Bill Text: CA AB1436 | 2019-2020 | Regular Session | Amended
Bill Title: Tenancy: rental payment default: mortgage forbearance: state of emergency: COVID-19.
Spectrum: Partisan Bill (Democrat 19-0)
Status: (Engrossed - Dead) 2020-08-20 - From committee: Do pass and re-refer to Com. on RLS. (Ayes 5. Noes 2.) (August 20). Re-referred to Com. on RLS. [AB1436 Detail]
Download: California-2019-AB1436-Amended.html
Amended
IN
Senate
August 10, 2020 |
Amended
IN
Senate
July 28, 2020 |
Amended
IN
Senate
July 02, 2020 |
Amended
IN
Senate
June 10, 2020 |
Amended
IN
Assembly
May 16, 2019 |
Amended
IN
Assembly
April 25, 2019 |
Amended
IN
Assembly
March 27, 2019 |
Introduced by Assembly Members Chiu, Bonta, Gonzalez, Limón, Santiago, and Wicks (Principal coauthor: Senator Jackson) (Coauthors: Assembly Members Carrillo, Kalra, Nazarian, Quirk-Silva, and Luz Rivas) (Coauthors: Senators Allen, Durazo, Wieckowski, and Wiener) |
February 22, 2019 |
LEGISLATIVE COUNSEL'S DIGEST
(1)Existing law regulates specified terms and conditions of tenancies. Existing law authorizes a landlord to demand security at the beginning of a tenancy for residential property and specifies the purposes for which the security may be used, including, among others, compensating the landlord for the tenant’s default in payment of rent.
This bill would prohibit a landlord from applying a security deposit to satisfy a financial obligation that accrued between the date a state of emergency relating to the COVID-19 pandemic was declared and either April 1, 2021, or 90 days after termination of the state of emergency, whichever is earlier (hereafter “effective time period”), or applying a monthly rental payment for the satisfaction of an obligation other than the prospective month’s rent, unless the payment or security is specifically designated by the tenant for the obligation, as specified. The bill would provide that a covered tenant who failed to pay rent or any other financial or monetary obligation that accrued during that effective time period shall not be deemed to be in default and would prohibit any action for recovery of unpaid rent or other sum until 12 months after the effective time period. The bill would define “covered tenant” as a tenant who is unable to
satisfy rent accrued during the effective time period due to a loss of income or increased expenses resulting from COVID-19 and who provides a written statement to that effect to their landlord, as specified. The bill would exclude a commercial tenant from the definition of “covered tenant.” The bill would provide that if a requirement in any local initiative, ordinance, regulation, or other policy conflicts with these provisions the provision that provides greater protection to covered tenants controls.
This bill would prohibit certain entities, including a housing provider, from using an alleged default in rent that accrued during the effective time period as a negative factor for the purpose of evaluating creditworthiness or for other specified purposes.
(2)Existing law provides that a tenant is guilty of unlawful detainer if the tenant continues to possess the property without permission of the
landlord after the tenant defaults on rent, among other reasons.
This bill would provide that a covered tenant is not guilty of unlawful detainer if the alleged default in payment of rent or other financial obligation under the tenancy accrued during the effective time period. The bill would require a landlord, in an action to recover a debt arising from an alleged default in rent or other financial obligation accrued during the effective time period to submit in the verified complaint or other document submitted under penalty of perjury the amount of any payments, mortgage forbearance, mortgage forgiveness, or property tax reduction to offset, replace, or compensate the creditor for lost rental income, and would require a court to offset the amount of rental payments as specified. The bill would require the landlord to affirmatively plead in the complaint that the tenant is not a covered tenant, and would provide the defendant 30 days to respond to the
complaint.
(3)Existing law prescribes various requirements to be satisfied before the exercise of a power of sale under a mortgage or deed of trust. In this regard, existing law requires that a notice of default and a notice of sale be recorded and that specified periods of time elapse between the recording and the sale. Existing law establishes certain requirements in connection with foreclosures on mortgages and deeds of trust, including restrictions on the actions mortgage servicers while a borrower is attempting to secure a loan modification or has submitted a loan modification application.
