On June 26, state lawmakers approved House Bill 4213 extending Governor Brown’s executive order temporarily prohibiting evictions of both residential and commercial tenants for non-payment of rent or other charges under a lease. Under the Governor’s order, the moratorium was due to expire on July 1. The new law, signed in to law by Governor Brown on June 30, extends the moratorium to September 30.
Like the Governor’s April 1 order, the new law does not forgive past-due payments, it only defers payment. Unlike the Governor’s order, which was silent on the issue, the new law specifically gives tenants until March 31, 2021 to make overdue payments, without interest.
HB 4213 also continues the Governor’s limitation applying the moratorium only on evictions for non-payment. As before, landlords can still evict tenants for other breaches of the lease unrelated to non-payment. With the courts and sheriffs still operating under significant practical limitations due to the pandemic, however, landlords may still face hurdles to actually obtaining a judgment or executing an eviction order.
The new law attempts to address two significant consequences of the extended moratorium. First, the law recognizes that while rent and other charges accruing prior to September 30 are not due until April 1, 2021, payments that accrue starting October 1 are due in the normal course. Thus, disagreements could arise between the parties as to the proper application of payments received on October 1 or later – landlords will want to apply it to past-due charges, and tenants will want to apply it to current charges. To address this, the law places the burden on the tenant to specifically notify the landlord that payments made on October 1 or later should be applied to current rather than past-due charges.
Second, many landlords and tenants have in the past few months entered into lease amendments that either forgive or defer payments due under the lease. The new law may contradict those agreements to some degree. To justify this, the Legislature found that the interference with private contracts caused by the law is not substantial due to its temporary nature, and that it is necessary to protect public health, safety, and welfare. To the extent that an existing lease amendment is more generous to the tenant than the new law (for example, forgiving some rent or giving the tenant more time beyond March 31, 2021 to pay the rent), the more generous amendment will almost certainly be enforced. It is less clear, however, if the Legislature will succeed in overriding lease amendments that are less generous to the tenant (requiring rent repayment sooner than March 31, 2021, or imposing interest on deferred payments), and it is likely that this will be challenged in court.
Of course, the COVID-19 pandemic has created many unexpected twists and turns, and there is no reason to think there won’t be more. So it is very likely that the rules regarding the eviction moratorium will change again before October 1. But for now, tenants that faced a large bill coming due on July 1 can breathe a bit easier. Landlords struggling to make ends meet and pay their mortgages, however, have been thrown another curveball by the Legislature.