What Happens if a Tenant is Denied the 80/20 Rental Assistance?
In Los Angeles there are two rental assistance programs. Los Angeles City has its own and the rest of Los Angeles applies through the California state rental assistance program. I am frequently asked what would happen if a tenant is denied the 80/20 rental assistance. Here are my thoughts on the matter.
To qualify for the rental assistance:
The tenant must meet the low income requirement as defined by Los Angeles City (50% median income) and California State (80% median income).
The tenant must still be occupying the unit and have not moved out. If the tenant moves out the tenant and landlord are no longer eligible for the rental assistance.
The 80/20 program only covers April 2020-March 2021 back rent. Tenants still need to pay 25% minimum of their rent for April 2021-June 2021 to avoid eviction.
The rental assistance programs are designed the help very low income families stay in their homes, thus I anticipate funding will run out and not reach people in higher end apartments or single family residences.
Under both Los Angeles City and Los Angeles County eviction moratoriums, once those moratoriums end tenants will have 12 months to pay back their rental arrears that accumulated between March 2020 and the expiration of the moratorium. The soonest landlords can file suit for the back rent would be August 2022. I won't go over the moratoriums in more detail as I've discussed it in several prior blogs.
The flaw in this, tenants who do not get the rental assistance will in effect need to pay double rent once the moratoriums are lifted. Paying rent as is can be very challenging, nonetheless twice the rent if you were a tenant that did not pay and did not save any money to pay in the future. I feel tenants were misled by officials with the guise "don't pay your landlord rent and don't worry about it" because a tenant is still responsible for the back rent one way or another.
Here are some possible outcomes I see playing out in the event the tenant does not get the rental assistance:
Tenant moves out and the landlord files suit for the back rent in August 2022. There are ways a landlord can find where a tenant has moved to. Down the line the landlord will likely get a judgment against the tenant and the tenant will have that on their credit.
Tenant stays in the unit, pays the minimum 25% as required to avoid eviction, keeps current from July 2021 going forward, rides out the 12 month payback period and then moves out. Landlords will then file suit to get the back rent.
Tenant stays in the unit, pays the minimum 25% as required to avoid eviction, keeps current from July 2021 going forward, rides out the 12 month payback period, tenant stays in the unit and the landlord files suit to get the back rent, likely gets a judgment and then begins trying to collect on judgment through legal means while tenant is still occupying the unit.
Tenants and landlords negotiate lease termination. This option makes the most sense for tenants and landlords when it is very apparent the tenant will be unable to pay their back rent.
The tenants and landlords get a resolution on paper potentially avoiding any lawsuits.
Landlords get possession of the unit.
Tenants move on with their lives in a different apartment. Essentially a clean start somewhere else.
It is unknown what else might be done or changed on or before the state eviction moratorium is lifted on June 30, 2021. I don't think it will be extended and I don't believe any more rent relief will be provided. Landlords and tenants benefit the most from working with each other to resolve any back rent in the event rental assistance is not provided.
Should you be facing issues with back rent and the rental assistance being denied, feel free to reach out to me by phone at (818) 306-0686 or by email at email@example.com
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The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship