A Virtual Discussion on AB 1436 COVID-19 Rent Evictions
If you missed our last virtual meeting or would like to watch it again, here is the full video.
Here is the full script from the meeting:
Curtis: Alright, we got everyone here.
I really wanted to thank everyone for coming here today, this is our first official Zoom meeting. We’re gonna have Rick Alter, he’s an eviction attorney for, how long you’ve been a victim attorney?
I met him before I got into the real estate business, I used to work in a gym and one of my clients was… I think he was related.
Okay, and then Rick was like a mentor of mine when I first started giving all kinds of good advice and I always appreciate what he’s done, so I wanted him to come on here today because no one knows more than he knows about evictions, and he’s a really good evictions attorney, and you’d think he’d be some mean o but he is a really nice guy. But he does a really great job. Doing a really hard job.
So I appreciate you being here today, Rick. Excuse me, everyone is somehow… We have a little bit of a hiccup here, a day here today, we’ll kind of grow and get better as we go, but we’re gonna have Rick talk for a while. We’ll kinda do some Q&As about what he’s done, but if you wanna write some quick questions down in the Q and A section, I’ll try to look at them and then see what we can kinda answer once Rick gets done and then we’ll kinda see where we go from there and do it.
So Rick why don’t you go ahead and start… Let us know what’s going on.
Rick: Okay, this is a brand new law, and unfortunately, we have not only our state legislature with AB Assembly Bill 3088, we also have the Federal government through the CDC as an emergency, it’s not an order, it’s like a declaration, and they have overlapped, unfortunately, the two different laws do not necessarily work together. And that’s unfortunate and there is a lot of confusion right now with the courts, and each of the different courts, now San Diego only has one unlawful detainer court that’s downtown, but in San Dao County, we have a whole bunch of different municipalities, and they’ve established many of them their own rules, if their rules are more stringent than what AB-3088 is, then we follow the local rules, if they’re less stringent, we’re stuck with the state law, but there is lots of confusion amongst lawyers, amongst the legislators, amongst the judge.
We have actually two judges that are hearing these kinds of actions, one who I have appeared in front of yesterday, I have probably appeared in front of her several dozen times recently, all by Microsoft Team, which is similar to Zoom. She has different ideas about what this law means then many of the landlord lawyers… It is a very complicated law, and I should probably give everyone just a little explanation how it came to be.
The judicial council decided that they needed to protect tenants from the Covid virus, and they enacted what we call rule number one. It was extremely prohibitive and finally, after they were sued about a dozen times ,successfully because the judicial council judges headed by the California State Supreme Court, Chief Justice, recognized that they were not in the territory they belonged.
A judge interprets laws, they don’t make laws.
So the middle of August, they said to the legislature, we have been taking the blows from everyone because we try to help you out, but we’re not doing that anymore, starting September 1st, if you don’t have a new law, it’s back to business as usual, and the legislature scrambled, it was up until, I believe, about an hour before midnight when they finally passed 3088, clearly, if you take the time to read it, you will be confused as the legislators were confused with what they put together, they codified some things that were in 1482, but basically they made a mess, so what they call the… What I call it, it is the free rent for tenants act, it’s called by the legislature the tenant Relief Act.
And I’m gonna go over a few of the terms and give you some indication of what you can do, what you can’t do, where the legislature gave a small bit of help to landlords, but we’re not talking about a whole bunch.
So with that, if you violate any term of the rental agreement except non-payment of rent, then you will be able to go forward. Sometimes there’s some confusion about this, whether it would have started on September 8 or if it’s deferred until October the first of this year, those would be things like behavior prior to… We’re gonna go back a little in history, when the Judicial Council said, the only time we are going to issue a summons, a summit is part of the unlawful detainer lawsuit.
It’s the order of the court saying, We’ve blessed this lawsuit to go forward… The only time that they would issue a summons was if there was a pre-hearing to determine if there was extreme health or safety… If there was extreme health or safety and you could prove it, they would issue the summons and let you go forward with the unlawful detainer under whole new rules, and one of the things you need to understand is that since March 17th, there have been no trials in the San Diego Superior Court, none. And they’re not exactly sure how they’re gonna go forward because of social distancing, but we have these hearings and you had to demonstrate that this person was just short of killing people or killing people, of doing terrible, horrific things involving the safety to others or health and safety to others on the property.
The judge that was hearing this was extremely cautious about issuing summons, so cautious that maybe 10% of the applications got through, now those lawsuits are just still languishing 3088, and we’ll just call it 3088 because that’s the number of the bill but it codified stuff into California Civil Code.
But 3088 said starting on October the 5th, if you started the lawsuit before March 1st, 2020, you could continue on with your lawsuit, but if it involves rent from March 1st to August 31st, that isn’t considered rent anymore, that is considered a financial obligation breach of contract, and now everyone that has a tenant that hasn’t paid rent from March until to including August of 2020, you will be able to go to small claims court.
The problem with small claims court is that small claims court cannot give you possession of the premises, so it’s just a breach of contract.
The good news is that the legislature has decided to waive the 10000 maximum that you can sue for in small claims court, it’s an unlimited number, but again, it’s just numbers on a piece of paper, and that unlimited jurisdiction will last until… I think it is August of 2025.
Filing, well, the small claims court isn’t open yet, so there really isn’t any need to rush into that if you were even thinking about it.
But now, one of the things that we will be able to do, they’ve taken away the rule that you can only have a summons issued if there is extreme health or safety, they’ve removed that. What they’ve now said is that if there are any breaches of the contract other than payment of rent, then you will be able to have a summons issued and file the unlawful detainer action.
So with that in mind, if you’ve got a lease that is terminating, you’ll be able to file that lawsuit without a permission of the court to issue a summons, and you can begin, if let’s say you had a rental agreement that expired in September the first… So long as you did not accept any rent after that, you’d be able to file the unlawful detainer based upon the termination of this contract.
One of the benefits, they gave one small benefit, and this will please curse all your commercial people.
This is only pertaining to residential tenancies, not commercial tenancies. If a commercial tenant is in default of rent right now, you can serve the Pay Rent or Quit notice, and it doesn’t matter whether they were impacted by the Covid 19 or not, so that is the one saving grace for my commercial clients, residential clients are unfortunately going to be dead about the head and shoulders.
Again, one of the things that you have to keep in mind is that 3088 works hand-in-hand with your local jurisdiction, so in San Diego, everything is stopped until September 30th, the CDC says everything is stopped until January 31, 2021.
We might as well get into the CDC because that’s federal and it’s a little more strenuous on landlords, not on tenants.
All that the tenant needs to do is give a declaration under penalty of perjury, I’m not sure if anyone has been prosecuted for perjury in the last 50 years, but that’s what they’ve got, and it’s a moderately descriptive declaration saying that you have… Well, I’ll give you the just of it. , that’s all that really matters.
It is, in the federal ordinance from CDC, it says that you have been affected by the Covid virus, you are health disabled, you’ve tried to find work, but you can’t, you couldn’t.If you are thrown out, you will be homeless, those are the basic things that you have to swear under penalty of perjury.
I have a case going, right now, I was in Court yesterday by a Microsoft team, that’s what the court uses, and they didn’t file that decoration, but the judge, not wanting to hurt any tenant and suffer… They wouldn’t suffer any liability because they’re immune as judges, and she continued the matter to allow the tenant to fill out the declaration, it was through legal aid, and they in fact completed that declaration under penalty of perjury.
I will be trying this next week, and one of the items that I am going to do is ask the tenant all of the questions and have them demonstrate to me why all of these things are true. What did you do?
How have you done it? When did you do it? And if they can’t answer those questions, now, I’m sure they’ve been coached by legal aid because that’s what lawyers do we coach our clients, and there’s nothing wrong, nothing illegal about doing that, but I’m very curious to see how they respond to this, or if they respond to it, and more importantly, how the judge responds to their responses… We’ll see about that.
Okay, so let’s move on.
As I call it, the free rent act controls March 1st to September 1st, 2020 any rents owed within that time are included in this, they are no longer rent, as I said, they are now just moneys owed that you can sue for later in breach of contract, in small claims court.
There is a protective time period from March 1st to August 31, no notices to pay rent or of any value.
We have now been given an interesting look at stuff, there’s this 15-day notice that they talk about, and in the 15-day notice, you serve this and say, Here’s a declaration, tell us all the reasons why you can’t pay your rent, how Covid 19 is affecting your payment of rent, if you do that, presumably that pay rent or quit notice is just gonna lie there on your desk, it’s not gonna go anywhere, the court’s not gonna be entertaining any kind of lawsuits based upon that.
If they don’t do it, there’s some question whether the court will allow us to continue and file an unlawful detainer, not sure how that’s gonna play out, this is so new that the judge doesn’t even know what she’s gonna do. And she’s a lovely lady. I’m right, but she is scared of a shadow in this one, and it’s unfortunate, but we’ll all come around.
So you give a blank declaration that covid caused loss of job, that you have to treat a family member, care for them, a child, ’cause there is no more school. And if that’s on the rent is deferred, if your tenant ,single, makes $99,000 of income a year about that, then they do not get this protection. If two of them, husband and wife, or a couple or whatever you’ve got… It’s $198,000.
So if they’re above that threshold, then they do not get this Covid 19 protection.
Let’s see if you give that 15-day notice and no declaration follows that, so no more pay rent or three day quit notice… Require notice is 15-day notice to pay rent or quit. And whether it’d be my office or all the other trans, we’re all creating these documents, the legislature didn’t give us a lot of help doing that, so we’re just kind of winging it.
So if you see different iterations of these 15-day notices, it’s everyone’s own interpretation of what they think the Legislature wants, but along with that is that Covid declaration that they have to fill out, saying why they’re impacted.
If that is in fact the case, you can go forward with an unlawful detainer on October 5th, 2020, so we’ve got plenty of time to deal with this, this is not, unfortunately, an urgent… In my business, unlawful retainers, every second counts. Every single moment is important.
The legislature is sort of taking that away, they’re giving people a chance to try and re-grow up and figure out what’s next, and no one’s really, really sure what is next, so that is the protective time period.
There was a transitional time period, and that will be the rent from September the 1st until July 31st. That transitional time period is when it is now rent that is owned, not just moneys owed, and again, they’ve given us a 15-day notice along with what we give the declaration telling us why they cannot pay their rent.
And this is the part that I didn’t quite understand, but I don’t understand a lot of what the legislature does.
You cannot start the unlawful detainer if they provide this declaration until February 1st.
By February 1st, the period from September 1 to the end of January. So February 1st, if they have paid 25% of that total rent, then you cannot go forward with an unlawful detainer.
If on February 1st, you can go forward with your 15-day notice, if it’s not paid, you can start your unlawful detainer.
We could be really, really busy February 1st doing evictions. Maybe by then the court will have gotten enough staff back. Something you do need to understand is that when the court closed on March 17, there were at that time, and we opened a tiny little bit on May 23rd… Actually, it was the 26th because it was a weekend.
Nothing was done in the court. Nothing except for emergency situations, emergency situations. We’re restraining orders, things like that,nothing was done.
At that point, they had about 60,000 matters in San Diego Superior Court, that does include all of the different courts, outline courts, East County, South County, North County..60,000 matters that would need to be reset, they haven’t said any of those yet.
That was May 23rd. We’re now way past that, there’s got to be at least 250 to 300,000 matters that are going to have to be reset.
We also have all of the backlog of all the stuff that’s still just sitting there that hasn’t been processed because the civil business office has been virtually shut down, they’re working with skeleton crew, and their purpose for that is because they are afraid that someone, and rightfully so, might contract the coronavirus and infect everyone else.
When we do these hearings by video, we have a look into the courtroom, the judge is wearing a face shield, the clerk is wearing a mask, and they’re someone operating a camera that shifts back and forth. There’s no one else in the courtroom, I tried getting into a courtroom and they said, and I’ve been doing this for four decades, and I said, wait, it’s me, it’s Rick alter, come on, you know me, and they said; we called the court, and the judge said we know it’s you Rick, but we’re still not letting anyone into our courtroom, so they are being very, very cautious. I’m not sure if they were just on vacation for six months, but I know that Judge Alvarez was working to some degree, because I would see her visually on screen.
Okay, some things that may assist you a little bit, people that own less than four units, individuals, family trusts, anything other than a real estate investment trust corporation, something that’s operated by real people, and it’s not some business entity that is the managing partner member and things like that. Those people are exempt from a lot of the issues that 3088 brings, but not the rent, everyone is subjected to the rent.
As I said earlier, you will have the ability to go forward in an unlawful detainer action for termination of a contract, the leases ended and it’s not renewed, and you’ve advised them, we’re not renewing this. Two, if you want to do substantial renovation to the premises, you’re probably going to need a permit because that’s what the statute said, and it’s gonna have to take at least 30 days. This is not just a cosmetic makeover where you’re putting in a new kitchen, where you’re putting in a new bathroom, this is gonna have to be something where you get a permit, you’re gonna pull a new electrical, new plumbing.. I only suggest water heaters because you can get a permit for a water heater, and that’s still a permit, but it’s got to be something that would require tenants not to be there while you are doing this.
Let’s say you have a slab crack and you need to tear out all of that concrete, that’s a substantial thing, but you have to define that, let the tenant know and give them notice that you’re doing that.
One of the other exceptions is if you want to take your property off the real estate market, you’re going to sell it, you have an absolute right, they haven’t taken that away from you yet, but give them time, they’ll try… You have an absolute right to sell your property, now let’s say that you have a tenant in that property, when you sell that property, the person that buys it steps into the Seller shoes and they now assume the responsibility of that tenant, so be kind of careful of that situation, if you’re removing it from the market, one of the legitimate reasons that you can do that is because you’re going to put a family member into that place, and I tell my clients that that family member should be there for at least six months, because the tenants are going to watch to see what you did with it, lots of times you get some owners that will look at a property, they’ll see a property that’s way under market and they’ll say, Oh, I can buy this for a steal and I can double my rents. The Legislature is not gonna let you do that, they are trying to control everything that landlords do now. Your property rights have been served by your government, kind of a sad commentary on things.
If you are going to sell the house and the person purchasing… I’m using it as a house, it could be a duplex, but again, it’s gotta be less than four, if the person purchasing this is going to occupy it themselves, now this would only apply if it’s a month-to-month tenancy or a tenancy that has expired and not been renewed, but if you’re gonna take occupancy, you’re gonna be allowed to do that and terminate the tenancy.
So keep that in mind. If you’re looking for a buyer, if they’re gonna occupy it, and as I said, at least six months, because the legislature doesn’t want people buying properties that were way under market and all of a sudden jumping them from, let’s say 1500 a month to 3000 a month.
And unfortunately, I’ve seen some people doing that and I understand the concept, but the legislature isn’t going to allow it.
The small claims court, not that anyone’s gonna really care that much, they’re gonna delay your filing until March 1st of 2021, so that rent that was owed from March 1st of 2020 to September 1st. 2020, you can’t file in small claims court until 2021… March 2021.
I don’t know that the small claims court is open right now. So it doesn’t really matter all that much.
Curtis: I got a question for you, or small claims court, I think the limit is 75100 bucks or something like that.
Rick: It’s 10,000. It’s a great question, the legislature has decided because they’re so magnanimous that the small claims limit has lifted to infinity, and with that in mind, let’s say your tenant owes you 6,000, and I’ve got situations where tenants owe 6,0000 and more.
You can go into small claims court and that jurisdiction is limited… Now, I don’t know if it is limited only to rent situations, I don’t know if the small claims court is raising its jurisdiction to other amounts for other things, probably not, but in this one instance, for rent, it can go all the way Curtis to whatever it is.
Again, remember this is residential, now, we’re not worried about commercial ,because commercial, they did not protect our commercial tenants, which is kind of interesting because the commercial tenants got hurt the most when they got closed down.
A good point though, Curtis, thank you.
Let’s see, what else are you got?
Okay, one of the things that I remember, I would explain to you that if your tenants are behaving badly causing a nuisance, disturbing the quiet enjoyment of people consistently, and I always encourage my clients, work with your good tenants, have them be your watch dog, have them be your eyes and ears on the property. And any time there is an issue with a behavior, call the police.
I can’t emphasize that enough. Call the police because it’s the police that are going to look at this and make the decision whether something bad is going on, but they’ll write a report. And here is the hardest part of all of this. At some point in the unlawful detainer, we file, we assert that these behaviors had occurred, we need to have witnesses. Clients tell me all the time, well, can’t we just submit a declaration? They’re afraid to come to court.
Unfortunately, those silly rules of court about cross-examination, you have the right to see and ask questions of your accusers, those are in place. So declarations are inadmissible, is hearsay. The reason why, and you probably understand this, the reason why tenants do not, excuse me, landlords and their clients, the tenants, do not want to come to court is they’re afraid of retaliation, oftentimes, justly so, especially if it’s somebody that’s selling or dealing drugs, they don’t wanna be involved, and maybe they’re not gonna take it out on them but they’ll take it out on a card that they know belongs to the tenant, terrible things, terrible things.
So those kinds of issues are difficult, but any breach of contract other than the non-payment of rent is permissible to begin the unlawful detainer. Winning that unlawful detainer is a completely different thing.
Your lawyer needs help. We need witnesses so that we can prove what we asserted was true, is true, at least in the court’s opinion. So kinda keep that in mind.
Curtis: Here as a question we had Rick. Can a landlord refuse acceptance to 10 in 25% rent in order to move forward in a lawful detainer?
No, the legislature was really clear, they’re trying to encourage tenants to pay what they can. Remember earlier I was talking about a situation that I have, where the tenants had lost their job or they had to take care of this, we have health issues, but somehow they were able to buy a new car so that’s… Where did that money come from? Why didn’t you use that money to pay your rent? Little… things like that.
I’ve got a lot of clients with a bunch of apartments and things like that, and right now, large complexes are getting 90% to 95% of their rents, so it’s not as big as everyone feared. Here is the real conundrum that the legislature neglected completely, what if it’s a mom and pop that owns a duplex… They own it free and clear.
So they don’t have a mortgage payment, but those rents that come in, help pay their expenses, help to keep Mom in an assisted living facility.
Well, the legislature has tried to provide some relief to people who help loans guaranteed by the federal government, putting those payments to the end, again, monies are not forgiven in this, mortgage payments are not forgiven, they’re just deferred.
As a practical matter, the tenants that rent is just gonna disappear and it’s never gonna be seen, well maybe people will go to a small claims court.
Curtis: Well, say, a majority of owners or small owners, and I think they’re not going to be able to wait for more experiments, it takes you to the years in San Diego to make any substantial cash flow.
Rick: I absolutely understand that, and they’re the ones that are gonna suffer because of this, and the Legislature, this is just Rick’s opinion on it, the legislature sees there are more tenants than there are landlords, and their first job, first and foremost job of the legislator is to be re-elected and that’s unfortunate because they neglected a whole body of people that are the backbone of the economy of the United States, Real Estate.
And they left you, folks, out to dry…
Curtis: I think we don’t realize sometimes is that I have not allowed people who own real estate, they put their retirements on real estate instead of stock or pension. That is their retirement, that is someone’s pension or retirement now Rick: and it was a good place to put it.
Watching the stock market go up and down, the real estate always has held its value, I’m not sure people are… I’m a native San Diegan, people are leaving California.
The climate is really terrific and everything is good, but we’re taxed to death, and we have these bleeding heart liberal laws that are gonna kill us, because apparently they don’t want any police to protect us, so…
Curtis: Yeah, it’s an interesting time for sure. Have you ever seen anything like this? You’ve been doing this for 40 years
Rick: Nothing even close to this.
This is.. all the landlord’s layers, all the tenant’s layers are in a state of flux. There has been no definitive decisions about what this law is and how it will be employed and adjudicated by the courts. And every single county is gonna have their own ideas. Every judge is gonna be different, this is gonna be tied up. My only hope is that the legislature will look at this and say, Okay, we took care of the emergency, we pushed this down the road, and now we have until January 31st to come up with a better plan.
I’m not hopeful, but maybe they’ll see the air of their ways because they will have been re-elected and now they can actually do things that might help everybody… We’ll see.
Great, great, good question!
Curtis: The other question… Between the a1436 and AB3088, what’s preventing legislation between the two?
Rick: we’re talking about 1482? 482 was the January 1st New law in 388, they put some of the… Reinforced some of the 1482 stuff.
And that was a good thing, at least. At least we now have some decision made on that, I forgot where it overlaps, but if you were to actually look at the billing, you can Google AB 30-66 and read it. I suggest that you have a stronger still spirit with you while you’re reading this because you’re gonna get very upset, I can assure you that it took me a couple of times reading through it to say… Were they kidding? Did everyone fell asleep? It’s very sad. Remember they call it tenant relief. No, this is the free rent for tenants act, they just didn’t call it by its real name, and that’s exactly what this is.
Curtis:And you’re saying your landlords are just in a large labor at 90%, 98% rent payments to Rick:90%, to 95% they’re collecting and maybe not 100% of it, but they’re collecting a bunch of it.
I’ve got some good landlords that had tenants there, and they went to him and they said, Listen, we know you’re having a struggle, we know this is weird times, and we’re gonna help you for the next couple of months, we’re gonna take 15% off your rent to just take… And if you’ve got good tenants, they’re gonna appreciate that, that you really care about them, and with that in mind, they definitely do, they’re not gonna go and buy a new car.
You’re gonna try and pay the rent… . They’re gonna feed their family.
Yes, sure, they’re going to pay the gas, electric bill, but they’re gonna keep a roof over their heads, and that’s all you can hope for all…
Curtis: And I think that’s a good practice. And I get the reason for this, and this is just some crazy times, but I think just a difficult part is they’re putting us all on landlords and one group of people, or in the mortgage person not being on the government, and so it just is crazy.
Rick: Well, then we have, I affectionately call our Governor Governor gruesome, because that’s what he makes me feel… We’ve spent a lot of money helping tenants, a lot of money, money that our state government didn’t have, so now we’ve gotta figure out how we gonna get more money to try and balance our budget… Well, they’ve decided that the best way to do that is by putting increased real property taxes on landlords now, I’m sure Senator Jabez is turning over in his grave multiple times, but they just don’t get it.
I guess what they really want are two parties, two factions in the country, the Ultra-Rich where they are going to take from and give to the core, and the vast middle class is gonna disappear, It’s just gonna shrink to nothing, and that I thought was our base, was the middle class, God knows, I’m not the upper class, and I don’t think on the lower class ,so I’m sort of in the middle. All you folks, we’re probably in the middle somewhere, maybe a little higher than lower, but that is reality.
Curtis: Here’s a question, a lease expires on month to month under just casein and you not accept is a tennis Doherty too…
Rick: Okay, we do have… And that was one of the things that were codified, I guess, in 3088, there is still… All evictions have to be for cause, and I gave you some of those things that are exempt from that, but otherwise, you have to have a reason why you’re getting rid of the tenant… Non-Payment of rent, can’t be one of them right now, eventually, it will be again, at some point, not exactly certain when that time will be, maybe October 5th, if they don’t fill out that covid 19 declarations. Maybe February 1st, if they don’t pay the 25% of the September, October, November, and December, January rents. But you have to have just caused… You have to give a reason why.
Curtis: Oh wow, this is gonna be…
Rick: It’s going to be immense.
It’s made my heart sober now.
Curtis: So somebody had a question if you have a 60-day Escrow Birdy for… Of my Triplex, for example, two units are under rented by 30% and tenants have been in for five-plus years.
What’s the best strategy for buyers? You can’t do anything in that situation. Correct?
Rick: There really isn’t very much you can do, rent increases are limited to… Okay, let’s say it’s a small entity that owns this, mom and pop, you might be able to go… And there’s confusion, remember, all of this is under debate right now
Curtis: If you are moving in there, one of those units, you could do that otherwise..
Rick: If you are doing that’s fine because you’re not raising the rent, you’re taking over one of the units, the hard question is, let’s say it’s a triplex. How do you decide which unit you’re going to move into, so if you choose the unit that has the tenant who is paying the least amount of rent, you better be able to justify why you didn’t choose any of the other two… Those are important., they’re very important for you to know.
Curtis: 48:12 And how long… And here, the other practical matter, it’s just happening right now, how long until you got something out of a… If you can justify the unit you’re moving into, how long, if somebody did not cooperate with you, how long would it take to get them out right now, if they didn’t wanna leave?
Rick:That is a really tough call, and the reason it’s a tough call is because your court doesn’t know what it’s doing yet, they tell me that they’re gonna start scheduling trials next week, well, you’re supposed to have at least 10 days notice of a trial…
I had a trial that didn’t go forward on March 17th, the first day that they closed the court… I haven’t gotten any notice. I have no idea.
So Curtis, it could take three, four months, an unlawful detainer prior to this Covid -19 would take two and a half to three months if everything went well from start to finish to sheriff lock out, I have no idea how long these cases are going to take
Curtis: Yeah.It’s such a crazy time. It’s just owning property myself, I just like… What’s the right thing to do here? Do you sell your property , do you just hold on tight? It’s just so difficult. 49:42 And then when people go for people who owned… What happens then when you have people not paying or how are the lenders going to look at this? This is such an unknown or not present situation,
Rick: I don’t have an answer for this, and the legislature doesn’t.
They’re not giving us any guidance. There are a lot of real estate developers buyers that are looking…
I guess a better word is praying on people who are having difficult times and offering embarrassing amounts of money to buy what would ordinarily be really good properties and I beg borrow steal. Try and hold on to your properties at some point… People are still moving here.
Southern California will always be valuable.
It’s sort of like, if you bought Amazon and you finally started to make a profit, they didn’t make profit for years, years and years, but you ought to have faith in them, Real estate you know it’s not going any place, it’s always gonna have value.
Curtis: I get asked all the time what’s gonna happen tomorrow, next year, and… I’m horrible predicting these things.
The only thing that I think I’ve discovered from the last 20 years being the business of the people who’ve been able to hold on… It’s always worked out okay.
But the difficult part is, when you owe a mortgage and you’re a dollar short and you have a lot of money in equity and you can’t sell and naturally the question that people need to ask themselves, how secure they are and can they write it out? And that’s when it gets difficult because I think the buy and hold strategy is a strategy to do and do 1031 exchanges, but in a perfect situation.
So that’s what makes it so hard for a lot of people right now, including myself.
Rick: My heart goes out to these people…And I look at our state government and I look at them and I say, Did you guys forget what made us the richest in our country? They don’t care, they just wanna take the money and spend it on… Well, it’s not on potholes. I see too, maybe.
Curtis: Right, right. Let me see what other questions we have that haven’t gotten answered.
For small claims court, can a person only file a claim a maximal of two times per year?
Rick: Oh no, no, no.
They helped you landlords, they helped you, they took all the restrictions off of you, you can file as often, as many as you want, as long as they are different things, but if it’s for back rent, excuse me, if it is for money owed under a breach of contract, it is not rent, remember that it is not rent, it is money’s owed for breach of contract, you can file as many of those as you want it. Unlimited jurisdiction. They will take them all.
And what about if somebody has a fourplex and they are the owner and it’s owner occupied, how are they covered? How does that work with… They’re fine in this situation?
Rick: Well, okay, so the fourplex owner occupies one of the units, and so they’ve got three tenants, they still have to give a reason for terminating the tenancy, and as far as rent increases, this is what 388 did, it said 1482 is right, 5% plus cost of living.
if it’s a single family, you can potentially go up to 10%… That’s our ceiling. Commercial, no limitations.
Curtis: Another thing that is gonna be brutal with the recent things they did is if rents go down or let’s just say, you are on a trend right now, let’s just say in a few months, things are really bad and you lower your rent , it’s gonna be difficult to get them back up.
Rick: when I talk with clients and I say, well, can you help your tenant out? Make certain that you do not tell the tenant that you are lowering their rent, you are allowing them an accommodation.
Curtis: This is really,I think important because if you were to lower their rent, then you now cannot go forward and raise it more than the rent control standards. That’s really important.
Rick: So we’re not saying we’re reducing your rent, we are allowing you an accommodation, you rent is still let’s say, $1500 a month.. We’re gonna lower it as an accommodation to you for a certain period of time to this amount for let’s say three months we’ll do this.
On month four, it’s $1500 again, because you don’t want to reduce rent, you just want to allow them an accommodation, be very careful to describe it that way.
