AB 1436

  • California Assembly Bill
  • 2019-2020 Regular Session
  • Introduced in Assembly Feb 22, 2019
  • Passed Assembly May 29, 2019
  • Senate
  • Governor

Tenancy: rental payment default: mortgage forbearance: state of emergency: COVID-19.

Abstract

(1) Existing law regulates specified terms and conditions of tenancies. Existing law authorizes a landlord to demand security at the beginning of a tenancy for residential property and specifies the purposes for which the security may be used, including, among others, compensating the landlord for the tenant's default in payment of rent. This bill would prohibit a landlord from applying a security deposit to satisfy a financial obligation that accrued between the date a state of emergency relating to the COVID-19 pandemic was declared and either April 1, 2021, or 90 days after termination of the state of emergency, whichever is earlier (hereafter "effective time period") , or applying a monthly rental payment for the satisfaction of an obligation other than the prospective month's rent, unless the payment or security is specifically designated by the tenant for the obligation, as specified. The bill would provide that a covered tenant who failed to pay rent or any other financial or monetary obligation that accrued during that effective time period shall not be deemed to be in default and would prohibit any action for recovery of unpaid rent or other sum until 12 months after the effective time period. The bill would define "covered tenant" as a tenant who is unable to satisfy rent accrued during the effective time period due to a loss of income or increased expenses resulting from COVID-19 and who provides a written statement to that effect to their landlord, as specified. The bill would exclude a commercial tenant from the definition of "covered tenant." The bill would provide that if a requirement in any local initiative, ordinance, regulation, or other policy conflicts with these provisions the provision that provides greater protection to covered tenants controls. This bill would prohibit certain entities, including a housing provider, from using an alleged default in rent that accrued during the effective time period as a negative factor for the purpose of evaluating creditworthiness or for other specified purposes. (2) Existing law provides that a tenant is guilty of unlawful detainer if the tenant continues to possess the property without permission of the landlord after the tenant defaults on rent, among other reasons. This bill would provide that a covered tenant is not guilty of unlawful detainer if the alleged default in payment of rent or other financial obligation under the tenancy accrued during the effective time period. The bill would require a landlord, in an action to recover a debt arising from an alleged default in rent or other financial obligation accrued during the effective time period to submit in the verified complaint or other document submitted under penalty of perjury the amount of any payments, mortgage forbearance, mortgage forgiveness, or property tax reduction to offset, replace, or compensate the creditor for lost rental income, and would require a court to offset the amount of rental payments as specified. The bill would require the landlord to affirmatively plead in the complaint that the tenant is not a covered tenant, and would provide the defendant 30 days to respond to the complaint. (3) Existing law prescribes various requirements to be satisfied before the exercise of a power of sale under a mortgage or deed of trust. In this regard, existing law requires that a notice of default and a notice of sale be recorded and that specified periods of time elapse between the recording and the sale. Existing law establishes certain requirements in connection with foreclosures on mortgages and deeds of trust, including restrictions on the actions mortgage servicers while a borrower is attempting to secure a loan modification or has submitted a loan modification application. This bill would enact the COVID-19 Tenant and Homeowner Relief Act of 2020. The bill, with respect to residential mortgage loans, would authorize a borrower experiencing a financial hardship during the covered period to request forbearance from any mortgage obligation by submitting a request to the borrower's mortgage servicer. The "covered period" would be defined as 90 days after the termination of the COVID-19 state of emergency or April 1, 2021, whichever comes first. The bill would require the mortgage servicer to provide the forbearance requested for the period requested by the borrower, up to an initial period of 180 days, the length of which would be required to be extended at the request of the borrower for a total forbearance period of up to 12 months. If the borrower requests a forbearance period greater than 90 days, the servicer would be required to provide an initial forbearance term of not less than 90 days, and automatically extend it for an additional 90 days, unless the servicer confirms the borrower does not want to renew the forbearance. The bill would prohibit a mortgage servicer from misleading or making misrepresentations to a borrower about forbearance and repayment options. The bill would require a mortgage servicer, upon placing a mortgage obligation in forbearance, to provide the borrower written notification of the forbearance terms, treatment of payments, and other options available to the borrower at the end of the forbearance period. The bill would require the servicer, no later than 30 days before the end of the forbearance, to notify the borrower of their options to modify their loan or reinstate their mortgage account to current status, as provided, and provide a written notice, within 30 days of the original notification, of their rights and obligations with regard to their loan modification or reinstatement, as provided. The bill would prohibit a mortgage servicer from assessing, accruing, or applying fees, penalties, or additional interest to the borrower's account beyond specified scheduled or calculated amounts. The bill would require a mortgage servicer that claims investor guidelines or applicable law prohibit implementation of postforbearance modification or reinstatement on the required terms, to notify the borrower and to present documentation, as specified. The bill would require the mortgage servicer, if the borrower is unable to return to making regular mortgage payments, to evaluate all loss mitigation and foreclosure prevention options, and, if the borrower qualifies, to implement the option with no penalties, late fees, modification fees, or additional interest beyond specified scheduled amounts. The bill would also authorize a mortgage servicer, if a borrower does not qualify for loss mitigation or foreclosure prevention options to pursue foreclosure after expiration of the covered period. The bill, with respect to multifamily mortgage loans, would authorize a borrower to submit a request for forbearance to the borrower's mortgage servicers, affirming that the multifamily borrower is experiencing hardship during the COVID-19 emergency. The bill would authorize a mortgage servicer, upon request from a multifamily borrower, to request reasonable documentation of a decrease in rental income in order to demonstrate financial hardship. The bill would define "financial hardship" for purposes of these provisions to mean a decline of an unspecified percent of average monthly rental income over the 2 most recent calendar months, as specified. The bill would require a mortgage servicer, upon satisfactory demonstration of financial hardship, to provide the forbearance for not less than 30 days, subject to extension. The bill would authorize a borrower harmed by a violation of the above requirements to bring an action for injunctive relief, damages, restitution, and any other remedies available. The bill would require a court to award attorney's fees and costs to a prevailing borrower.

