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California Rent Relief: Newsom Aims for 100 Percent Compensation

The California Rent Relief package in response to COVID-19 may expand to include 100 percent compensation for unpaid rent owed. Governor Newsom has proposed to broaden the existing rent relief package signed earlier this year. This is welcome news for small landlords who are trying to stay afloat financially as a result of the COVID-19 eviction moratorium

Newsom’s proposal expands California Rent Relief package.

Currently, California’s eviction moratorium expires on June 30. Before that, Newsom has pledged to double California’s pandemic rent relief budget to $5.2 billion. This includes an additional $2.6 billion from the federal government.

Under the proposed plan, the state may cover 100 percent of all unpaid rent. This covers unpaid rent both retroactively and going forward. In addition, Governor Newsom intends to spend $2 billion from the state general fund to pay outstanding water and utility bills.

The state legislature will negotiate the details on exactly how the plan will work. They will also determine who will be eligible for 100 percent compensation. Among other decisions, they will need to determine income limits for debt forgiveness, and whether to pay the money to landlords or tenants.

California mom and pop landlords hit hard by eviction moratorium. 

During the COVID-19 pandemic, many Bay Area renters have fallen behind on their rent payments. As a result, small rental property owners who depend on rental income were hit hard. While tenants were living rent-free, mom and pop landlords still had mortgages and bills to pay. The reality is, most small business landlords don’t have the financial reserves to absorb month after month of unpaid rent. 

While some landlords may have been able to pause some of their mortgage payments, they’re still responsible for repairs and maintenance for their rental properties.

How the current California Rent Relief program works:

In January 2021, Newsom extended the eviction moratorium for low-income renters. To receive eviction protection, renters had to pay at least 25% of their rent. Under the existing plan, landlords can apply to receive 80% of the back rent owed. However, they must agree to forgive the remaining 20% of the unpaid rent. In addition, the program only covers back rent from April 2020 and March 2021. 

To qualify for rent relief, tenants must earn less than 80% of the area median income, or have lost their jobs within the past ninety days. Renters with landlords who choose not to participate can apply for rent forgiveness of 25 percent, but they still owe the rest.

Bay Area cities offer additional rent relief.

Several cities in the Bay Area, including San Francisco, Oakland and Fremont, offer their own rent relief programs targeted to renters with lower incomes. In some counties, renters and landlords could be eligible for 100% compensation for unpaid rent.

The experienced team of San Francisco landlord-tenant attorneys at Steven Adair MacDonald & Partners can clarify how the California Rent Relief program impacts you. To schedule a consultation with one of our attorneys, please call 415-956-6488.

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