Curtis: Okay, yeah, no, that’s huge. And any timeI have been in an important situation where I’m having you advise, I always made sure to use you as an attorney because it’s so easy to mess things up and have to start the process over again , and now probably more than ever,
Rick: Contact a lawyer, whether it be me or somebody else, don’t take the chance, it’s worth it to spend a consultation fee to know that you’re safe, that you’ll sleep better at night.
And when we talk about rents, it’s not just rent, let’s say that there’s a water bill that they pay, or let’s say there’s utilities that they pay or any other charges that they may pay that’s included in the rent that is now being shoved to the side from March 1st until August 31st.
Curtis: Wow, you mentioned something, and I don’t know if you cover this or not you said something to me on the phone about if somebody doesn’t do certain things correctly as a landlord, there’s fines up to six figures, let talk about that.
Rick: This is the CDC.
And they said… And they just planned out said: No evictions, and I think it’s till January 31st of 2021. No evictions, but the tenant does have to fill out this Covid -19 declaration, and they don’t fill it out, they have to create a declaration, legislature said, these are the things that should be included in it, if you try and start an eviction and the tenant is given you those items, provided those items in basic form, then you are subjected to potentially $100 to $250000 fine and a year in jail.
So if you think that anyone in your government, state or federal is on your side landlords…You’ve come to the wrong country, this is… It’s starting to look more and more like Canada, this is socialism.
Curtis: 57:59 So if you just do something, there would be a lot of people are just going to understand all the stuff, things are happy so quickly, I can see easily now doing something wrong is scary as shit.
Rick: It absolutely is.
That’s what I say, and if you call your lawyer, if you call me, and I’m gonna say, well, you know, it’s a grey area.
We’ve got two lawyers in the office with me, and we have somewhat heated discussions about, Well, what can you do… What can’t you do? Why… What could the penalties be… It’s crazy, this is a crazy time, and we’re not getting any help from either the legislature or the judges, because they don’t understand it either.
When you put a bill together for the legislature and you get it done within an hour of midnight on the last day, do you think that everyone has had an opportunity to review it?reflect on it now?No.
He just needed to do something otherwise, on September 1st, or actually it was September 2nd, the court was open for business, and the court was not ready to be open for visits.
Curtis: One of the things is, this is being recorded, so… What will have a recording? I’ll come out here. Surely. I’m probably hoping I have you on again soon in the next couple of months, right? ’cause you kinda get an update with you, it’s happening.
Rick: I’m gonna guess within two months, two to three months, we’ll have a better handle on what’s going on and how it’s working, because right now… The landlords have an email stream back and forth amongst each other, what happened when they went into court? What did the judge do? I listen, I watch all the stuff and there is no consensus of what is right or wrong, what should you do, what shouldn’t you do? Some people are more aggressive.
I know Dennis Block in Los Angeles is a lot more aggressive, and he was one of the people that suit the judicial counsel, which pleased me… But there’s confusion. There’s just confusion.
As I say, we debate this in our office, what should that 15-day notice look like, what should it have in it… When would you serve it? And these all need to be done before the end of the month to move forward.
Curtis: And I kind of don’t imagine things getting easier because as covid keeps going and things are shut down and we’re just having more and more problems, not even just with landlords.. It’s just gonna get crazy and crazy.
They don’t know what’s going on right now, I can’t imagine them having time to figure that out any time soon, because there’s gonna be so many other things that come up that are gonna be emergencies for legislation in our government. It’s just a crazy, crazy time for sure.
Rick: The legislature recognizes that this bill needs playing with, massaging, they understand that, they can’t possibly think that this was it, and now they’re done… If they do then they’re more foolish than I thought then.
Curtis: Somebody said, take us through what you can and can’t do, basically, what would be the steps if you wanted to get a non-paying tenant out on a month, a month…
Rick: Ok, I’m gonna presume that this is from March 1st forward.
The only hope that you have is you could serve this 15-day notice along with a declaration that they’d have to sign or fill out, somehow declaring that they are impacted by the Covid virus. If they do that, you are shut down, that’s it ,show’s over.
Don’t do this… you would probably still have to ask the court permission to have a summons issued, and remember, there’s two pieces to this unlawful detainer, eviction lawsuit, a summons, the courts blessing and the complaint, telling the tenant what it is that they did wrong and all the important information that goes with it, but without the summons, and I know a lot of lawyers filed a whole bunch of complaints without summons hoping that something would happen and then hoping when it finally opened up that the court was to… And I didn’t do that because I was afraid that that complaint and the summons that I file later would never get together, because the civil business office just isn’t that good.
These are not necessarily… They’re good, but they’re gonna be way over worked, they’re not gonna be able to handle this and it’s gonna be backlog, so if my thinking was just simply wait until I can put the two pieces together and then move forward with it.
But I talked to a lot of attorneys, we’re filing complaints right and left that I’ve been out of business for five months because I’m not filing any lawsuits other than extreme emergencies, and I don’t have a lot of faith that those two pieces are gonna get back together.
Curtis: So I mean, maybe the advice is you try to pay people to move, I mean, what a situation there is that abatement it.
Rick: This advice Curtis, you’ve nailed it . It’s the advice that I now give it, I never, in 40 years would have ever given to a client, and I’m writing letters for clients, it’s two tenants saying.. You know, I know this is a hard time, but here’s what we’re gonna try and do to help you, if you can move out within a couple of weeks, we’re gonna forgive all of your rent and we’re gonna… And this is like a Cash for Keys, and we’re gonna give you $2000 to help you, or you’ll forgive, let’s say $10000 of rent plus give you $2000, a windfall of $12000, and sometimes say, well, I need five.
You know what, $5000 depending upon the value of the rental agreement, the property itself might be worth it, it might be worth it to get someone in there that will pay rent, so just to make sure that you have a good contract and don’t give them… If you give them money a little bit, but not all of the money until they’ve handed you the keys, you inspected the unit to see that everyone is out, the worst case scenario is when all of a sudden they move out and a squatter moves in and they put the gas electric in their name, they’re getting mail, is it… Who are you guys? And you call the police and the police say, I’m sorry, this is a civil matter, we don’t get involved.
So this is kind of a cautionary, I know in this time with the Coronavirus, people are reticent to be exposing themselves to strangers.
Absolutely understand that.
Visual, putting it on video, video walk through some things like that, I think that’s a great idea.
The one thing that I don’t want is for someone to put a lock box on that front door, give the code to a prospective tenant because the next thing you know, that isn’t a prospective tenant, they’ve moved everything in and I’ve seen this.
Sometimes property managers get lazy or they’re afraid… No, just wear proper protective devices, masks and social distance, but don’t ever, ever let a tenant, a prospective tenant go into a unit, unescorted, ever… You’re just asking to call me up and I say, Gosh…
Why weren’t you there… And a lot of it… Now they can use the excuse, well I’m afraid of the Coronavirus, and a lot of property managers were just lazy, they just didn’t wanna go out there, well, that lazy could cost your owner a whole lot of money by the time the tenant is there not paying any money.
The only thing you can ostensibly do is give them a 30-day notice terminating a tenancy at will saying they acquired access to the property voluntarily because you gave him the key or you told him go in and have a look and they moved in, 30-day notice, and then you’ve got the lawsuit, how long has is that lawsuit gonna take? Three months..
Curtis: This sounds like another..nightmare you see.
If somebody has questions or wants to kinda make sure we go to the process correctly… How do they get a hold of you?
Rick: Okay. The easy number to remember. It’s 6-19 ’cause my office is Downtown, it’s 23 was Michael Jordan’s jersey number. That’s not why I picked it.
23 evict. evict.
It did not happen by accident.
So that’s my phone number. I have an email that I occasionally look at it as Curtis will know, it’s long, but it’s really easy. It’s all lower case. It’s richard at Richard C, like cat, alter law firm dot com.
So when you look at it and you type in, it looks like Richard at Richard culture laawfrim dot com.
Curtis: I’ll send this out to everyone. We’re gonna… This is gonna be recorded, so I’ll do a follow-up email.
Rick: Curtis, I’m gonna suggest that we re-circle this in month and a half, two, probably two months, because then some of the dust will have settled and we’ll know a lot more, but if you’ve got questions, I always tell people before they call me up, write your question down, I get a lot of calls all day long, I used to be in court a lot up , not so much anymore, but write your question down so that when I get back to you… You’ll have your question. Lots of times people I call and I say, hi it’s Rick Alter, what can I do for you? And they say, Well, I have a question which is great, I wanna answer your question as best I can, and they say, Oh, and I’ll say, well, you know, nice weather and chat just a little bit… Maybe it’ll trigger something. And I said, Well, when you’re thinking your question, write it down, so I’m telling you in advance, folks, write your questions down, and lots of times I get people… And for the life of me, I don’t understand. They email me questions.
Make sure if you do email me a question, that you put a phone number down, here’s the reason, I can answer the question that you asked me, but my answer is going to cause you to think of seven other things that you want to ask, so rather than have an email stream of two dozen things, why don’t we just get it done in a quick phone call… that’ easier.
Curtis: Okay, well, I’m gonna send an email out, I’m gonna put a link to the video. Everyone, I have a little polling question, trying to figure out how often I should do these… If you guys have any ideas as part of that, we made this better, I really appreciate you coming on here, Rick.
Rick: Curtis do you know what would make it better?
If the Corona Virus were gone and we could do this in person, so I could actually see people other than you.
Curtis: Yeah. I just gotta figure that out. So this is new to me. So we’ll get it down. I think we do this a little bit more often. We were doing happy hours before, so we’ll probably do coffee… I don’t know. Well, figure this out. We’ll keep on going.
Thank you very much, Rick. I appreciate it.