There has been no point in history when managing our apartment buildings has been this difficult.
As always, our goal at Sage Real Estate is to educate our clients and apartment owners like yourself, and keep you up-to-date on all the legal changes, required forms, and developments that are going to impact you as a real estate investor. In the end of the day, we aim to give you all the information you need to make the best decisions when it comes to your business and retirement.
Today we’re interviewing Oliver John Baptiste, the Educational Coordinator for the Apartment Association of California Southern Cities. Oliver is going to shed some light on new forms, our new laws and tips moving forward so that you have all the tools at your disposal to better manage your apartments or real estate investments.
Who is Oliver John Baptiste?
Oliver is an Educational Coordinator for the Apartment Association. He is one of my trusted sources of information in the city of Long Beach when it comes to questions related to landlords and tenants. We reached out to him because he takes calls every single day from apartment owners like us.
In this fresh interview for 2021 we discussed:
- The most frequently asked questions from landlords
- What landlords and apartment owners are most worried about
- The Tenant Relief Act (AB-3088) that was set to expire by the end of January 2021
- The eviction moratorium that is set to expire in early this year
- How to coordinate a payback plan with your tenant
- Taking possession of your units
- Eviction of tenants causing nuisances
- Moving forward through difficult times as a real estate investor
- New required forms available through the Apartment Association
What is Assembly Bill 3088 (AB-3088)?
Also known as the Tenant Relief Act, AB-3088 is the recent piece of legislation enacted on August 31st of 2020 that provides a degree of protection for tenants who have been affected during the Covid-19 pandemic period and struggled to pay rent. It basically limits a landlord’s ability to evict a tenant for non-payment of rent due starting from March 1st of 2020. It was set to expire on January 31st of this year, but has been extended through June 30, 2021.
Can Landlords Increase Rent?
Obviously with the passing of AB-3088, that’s put the question of rent increases much more in the forefront of many apartment owner’s minds. So right now, the only city with an existing rent freeze is the city of Los Angeles. That freeze only applies to RSL properties (duplexes and above), and single family homes are exempt from local rent control in the city of Los Angeles. Now there’s currently a lawsuit being filed against the city of Los Angeles by the Apartment Association of Greater Los Angeles.
Alongside AB-3088 we have the Tenant Protection Act (AB-1482), which is another piece of legislation that came out in January of 2020. In a nutshell, AB-1482 provides a just cause protection that tenants gain after occupying a unit after 12 months, and a rent cap (currently at 5.6%) that applies to certain properties (duplexes and above). Single family homes, condos, and townhouses are exempt from AB-1482 therefore have no limits on rent increases, however due to a state of emergency there is a 10% temporary rent cap currently in existence.
How to Deal with Tenants That Have Stopped Paying Rent? Two Things You Can Do Right Now:
Serve a 15-Day Written Notice to Your Tenant
If you haven’t done this already, you should be serving your tenants who have stopped paying rent a 15-day written notice to pay rent or quit. Many owners are familiar with a 3-day notice to pay rent or quit, but while AB-3088 is in effect you’ll have to show a 15-day written notice. That means 15 court days, without counting weekends or holidays. Together with a 15-day written notice, landlords can add a separate notice asking for a letter that states declaration of hardship due to COVID-19.
That is what many owners have been doing at the beginning of every month: serving notices to their tenants and waiting on whether they pay unpaid rent or return a letter of hardship in response.
- Landlords cannot evict tenants for non-payment of rent for the period of March to August 2020.
- If a tenant returns a declaration of hardship within 15-day notice period and pays at least 25% of the unpaid rent payments for the period between September 2020 and January 2021, they cannot be evicted for non-payment.
- If the tenant does neither by the 16th date, you can file an unlawful detainer. Based on what Oliver says, there’s a backlog at the moment. Even if you file an unlawful detainer, you may have to wait at least a month before your case moves forward.
Work on a Repayment Plan
Local moratoriums in cities such as Long Beach and Los Angeles offered a 12-month repayment plan with tenants to pay back unpaid rent. Now that has been superseded by AB-3088, but it’s not necessarily off the table. So if you have a tenant that’s more or less cooperative and they are showing you evidence that they have the ability to dig themselves out of this hole, setting up a repayment plan is an alternative option for landlords as well.
Eviction Moratorium Update
On January 29th of 2021, Governor Gavin Newson signed an emergency bill that extended the eviction moratorium through June 30, 2021, protecting millions of struggling California tenants as a result of the economic hardship brought by the COVID-19 pandemic.
Taking Back Ownership of Your Property Through Renovations or Nuisances
Under a “loophole” in AB-1482, landlords were able to remove tenants in order to “substantially remodel” an apartment building. However, under AB-3088, evictions for substantial renovations are now limited to circumstances where it’s necessary for compliance with health and safety laws. This means that renovations such as upgrades or aesthetic changes are not enough to warrant an eviction.
In Los Angeles County, there is a degree of protection within the moratoriums for low-level nuisance issues which are typically associated with COVID-19. Examples of low-level nuisance issues include:
- Children staying at home from school
- People working from home who are not accustomed to a higher level of noise
On the other side, here are a few cases of significant nuisance issues that may warrant an unlawful detainer:
- Unauthorized occupants
- Smoking within premises
- Blatant material breaches of a contract
If there is a significant nuisance:
- A 3-day notice to perform may be issued.
- If the property is subject to rent control (duplexes and above), another 3-day notice to quit needs to be issued.
- If the tenant does not vacate the property within the 6th day, the owner may begin the unlawful detainer process. If the property is not subject to rent control (such as a single family home), the owner may begin the unlawful detainer process on the 4th day.
Four New Essential Documents That Must Be Added Into a Tenant’s Rental Agreement
- An addendum stating whether the property is subject to or exempt from rent control.
- A Flood Zone Hazard Disclosure: this is a disclosure that is required by either your mortgage lender, insurance provider, or real estate professional.
- Bed Bug Disclosure: California landlords are required to provide tenants with written information about pests and how to report suspected infestations.
- Prop 65 Disclosure: California landlords are also required to communicate Proposition 65 warnings to tenants regarding what the Environmental Protection Agency considers as toxic chemicals that may cause cancer or reproductive harm.
Trustworthy Sources of Information for Apartment Owners and Real Estate Investors
It’s certainly difficult to keep track of all the updates and news relevant to your property. Some sources may be misleading or outdated. Here are a couple of local reliable resources for you:
- Apartment Association, California Southern Cities
- CAA Long Beach – The California Apartment Association
- American Apartment Owners Association
- Apartment Association of Greater Los Angeles
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