Jackson Tidus Clients and Friends:
This follows our previous advisories regarding Executive Order N-28-20 and Executive Order N-37-20, that collectively suspended state law limitations on local ordinances restricting residential evictions and also provided residential tenants with an extended sixty-day period in which to respond to an action for eviction due to non-payment of rent.
On March 27, 2020, the same day Executive Order N-37-20 was issued, the Governor also issued Executive Order N-38-20 authorizing the Judicial Council of California to adopt certain rules meant to suspend relevant statutes that are inconsistent with the above-referenced Executive Orders. On April 6, 2020, the Judicial Council adopted, effective immediately, Emergency Rule No. 1, (the "Rule") for the purpose of implementing the goals of the Governor's directive to address the crisis surrounding residential tenants who have experienced COVID-19 pandemic-related loss of income, as well as to protect litigants and court staff from having to appear at unlawful detainer proceedings.
Before the COVID-19 pandemic arrived, when a landowner filed a verified complaint for unlawful detainer due to a tenant's nonpayment of rent, a Court was required to issue a summons instructing the tenant that a formal response must be made - on an expedited basis - within five (5) days. Executive Order N-37-20 extended the time period in which a tenant was required to respond by an additional sixty (60) days for any such summons that was issued through May 31, 2020, as long as the tenant otherwise complied with certain criteria.
This new Rule formally suspends both the statutory requirement imposed on a court to even issue the summons, along with the ability of a court to enter a default judgment on an unlawful detainer complaint that a tenant fails to respond to during the time period that the Rule is in effect, unless the court finds that either action is necessary "to protect public health and safety." The Rule, which applies to both residential and non-residential properties, will remain in effect for an additional ninety (90) days after the Governor declares that the state of emergency related to the COVID-19 pandemic is lifted, or until the Rule is amended or repealed by the Judicial Council.
Given the uncertainty surrounding the COVID-19 pandemic, it is unclear when the Governor will lift the state of emergency that was declared on March 4, 2020; however, it is possible that the state of emergency will exist through the end of May, if not longer. If the state of emergency is not lifted until the end of May, and the Rule is not otherwise amended or repealed, landowners will not be able to file and serve an unlawful detainer action to evict tenants on an expedited basis until September.
While the adoption of this Rule has the effect of extending the time period that landowners will be unable to file an unlawful detainer action to evict tenants for nonpayment of rent on an expedited basis, similar to the Executive Orders that were previously issued, the Rule does not (1) excuse a tenant's underlying obligation to pay rent, nor (2) prohibit a landowner from seeking other, non-expedited remedies for possession following the nonpayment of rent by a tenant, to the extent available pursuant to the terms of the lease, such as: (a) file a claim for breach of the lease to collect monetary damages; (b) application of a security deposit against the rent obligation; (c) make demand for payment on a guarantor of the lease; and (d) seemingly serve a Notice to Pay Rent or Quit and declare the Lease terminated after expiration of the Notice. As drafted, there is seemingly nothing preventing a landowner from serving a Notice to Pay Rent or Quit declaring that a failure to pay will terminate the Lease. At the end of the Notice period, the landowner can declare the Lease terminated. As long as the landowner does not accept subsequent payments as a cure of the default, then when the suspension on issuing unlawful detainer summons is lifted, the Lease is already terminated, and the landowner can immediately proceed to an unlawful detainer action.
The landowner still has other remedies to recover possession, just not on a statutorily expedited basis. The landowner may still file an action for ejectment and quiet title as these remedies are not impacted by the Rule and are still available to landowners on the standard filing timeframes, which provide the tenant with thirty (30) days to respond to the complaint.
Overall, a landowner seeking to recover possession of the property as soon as possible should continue to serve a notice to pay or quit on any tenant in breach of a lease agreement for nonpayment of rent to create a record, ultimately declaring an unwanted lease terminated. Then it can proceed with a common law action to obtain possession or wait until the suspension on unlawful detainer actions is lifted. Otherwise, the landowner can keep the lease in place and simply file an action for unpaid rent. California has prevented the landowner from quickly taking back possession, but not from exercising other valuable legal and contractual rights.
If you have questions regarding these issues, please do not hesitate to reach out to Charles Clark or Miles Carter or other members of our Legal services team of legal professionals to assist you. We also encourage you to check back in on our Media Center for current updates as the situation develops.
Charles M. Clark is an experienced trial attorney that practices in all areas of civil litigation, including contractual, real estate and commercial disputes, securities fraud, trust disputes and insurance defense. Mr. Clark has represented a variety of clients from large real estate developers, commercial real estate investors and educational institutions to corporations of all sizes from the initiation of the dispute through trial or arbitration and appeal. Mr. Clark is also a member of Jackson Tidus' Board of Directors.
Phone: (949) 851-7659
email: cclark [at] jacksontidus.law
A. Miles Carter focuses his practice on the representation of residential and commercial builders in the development and sale of master-planned residential communities, mixed-use developments, high-rise condominium projects, urban infill, and commercial projects. Miles specializes in the preparation of governing instruments and related sales documents for compliance with the current regulations and guidelines imposed by the California Department of Real Estate, Fannie Mae, FHA, VA, and other federal, state and local government regulatory agencies. He also advises real estate developers on all aspects of real property disclosure laws related to the disposition of residential property, including construction defect risk management and insurance coverage matters. Miles also counsels clients on issues related to construction and permanent loans, including mezzanine financings, secured by interests in commercial and residential property.
Phone: (949) 851-7648
email: mcarter [at] jacksontidus.law