BILL ANALYSIS Ó
AB 265
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 265 (Ammiano) - As Amended: April 6, 2011
As Proposed to be Amended
SUBJECT : Tenancies: Unlawful Detainer
KEY ISSUE : Should a tenant who has been served a three-day
notice to quit or pay rent be given a right to redeem the
tenancy after the three-day period expires by paying the owner
all rent due and reasonable costs associated with filing an
unlawful detainer?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill seeks to address a problem in which a tenant who
receives a three-day notice to quit or pay rent could pay the
amount owed if given more than three days. Under existing law,
once the three-day notice period has passed, a landlord is not
required to accept rent after the third day and can proceed with
filing an unlawful detainer. For example, a tenant who faces an
unexpected medical expense or takes a new job with a later pay
date might easily make the payment if given a few more days. In
addition, low-income tenants are often eligible for rental
assistance from charitable organizations, but it generally takes
those organizations longer than three days to process and
arrange for payment to the landlord. This is particularly a
problem in California, which is only one of 17 states that have
an extremely short three-day notice period. This bill seeks to
address this problem by creating a "right of redemption" - a
remedy available in many other states -so that a landlord may
proceed with an unlawful detainer after the three-day period has
expired but is still required to accept payment from the tenant
so long as the tenant tenders all rent due and any reasonable
costs and fees that the landlord incurred in filing the unlawful
detainer. In order to address reasonable concerns raised by
some of the opponents of this bill, the author has agreed to
take amendments in this Committee. These amendments are
reflected in the attached mock-up and discussed below. The bill
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is supported by numerous tenant advocacy groups, legal aid
clinics, civil rights groups, labor organizations, and the City
of Santa Monica. The bill is opposed by various property
management, landlord, and realtor groups.
SUMMARY : Gives a tenant who has received a three-day notice to
quit or pay rent the right to redeem the tenancy after the three
day period has expired by tendering rent due and other fees and
costs, as specified. Specifically, this bill :
1)Permits a residential tenant who has been served a three-day
notice to quit or pay rent to redeem the tenancy and continue
in possession by tendering to the owner or the owner's agent
all of the following:
a) The amount of rent specified in the three-day notice.
b) Any subsequent rent that has become due under the lease
or rental agreement.
c) Any reasonable court costs or attorney's fees incurred
by the plaintiff as of the date of tender, subject to the
following:
(i) No payment of costs and fees are required if
tender is made prior to the filing of an unlawful
detainer action.
(ii) Reasonable attorney's fees shall not exceed $350
if tender is made prior to the commencement of trial
if the matter is contested, or at any time if the
matter is not contested.
1)Provides that upon tender of the total amount specified,
including rent due and any applicable costs or fees, prior to
the entry of judgment in an unlawful detainer action,
plaintiff shall file with the court a request for dismissal of
the action. If the amount tendered is not accepted by the
owner or the owner's agent, the court shall upon ex parte
application grant conditional judgment for the tenant's
payment of the amount due.
2)Upon tender of the total amount due after entry of judgment
and before plaintiff's recovery of possession, the court shall
grant relief from forfeiture pursuant to the procedures set
forth pursuant to Code of Civil Procedure Section 1179 and
restore the tenant to possession.
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3)The right to redeem under this section is in addition to, and
does not limit, any right a tenant may have to seek
discretionary relief from forfeiture pursuant to any other
law.
4)Provides that the tenant's tender of any amount due must be
made by cashier's check, money order, or other certified form
of payment, except that payment tendered on behalf of a tenant
by a nonprofit organization or governmental agency, where the
entity states in writing that it makes no claim to right of
possession of the premises through the payment of rent, shall
be considered part of the tender regardless of the form of
that payment.
5)Provides that a tenant may not exercise the right to redeem as
provided by this bill more than once in any twelve month
period.
EXISTING LAW :
1)Provides that a tenant is guilty of unlawful detainer when he
or she continues in possession of rental property after three
days' written notice to quit for non-payment of rent, as
specified. (Code of Civil Procedure Section 1161, paragraph
2.)
2)Provides that a court may, at its discretion, grant a tenant
post-judgment relief against forfeiture of a lease or rental
agreement, whether or not the tenancy has terminated, and
restore the tenant to his or her tenancy in the case of
hardship. However, no relief of forfeiture may be granted
except on condition that payment of full rent is made. (Code
of Civil Procedure Section 1179.)