This bill would enact the COVID-19 Tenant and Homeowner Relief Act of 2020. The bill, with respect to residential mortgage loans, would authorize a borrower experiencing a financial hardship during
the covered period to request forbearance from any mortgage obligation by submitting a request to the borrower’s mortgage servicer. The “covered period” would be defined as 90 days after the termination of the COVID-19 state of emergency or April 1, 2021, whichever comes first. The bill would require the mortgage servicer to provide the forbearance requested for the period requested by the borrower, up to an initial period of 180 days, the length of which would be required to be extended at the request of the borrower for a total forbearance period of up to 12 months. If the borrower requests a forbearance period greater than 90 days, the servicer would be required to provide an initial forbearance term of not less than 90 days, and automatically extend it for an additional 90 days, unless the servicer confirms the borrower does not want to renew the forbearance. The bill would prohibit a mortgage servicer from misleading or making misrepresentations to a borrower about forbearance and repayment options.
The bill would require a mortgage servicer, upon placing a mortgage obligation in forbearance, to provide the borrower written notification of the forbearance terms, treatment of payments, and other options available to the borrower at the end of the forbearance period. The bill would require the servicer, no later than 30 days before the end of the forbearance, to notify the borrower of their options to modify their loan or reinstate their mortgage account to current status, as provided, and provide a written notice, within 30 days of the original notification, of their rights and obligations with regard to their loan modification or reinstatement, as provided.
The bill would prohibit a mortgage servicer from assessing, accruing, or applying fees, penalties, or additional interest to the borrower’s account beyond specified scheduled or calculated amounts. The bill would require a mortgage servicer
that claims investor guidelines or applicable law prohibit implementation of postforbearance modification or reinstatement on the required terms, to notify the borrower and to present documentation, as specified. The bill would require the mortgage servicer, if the borrower is unable to return to making regular mortgage payments, to evaluate all loss mitigation and foreclosure prevention options, and, if the borrower qualifies, to implement the option with no penalties, late fees, modification fees, or additional interest beyond specified scheduled amounts. The bill would also authorize a mortgage servicer, if a borrower does not qualify for loss mitigation or foreclosure prevention options to pursue foreclosure after expiration of the covered period.
The bill, with respect to multifamily mortgage loans, would authorize a borrower to submit a request for forbearance to the borrower’s mortgage servicers, affirming that the multifamily
borrower is experiencing hardship during the COVID-19 emergency. The bill would authorize a mortgage servicer, upon request from a multifamily borrower, to request reasonable documentation of a decrease in rental income in order to demonstrate financial hardship. The bill would define “financial hardship” for purposes of these provisions to mean a decline of an unspecified percent of average monthly rental income over the 2 most recent calendar months, as specified. The bill would require a mortgage servicer, upon satisfactory demonstration of financial hardship, to provide the forbearance for not less than 30 days, subject to extension.
The bill would authorize a borrower harmed by a violation of the above requirements to bring an action for injunctive relief, damages, restitution, and any other remedies available. The bill would require a court to award attorney’s fees and costs to a prevailing borrower.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known, and may be cited, as the Homeowner, Tenant, and Small Landlord Relief Act of 2020.SEC. 2.
The Legislature finds and declares all of the following:SEC. 3.
Section 798.56 of the Civil Code is amended to read:798.56.
A tenancy shall be terminated by the management only for one or more of the following reasons:“Warning: This notice is the (insert number) three-day notice for nonpayment of rent, utility charges, or other reasonable incidental services that has been served upon you in the last 12 months. Pursuant to Civil Code Section 798.56 (e) (5), if you have been given a three-day notice to either pay rent, utility charges, or other reasonable incidental services or to vacate your tenancy on three or more occasions within a 12-month period, management is not required to give you a further three-day period to pay rent or vacate the tenancy before your tenancy can be terminated.”
(a)Notwithstanding Sections 1470, 1947, 1950.5, or any other law, a landlord shall not do either of the following during the tenancy:
(1)Apply a security deposit to satisfy an obligation that accrued during the effective time period unless the tenant agrees in writing to allow the deposit to be applied in satisfaction of the obligation.
(2)Apply a monthly rental payment to any obligation other than the prospective month’s rent, unless so designated by the tenant in writing.
(b)Any provision of a stipulation, settlement agreement, or other agreement, including a lease agreement, that conflicts with or purports to waive the provisions of this section is prohibited and is void as contrary to public policy.
(c)If a local initiative, ordinance, regulation, or other policy conflicts with this section, the provision that provides greater protection to covered tenants shall control.
