Proposed New Law
1. 25% Automatic Rent Reduction
There is a pending Assembly Bill 828 which will require all residential landlords to reduce rent by 25% for a year for renters with coronavirus hardships.
Comment: I hope everyone who is reading this fires off an email to their elected representatives in the Assembly and the Senate and object to this proposed bill.
2. Premise Liabilty
In the case of Hedayatzadeh v. City of Del Mar (2020) 44 Cal.App.5th, 555, the Court of Appeal affirmed the superior court’s ruling that no dangerous condition of public property can be proven when a pedestrian was struck and killed by a train in Del Mar. The railroad is not responsible to erect barriers to prevent pedestrians from going around guardrails towards the railroad tracks.
The Court of Appeal has determined that the superior court judge erred in ruling that a commercial holdover provision increasing the rent by 150% if the tenant remained on the premises after the lease expired, was an unlawful penalty. The landlord, according to the Court of Appeal, was entitled to enforce the holdover provision against the tenant.
In this case, the trial court held that the holdover rent provision was an unlawful penalty. The Court of Appeal rejected the trial court’s decision finding that landlord and tenant dealt at arms-length, thereby triggering the presumption that the lease and lease amendment were valid agreements, free from coercion. Constellation-F, LLC v. World Trading 23, Inc. (2020) 45 Cal.App.5th 22.
4. Fannie-Freddie Will Not Require Sum Repayments
Both Fannie and Freddie announced last Monday that borrowers who benefit from the programs that will let them skip mortgage payments because of the virus will not have to pay lump sum repayments when the crisis passes. Fannie-Freddie has still not issued guidelines to lenders about what terms they should be offering for repayment of missed payments. Currently, loan servicers face liquidity crisis because they are required to advance cash to the mortgage investors even when the borrowers are not paying. Although they are eventually repaid by Fannie and Freddie, non-bank servicing companies are hurting for money in the meantime.
Currently, borrowers are only required to claim that they are struggling financially in order to qualify for skipped payments on Fannie and Freddie loans. They are not required to send in any proof of their financial struggles.
About the Author
Scott Souders is a real estate attorney who has practiced real estate law in excess of 43 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.