COMMENTS : This bill seeks to address a problem in which a
tenant who receives a three-day notice to quit or pay rent could
raise the amount owed if given more than three days. Under
existing law, once the three-day notice period has passed, a
landlord is not required to accept rent after the third day and
can proceed with filing an unlawful detainer. For example, a
tenant who faces an unexpected medical expense or takes a new
job with a later pay date might easily make the payment if given
a few more days. Similarly, low-income tenants are often
eligible for rental assistance from charitable organizations,
but it generally takes those organizations longer than three
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days to process and arrange for payment to the landlord. This
is particularly a problem in California with its very short
three-day notice period. This bill confronts this problem by
creating a "right of redemption" - a remedy available in many
other states - by which a landlord may proceed with an unlawful
detainer after the three-day period has expired, but is
nonetheless required to accept payment from the tenant
thereafter, so long as the tenant tenders the full rent owed,
any rent accrued since three-day notice, and reasonable costs
and fees that the landlord incurred in filing the unlawful
detainer.
Evolution of AB 265 : As originally introduced, this bill sought
to address the above problem by extending the notice period for
non-payment of rent from three days to fourteen days.
California is one of about 17 states that provide only a
three-day notice for non-payment of rent. The majority of
states provide for a longer notice period, ranging from five
days to 30 days, albeit with the vast majority falling within a
7 to 14-day period. For example, tenants in Kansas, Indiana,
and North Carolina receive a 10-day notice to pay or quit;
tenants in Tennessee, Vermont, and Massachusetts receive a
14-day notice to pay or quit; and tenants in Wisconsin and the
District of Columbia receive a 30-day notice to pay or quit.
However, opponents of this bill objected that extending the
notice period would have two detrimental consequences from the
property owner's perspective: first, it would effectively give
tenants an additional 11 days to live "rent free;" and second,
it would further delay the unlawful detainer process by delaying
the landlord's right to file an unlawful detainer from three to
fourteen days. Opponents also informed the Committee that the
longer notice periods in other states are not necessarily an apt
comparison, since we do not know if tenants in this those states
possess other protections that tenants have under California
law.
Tenant's Right of Redemption : In order to address the above
concerns while still giving tenants extended time to pay in
appropriate cases, the author agreed to amend this bill to
create a "right of redemption," a right enjoyed by tenants in
many other states and one that is afforded to California home
owners facing foreclosure. Under existing law, a landlord is
not obligated to accept rent from a tenant once the three-day
period has passed, even if the landlord has not yet filed an
action for unlawful detainer. A landlord may, of course,
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voluntarily agree to accept the payment after the three-day
period has passed, but the tenant under California law cannot
redeem as a matter of right. Under "right of redemption"
statutes in other states, a landlord is generally free to file
the unlawful detainer after the notice period has expired, but
he or she must nonetheless accept payment that is offered within
a statutorily prescribed period. Often this statutory period
extends up to the unlawful detainer hearing; in some states, the
right of redemption extends to the point of final judgment. In
at least one state, the tenant may redeem and have the tenancy
restored by making payment to the Sheriff at the time of
physical eviction. A right of redemption addresses two concerns
raised by opponents to the initial proposal to extend the notice
period from three to fourteen days: first, the right of
redemption does not give the tenant additional time to live
"rent free," since the tenancy is only restored if full payment
is made; and second, a right of redemption does not delay the
unlawful detainer process since the landlord is still free to
file after the three-day notice period.
In addition, the right of redemption is a familiar and
well-established concept in property law. For example, in many
judicial foreclosure states, a home owner facing foreclosure may
redeem up to one year after the sale at auction. Although
technically there is no "right of redemption " (or at least it
is not called that) in a non-judicial foreclosure state like
California, the owner may "reinstate" by making payment up to
five days before the foreclosure sale. This provides the owner
with a substantial amount of time, given that the trustee or
mortgagee may not file a notice of sale until three months after
filing the notice of default, and the sale cannot occur until at
least 20 days after the filing of the notice of sale. Thus a
property owner facing foreclosure - including a landlord - can
cure the default by making payment any time during the three
month period between the notice of default and the notice of
sale, plus up to five days before the sale date stated in the
notice of sale. (See Civil Code Sections 2924 and 2924c.) A
tenant, who also risks losing a valuable property right (and a
tenancy is a property right), has no such option under existing
law.