(d)For purposes of this section, the following definitions apply:
(1)“Covered tenant” means a tenant who has provided their landlord a written statement that they have had a loss of income or increased expenses, or both, as a result of the COVID-19 pandemic that has impacted their ability to fully pay rent, in accordance with paragraph (1) of subdivision (e) of Section 1161.6 of the Code of Civil Procedure. “Covered tenant” does not include a commercial tenant.
(2)“Effective time period” means the time period between the date a state of emergency is initially declared and the earlier of either of the following:
(A)Ninety days after the termination of the state of emergency.
(B)April 1, 2021.
(3)“State
of emergency” means an emergency related to the COVID-19 pandemic declared by the Governor pursuant to the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code).
(a)A covered tenant who failed to perform an obligation to pay rent, or any other financial or monetary obligation, that accrued during the effective time period shall not be deemed to be in default of the obligation, and no action to recover unpaid rent or other sums due, may be pursued, until 12 months after the
effective time period.
(b)(1)Nothing in this section shall prohibit a landlord from recovering unpaid rent by written agreement with the tenant, provided that the agreement does not exceed the actual amount of the debt, does not include attorney’s fees or costs, late fees, penalties, or interest related to the unpaid rent, and the debt is offset by the amount of any payments, mortgage forbearance, mortgage forgiveness, or property tax reduction that were provided to the
landlord to offset, replace, or compensate the landlord for decreased rental income or provided as financial
assistance.
(2)The agreement shall not require the tenant to vacate the premises as a condition of satisfying the unpaid rent obligation.
(3)A landlord shall notify the tenant in writing of their rights under this section before the agreement is signed.
(4)Any agreement with a tenant regarding the payment of rent shall be in writing and shall adhere to the requirements of Section 1632.
(c)A landlord shall not charge a tenant, or attempt to collect from a tenant, fees assessed for late payment of rent that accrued during the effective time period, nor may the landlord charge fees to a tenant for services previously provided by the landlord, as compensation for purported damages for late payment of rent that accrued during the effective time period. A landlord shall not provide different terms or conditions of tenancy or withhold a service or amenity based on whether a tenant repays or agrees to repay all or any portion of unpaid rent.
(d)A landlord shall not harass, threaten, or seek to intimidate a
tenant in order to obtain a tenant’s payment or agreement to pay any portion of unpaid rent or to obtain a tenant’s vacation of the property because of a tenant’s failure to pay rent.
(e)Any stipulation, settlement agreement, or other agreement, including a lease agreement, that conflicts with or purports to waive the provisions of this section is prohibited and is void as contrary to public policy.
(f)If a local initiative, ordinance, regulation, or other policy conflicts with this section, the provision that provides greater protection to covered tenants shall apply.
(g)For purposes of this section, the terms “covered tenant,” “effective time period,” and “state of emergency” have the definitions provided in Section
1947.01.
(a)A housing provider, credit reporting agency, tenant screening company, or other entity that evaluates tenants on behalf of a housing provider shall not use an alleged default in rent that accrued during the effective time period as a negative factor for the purpose of evaluating creditworthiness or as the basis for a negative reference to a prospective housing provider, regardless of whether a report is received alleging default in the payment of rent.
(b)For purposes of this section, the terms “covered tenant,” “effective time period,” and “state of emergency” have the definitions provided in Section 1947.01.
SEC. 4.
Title 19 (commencing with Section 3273.01) is added to Part 4 of Division 3 of the Civil Code, to read:TITLE 19. COVID-19 Tenant Small Landlord and Homeowner Relief Act of 2020
CHAPTER 1. Title and Definitions
3273.01.
This title is known, and may be cited, as the “COVID-193273.1.
For purposes of this title, the following definitions apply:(B)
(C)
(D)
(3)
(b)“Covered period” means the time period between the operational date of this title and the earlier of either of the following:
(1)Ninety days after the termination of the COVID-19 state of emergency.
(2)April 1, 2021.
(c)
(d)
(e)
(f)
3273.2.
(a) The provisions of this title apply to specified obligations, as follows:CHAPTER 2. Mortgages
Article 1. Residential Mortgage Loans
3273.10.
(a) During the(g)
3273.11.
(a)(1)Require the borrower to make a lump-sum reinstatement payment prior to the mortgage loan’s maturity date.
(2)Increase the borrower’s preforbearance monthly principal and interest payment except subject to any adjustment of the applicable index pursuant to the terms of an
adjustable rate mortgage.
