05/03/2020
Our main objection to AB 828 lies in its false assumption that due to the current housing market, all landlords are financially capable of absorbing a 25 percent reduction in rent. In fact, due to the recent significant downturn in the rental market as a result of the COVID-19 virus, many landlords, particularly the smaller ones, are already struggling to pay all of their expenses, which include mortgage payments, property taxes, rental property license fees, insurance, management fees, expenses for repairs, business license fees, common area gas and electric, water, sewer, garbage, etc.
The glaring flaw in the bill lies in the criteria the courts have to apply in determining whether to grant a tenant’s request for a 25 percent rent reduction: the tenant simply has to stop paying rent and then ask the court for a special hearing prior to eviction; the tenant does not even have to file any court documents in response to an unlawful detainer eviction lawsuit. At the hearing, the tenant is simply required to supply evidence that his/her inability to stay current on the rent resulted from “increased costs for household necessities or reduced household earnings due to the COVID-19 virus.” If the tenant presents such evidence, the court should order the 25 percent rent reduction unless the landlord proves affirmatively that they will suffer material economic hardship as a result of a 25 percent reduction in rent. Requiring the landlord to prove “material economic hardship” to avoid a 25 percent reduction is an unjustified overreach for these reasons:
1) it is nearly impossible to prove a negative;
2) the term “material economic hardship” is so vague and uncertain that it gives the courts free reign to impose the 25 percent rent reduction, with little or no chance of success on appeal;
3) the rent reduction of 25 percent, or a full quarter of the rent, is arbitrary and unsupported by any applicable data.
Moreover, this bill totally disregards the binding contractual agreement signed between the landlord and tenant, which promises a certain level of income upon which landlords have relied to cover their inescapable business expenses.
We recognize that the COVID-19 pandemic is causing great financial uncertainty and distress to everyone, landlords and tenants alike, and that some fair and balanced action by the government to address the financial shortfalls arising out of the COVID-19 crisis may be appropriate. However, AB 828 as drafted puts virtually all of the burden on landlords, who in many cases are already struggling under:
1) a downturn in the rental market since the onset of the COVID-19 pandemic;
2) strict, recently passed state-wide rent control laws;
3) even more onerous rent control laws in cities such as San Francisco, Berkeley, Oakland, Los Angeles and Santa Monica.
AB 828 is highly flawed, completely one-sided in favor of tenants and against landlords, and very likely an unconstitutional taking of property, which is why we are so emphatic in our opposition to it.
