Being a California landlord was not an easy task before COVID-19 hit. A variety of laws surrounding the nature of evictions were already in place. Yet since the CARES act at the federal level, and Gavin Newsom’s actions for renters at the California level, things have only become more difficult for landlords. One key component to understand is that a tenant who claims a financial hardship in connection to the COVID-19 programs, must also be able to draw a connection to their financial hardship and COVID-19.
Valid Examples of a Connection to COVID-19
An easy example of a profession that has been impacted by COVID-19 would be ME (even though I’m not a tenant). As a lawyer, I have appeared in Court far less frequently since COVID-19 hit. This means less billable hours which translates to a demonstrable reduction income. Similar professions that would have no trouble demonstrating a connection to the pandemic might be restaurant, travel, or customer service in general.
Professions Unlikely to Be Impacted By COVID-19
A poor example might be if someone like a Gavin Newsom were to claim financial hardship due to COVID-19 (also not likely to be a tenant). While I’m not exactly sure how the Governor’s compensation works, I strongly doubt he has seen any mandated reduction in pay. This means, theoretically, his ability to pay his bills has not changed due to COVID-19, which would make him ineligible for any COVID-19 hardship considerations.
Other industries that might face questionable scrutiny if they were to claim that COVID-19 impacted their financial situation would be government jobs, doctors, and EMTs (Side note, I think evicting EMTs in today’s social landscape would be bad for business).
Opportunity for Gamesmanship
Suffice to say, it’s likely that some tenants will try to extend this definition beyond the scope of what the law was intended for. In such situations, landlords need to think carefully on whether to challenge their tenants definition of a financial connection to the hardship. Below are two financial situations I personally have witnessed, where I could see some gamesmanship in play if either were to claim a hardship.
Hardship Due To 401k Reduction
Many corporations have attempted to shore up costs by discontinuing matching employees’ 401k investments (article discusses this issue here). This probably impacts tens of thousands of individuals who still make over $100k.
Such an individual could truthfully state under oath that their overall compensation has been reduced by COVID-19. Yet at the same time, their ability to actually pay their rent has likely not changed, as the 401k match would never have hit the tenant’s checking account used to pay rent.
Converging Typical Financial Struggles Into COVID-19
Another challenge to landlords would be to decipher a COVID-19 hardship outside of any other type of financial hardship. To illustrate, last month, an individual I’m familiar with (let’s call him/her BILLY) was essentially fired due to perpetually failing to show up for work. Billy isn’t exactly the most driven individual (to put it politely) nor does Billy tend to do well in job interviews.
In my opinion, Billy would have been unable to pay rental costs even if COVID-19 had not happened. Yet Billy may be able to truthfully claim that the job market is too weak right due to COVID-19.
It will be interesting to see what the Court’s begin to adopt as the standard for a nexus to COVID-19. As any California landlord can tell you, the Courts tend to favor tenants on matters where the law or evidence is limited.
Landlords should proceed with caution on picking which tenants they wish to challenge hardship claims on. If you’re interested in trying to challenge a tenant’s claim to the pandemic, I would strongly recommend you get in contact with a lawyer in your area who is very familiar with how the way courts are interpreting this issue. I personally am monitoring this very closely in the Sonoma, Napa and Marin Counties.