Governor Gavin Newsom today issued an executive order banning the enforcement of eviction orders for renters affected by COVID-19 through May 31, 2020. The order prohibits landlords from evicting tenants for nonpayment of rent and prohibits enforcement of evictions by law enforcement or courts. It also requires tenants to declare in writing, no more than seven days after the rent comes due, that the tenant cannot pay all or part of their rent due to COVID-19.
The Corona/COVID19 Pandemic has quickly reshaped the landscape for businesses, property owners, and consumers in ways unimaginable just 6 months ago. Governor Newsom's most recent order exemplifies the difficult task of crafting solutions without causing a myriad of legal issues.
Landlords are left to wonder how they will make their mortgage payments and perhaps survive without losing their investment. Whether landlords are mom & pop investors, or anonymous corporate investors, the investments are significant and it's difficult to foresee how they will be able to recover the lost revenue, maintain rental properties, and meet their own financial obligations secured by tenant occupied properties.
What are landlords to do if upon the expiration of the Governor's executive order tenants file for bankruptcy thereby cancelling obligations to their landlords. Landlords may be left without recourse to recover rent arrears and be precluded from evicting the tenant. Adding to their losses, if landlords fall behind on their mortgages, lenders will promptly demand loans be paid current. Landlords may well be the ones left holding the proverbial "bag"!
The above is only a small sample of the legal issues resulting from the extraordinary circumstances we are facing today. How the issues are resolved remains to be determined.