C.A.R. RED ALERT
OPPOSE AB 828 – UNCONSTITUTIONAL RENT REDUCTION BILL
C.A.R. OPPOSES AB 828 (Ting), a bill that, among other things, effectively forces a 25 percent reduction in rents. C.A.R. opposes the bill because it is unconstitutional and provides no financial protection for mom-and-pop property owners who still must pay their mortgages and have a legal obligation to repair and maintain their properties.
In response to the COVID-19 crisis, the Judicial Council of California has halted all eviction lawsuits – otherwise known as “unlawful detainer” lawsuits – statewide. Additionally, Governor Newsom’s March 27th Executive Order, among other things, allows tenants to delay payment of rent due to the COVID-19 crisis. Lastly, many local governments have enacted ordinances that freeze rents and halt the issuance of eviction notices of any kind during the pandemic.
On top of these existing COVID-19 state and local tenant protections, AB 828 creates a court-ordered reduction of rent by 25% for 12 months for tenants who claim they cannot pay due to the COVID-19 crisis. There is no way for property owners to recoup this court-ordered lost rental amount, even though they are still legally obligated to continue paying their mortgage, taxes, and insurance and maintain and repair the property.
C.A.R. Opposes AB 828 Because:
It is unconstitutional. AB 828 FORCES courts to interfere with existing contracts in violation of both the California and U.S. Constitution. Not even a pandemic should undermine the California and U.S. Constitution.
It is unnecessary. The state and/or local governments have already acted to limit evictions and rent increases and impose temporary payment moratoria during this emergency, protecting tenants from uncertainty.
It does not require any real demonstration of hardship. AB 828 only calls for a tenant to show “increased costs for household necessities OR reduced household earnings” without establishing a reasonable threshold for the financial impact. Furthermore, if the increased costs or reduced earnings happened during March 4, 2020 and March 4, 2021, the court must assume that was caused by the Covid-19 crisis; meaning, the tenant has no obligation to show the linkage in the change of circumstances to the Covid-19 crisis.
It places undue financial hardship on property owners without providing any assistance. Property owners are given no recourse to recoup this lost rental income, even though they are still legally obligated to continue paying their mortgage, taxes, and insurance and repair and maintain their properties. Legislators should keep in mind that many rental housing owners are retirees who count on rental income to cover the expenses associated with providing rental housing as well as their own personal income, which may already be limited due to existing emergency measures.
It discourages investment in the building of new housing. Adding more uncertainty to the rental housing market discourages builders from investing in the creation of desperately needed rental housing. That unmet need will NOT go away with this pandemic.
It creates additional costs for state and local governments when tax revenues will already be dramatically reduced. Courts, local housing authorities, and other agencies will either incur new costs or see reduced revenue if AB 828 is enacted.
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C.A.R. Government Affairs Team