Bill Sponsors (15)

Votes


Actions


Jul 28, 2020

Senate

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD.

  • Amendment-Introduction
  • Referral-Committee
  • Reading-2
  • Reading-1
  • Amendment-Passage
Com. on JUD.

Jul 02, 2020

Senate

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD.

  • Amendment-Introduction
  • Referral-Committee
  • Reading-2
  • Reading-1
  • Amendment-Passage
Com. on JUD.

Jul 01, 2020

Senate

Re-referred to Com. on JUD.

  • Referral-Committee
Com. on JUD.

Jun 11, 2020

Senate

Re-referred to Com. on RLS.

  • Referral-Committee
Com. on RLS.

Senate

Withdrawn from committee.

Jun 10, 2020

Senate

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on HUMAN S.

  • Amendment-Introduction
  • Referral-Committee
  • Reading-2
  • Reading-1
  • Amendment-Passage
Com. on HUMAN S.

Jun 12, 2019

Senate

Referred to Com. on HUMAN S.

  • Referral-Committee
Com. on HUMAN S.

May 30, 2019

Senate

In Senate. Read first time. To Com. on RLS. for assignment.

May 29, 2019

Assembly

Read third time. Passed. Ordered to the Senate. (Ayes 78. Noes 0. Page 2098.)

May 20, 2019

Assembly

Read second time. Ordered to third reading.

May 16, 2019

Assembly

From committee: Amend, and do pass as amended. (Ayes 13. Noes 0.) (May 16).

Assembly

Joint Rule 62(a), file notice suspended. (Page 1760.)

Assembly

Read second time and amended. Ordered returned to second reading.

May 15, 2019

Assembly

In committee: Set, first hearing. Referred to APPR. suspense file.

  • Referral-Committee
APPR. suspense file. APPR

May 13, 2019

Assembly

Joint Rule 62(a), file notice suspended. (Page 1609.)

Apr 29, 2019

Assembly

Re-referred to Com. on APPR.

  • Referral-Committee
Com. on APPR.

Apr 25, 2019

Assembly

Read second time and amended.

Apr 24, 2019

Assembly

From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 8. Noes 0.) (April 23).

Mar 28, 2019

Assembly

Re-referred to Com. on HUM. S.

  • Referral-Committee
Com. on HUM. S.

Mar 27, 2019

Assembly

From committee chair, with author's amendments: Amend, and re-refer to Com. on HUM. S. Read second time and amended.

Mar 25, 2019

Assembly

Referred to Com. on HUM. S.

  • Referral-Committee
Com. on HUM. S.

Feb 25, 2019

Assembly

Read first time.

Feb 23, 2019

Assembly

From printer. May be heard in committee March 25.

Feb 22, 2019

Assembly

Introduced. To print.

Bill Text

Bill Text Versions Format
AB1436 HTML
02/22/19 - Introduced PDF
03/27/19 - Amended Assembly PDF
04/25/19 - Amended Assembly PDF
05/16/19 - Amended Assembly PDF
06/10/20 - Amended Senate PDF
07/02/20 - Amended Senate PDF
07/28/20 - Amended Senate PDF

Related Documents

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