(b)Within 30 days of providing the notification required by subdivision (a), the mortgage servicer shall provide the borrower with a written notice that does all of the following:
(1)Describes the terms of any loan modification or other reinstatement options available to the borrower, including any new payment schedule, new balance, or new date of maturity.
(2)Informs the borrower that they have the option of prepaying the outstanding balance or any portion thereof at any time, in a lump sum or otherwise.
(3)Clearly explains to the borrower the process for electing a loan modification or other reinstatement
option that is available to the borrower.
(4)Advises the borrower to contact the mortgage servicer if they cannot resume making their preforbearance mortgage payments.
(c)A mortgage servicer that claims investor guidelines or any applicable law prohibits the mortgage servicer from implementing a postforbearance option that complies with subdivision (a) shall notify the borrower of the claim at the time of an offer of forbearance. Failure to make that disclosure shall have the effect of a designation by the servicer that it has the authority to implement the provisions of this section. At the time of an offer of forbearance, the servicer claiming that exception shall present documentation of the ground for the exception to the borrower.
(d)(1) Notwithstanding subdivision (g) of Section 2923.6 or any other law or regulation, if the borrower notifies the mortgage servicer, pursuant to paragraph (4) of subdivision (b), that they are not able to resume making their preforbearance mortgage payments,
(e)
If a borrower does not qualify for an option described in Section 3273.11, the mortgage servicer may pursue foreclosure acts after to the extent that those acts comply with relevant state law, including, but not limited to, Sections 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, 2924.17, and 2924.18.
3273.13.3273.12.
It is the intent of the Legislature that a mortgage servicer offer a borrower a postforbearance3273.14.3273.13.
A mortgage servicer shall not mislead or make material misrepresentations to a borrower regarding any of the following:3273.15.3273.14.
A mortgage servicer shall communicate about forbearance and3273.16.3273.15.
(a) A borrower who is harmed by a violation of this article may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation.3273.17.3273.16.
Any waiver by a borrower of the provisions of this article is contrary to public policy and shall be void.Article 2. Multifamily Mortgage Loans
During the covered period, a multifamily borrower experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency may request a forbearance pursuant to this article.
A
3273.20
During the effective time period, a multifamily borrower that was current on its payments as of February 1, 2020, may submit an oral or written request for up to six months’ forbearance under this article to the borrower’s servicer affirming that the multifamily borrower is experiencing a financial hardship during the COVID-19 emergency.3273.22.3273.21.
(a) Upon receipt of an oral or written request for forbearance from a multifamily borrower, a mortgage servicer may request any reasonable documentation of a decrease in gross rental(c)
3273.23.3273.22.
(a) A multifamily borrower who is harmed by a violation of this article may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation.3273.23.
A mortgage servicer, mortgagee, or beneficiary of the deed of trust, or an authorized agent thereof, who, with respect to a multifamily borrower of a federally backed mortgage, complies with the relevant provisions regarding forbearance in Section 4023 of the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) (Public Law 116-136), including any amendments or revisions to those provisions, and any related guidance provided by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal Housing Administration of the United States Department of Housing and Urban Development, shall be deemed to be in compliance with this chapter.CHAPTER 3. Mobilehome Loans
3273.30.
(a) At any time during the effective time period, a manufactured home or mobilehome owner who is the borrower on any security agreement relating to a loan or conditional sale contract which, according to its terms, gives the secured party the right to foreclose its security interest in a manufactured home or mobilehome subject to registration under Part 2 (commencing with Section 18000) of Division 13 of the Health and Safety Code may request up to a total of 12 months’ forbearance, which may include forbearance beyond the effective time period, from any payment obligation under the security agreement by submitting a request to the lienholder, either orally or in writing, affirming that the mobilehome owner is experiencing a financial hardship that prevents the mobilehome owner from making timely payments on the obligation due, directly or indirectly, to the COVID-19 emergency. Any month for which the mobilehome borrower received mortgage forbearance between March 4, 2020, and the operative date of this title shall count toward the 12-month total.3273.31.
(a) At least 30 days before the end of any forbearance period or no more than 30 days after a request by a mobilehome borrower to terminate the forbearance, a lienholder shall, with diligent effort, attempt to contact the mobilehome borrower and inquire whether the mobilehome borrower is now able to resume the preforbearance payments.3273.32.
It is the intent of the Legislature that a lienholder offer a mobilehome borrower a postforbearance repayment plan that is consistent with the lienholder’s contractual or other authority.3273.33.
A lienholder shall not mislead or make material misrepresentations to a mobilehome borrower regarding any of the following:3273.34.
A lienholder shall communicate about forbearance and loan modification options described in this article in the mobilehome borrower’s preferred language when the lienholder regularly communicates with any mobilehome borrower in that language.3273.35.
(a) A mobilehome borrower who is harmed by a violation of this article may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation.3273.36.
Any waiver by a mobilehome borrower of the provisions of this article is contrary to public policy and shall be void.(a)Notwithstanding paragraphs (2) or (3) of Section 1161, a covered tenant is not guilty of unlawful detainer if the alleged default in payment of rent, or an alleged default in any other financial obligation under the tenancy, accrued during the effective time period. It shall be unlawful to terminate a tenancy in retaliation for a default in rent that is subject to this subdivision. Nothing
in this section shall prohibit a landlord from seeking to recover unpaid rent through a written agreement with the tenant or by other civil remedies subject to the limitations in Section 1947.02 of the Civil Code or by written agreement with the tenant. Any stipulation, settlement agreement, or other agreement, including a lease agreement, that conflicts with or purports to waive the provisions of this subdivision is prohibited and is void as contrary to public policy.
(b)(1)In any action to recover a debt arising from an
alleged default in rent that accrued during the effective time period, the creditor shall set forth in the verified complaint or other document submitted under penalty of perjury the amount of any payments, mortgage forbearance, mortgage forgiveness, or property tax reduction during the relevant time period that were provided to the landlord to offset, replace, or compensate the landlord for decreased rental income or provided as financial assistance. In any judgment on the debt, the court shall offset the amount of these payments by the portion of the financial assistance fairly attributable to the rental unit in question. The defendant may present evidence that the creditor received relief designed to offset debt related to the rental unit in question, and any agreement in satisfaction of such a debt shall be void if it fails to account
for receipt of payments described in this section.
(2)In any action described in subdivision (a), the creditor shall not be entitled to recover fees assessed against a tenant for late payment of rent or other sums due.
(c)In any unlawful detainer action based on paragraph (2) of Section 1161 filed within 12 months after the effective time period, the landlord shall be required to affirmatively plead in the complaint that the tenant is not a covered tenant and shall bear the burden
of proof that the tenant did not provide the written statement specified in paragraph (1) of subdivision (e).
(d)In any unlawful detainer action based on paragraph (2) of Section 1161 due to nonpayment of rent filed within 12 months after the
effective time period, notwithstanding Section 1167, the defendant’s response shall be filed within 30 days.
(e)(1)A tenant who is unable to satisfy all or a portion of the rent or other sums due that have accrued during the effective time period due to a loss of income or increased expenses resulting from COVID-19 shall provide the following written statement in response
to a written demand to cure the default in rent pursuant to paragraph (2) of Section 1161:
I declare that the following is true and correct:
I have had a loss of income and/or increased expenses as a result of the COVID-19 pandemic that has impacted my ability to fully pay the rent.
Signed:
Dated:
(2)The tenant shall provide the notice to
their landlord as soon as reasonably practical but may provide the notice any time before judgment is entered.
(3)Any notice served pursuant to paragraph (2) of Section 1161 for an alleged default that occurred during the effective time period shall be accompanied by a document containing the written statement specified in paragraph (1) that the tenant may sign and return to the landlord.
(f)For purposes of this section:
(1)“Covered tenant” means a tenant described in paragraph (1) of subdivision (e) who has provided a written statement to their landlord. “Covered tenant” does not include a commercial tenant.
(2)“Effective time period” means the time period between the date a state of emergency is initially declared and the earlier occurrence of either of the following:
(A)Ninety days after the termination of the state of emergency.
(B)April 1, 2021.
(3)“State of emergency” means an emergency related to the COVID-19 pandemic declared by the Governor pursuant to the California Emergency Services Act (Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code).
SEC. 5.
Section 1161 of the Code of Civil Procedure is amended to read:1161.
A tenant of real property, for a term less than life, or the executor or administrator of his or her estate heretofore qualified and now acting or hereafter to be qualified and act, is guilty of unlawful detainer:As used in this section, tenant includes