How the tenant's right of redemption process would work . Under
the bill as proposed to be amended, a tenant is subject to a
three-day notice to pay or quit and an unlawful detainer action
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can have the action dismissed by tendering to the owner all rent
that is due (including any rent that comes due after the notice
is received) and paying any costs or fees incurred by the owner
in filing the unlawful detainer. To avoid the potential problem
of bounced checks, the bill requires payment by cashier's check,
money order, or some other certified form of payment. If the
payment is tendered before commencement of the trial, but after
the unlawful detainer has been filed, costs and fees would be
capped at $350. This provision will strongly encourage a tenant
to tender payment before the unlawful detainer trial begins;
otherwise, the tenant would be liable for all of the landlord's
attorney's fees and court costs before the tenancy could be
restored. Once the tenant has tendered payment, the tenant
would simply take proof of payment to court and the unlawful
detainer action would be dismissed. Finally, a tenant would
only be permitted to invoke this right once in a twelve month
period.
Amendments address many, but not all, opposition concerns. The
amendments taken in this Committee, as reflected in the attached
mock-up, seek to create a right of redemption that fulfills the
underlying goal of giving tenants additional time while
addressing reasonable concerns raised by some of the opponents.
For example, the author agreed to a requirement that the tenant
give payment directly to the owner (instead of to the court) and
that the payment be made by cashier's check, money order, or
other certified form of payment. In addition, the author agreed
to take an amendment that would limit the tenant's ability to
exercise the right of redemption to only once in a twelve month
period. (This is consistent with a parallel restriction in the
state retaliatory eviction statute, Civil Code Section 1942.5.)
Finally, the author agreed to remove the language from the
"relief from forfeiture" statute (Code of Civil Procedure
Section 1179) in order to make it clear that the right of
redemption is not a post-judgment right and does not apply
"whether or not the tenancy has been terminated." In other
words, a tenant who has already vacated or been removed cannot
have the tenancy restored by tendering payment.
Remaining Issues : While the author has taken several amendments
to address concerns raised by the opposition, there are
nonetheless two issues raised by the opposition that are not
addressed by the amendments. Thus the Committee may wish to
consider the following:
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Should the tenant be required to file an answer to the
unlawful detainer ? Landlord groups have expressed to the
Committee their view that a tenant should be required to file
an answer to the unlawful detainer in order to take advantage
of the right of redemption. Under existing law, if a tenant
fails to answer an unlawful detainer within the prescribed
period of five days, the landlord prevails in the unlawful
detainer action by default. On the one hand, landlord
representatives contend that requiring the tenant to file an
answer lets the landlord know the tenant's intentions. On the
other hand, the author and sponsor suggest that filing an
answer is not necessary since the tenant is not contesting the
unlawful detainer per se but is simply seeking the right to
pay beyond the three-day notice. Thus there is no need to
burden the court with an additional and unnecessary filing.
Should the tenant have a right to redeem after the unlawful
detainer trial has begun ? Another issue raised by the
landlord representatives was whether or not the tenant's right
to redeem should extend beyond the commencement of the
unlawful detainer trial, especially given that the time from
commencement of trial to final judgment and eventual eviction
by the Sheriff entails a considerable use of the owner's and
the court's resources. However, the author and sponsor
contend that there is no compelling reason to absolutely cut
off the tenant's right to redeem at the commencement of trial,
especially in light of the tenant's stepped obligations to pay
costs and fees. If the tenant pays before the unlawful
detainer is filed, the tenant will owe no costs or fees since
the landlord would not yet have incurred those expenses. If
the tenant pays before commencement of the trial, costs and
fees will be capped at $350. But if the tenant delays and
tenders payment only after the commencement, the tenant will
be liable for all costs and fees. The author and sponsor
believe that this will create a powerful incentive for the
vast majority of tenants to pay prior to commencement of
trial, while at the same time accommodating the few tenants
that may require a longer period to consolidate funds.
ARGUMENTS IN SUPPORT : Because existing law imposes no
obligation on a landlord to accept rent offered after the
three-day notice has expired, the author contends, "even tenants
who are willing and able to pay their rent are being kicked out
of their homes." The author notes that California "has the
second highest rents in the nation and in today's economy
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layoffs, pay cuts, or unexpected health care costs can leave
tenants scrambling to come up with rent money." Existing law is
"unfairly harsh" because it "does not provide tenants enough
time to reach out to friends, families, and/or other community
organizations to utilize any available resources. Families who
are unable to scrape together rent must move in three days or
face an eviction lawsuit." The author also believes that
California law is particularly harsh relative to many other
states that have notice periods extending anywhere from 10 to
even 30 days. Finally, the author notes that tenants who are
late with rent are punished disproportionately compared with
homeowners who default on mortgages, who "are provided over six
months in which to pay the amount due and prevent foreclosure."
The Western Center on Law & Poverty (WCLP) and the California
Rural Legal Assistance Foundation (CRLA) write that "the need
for Ýthis] bill is acute." WCLP and CRLA note that struggling
families in today's economy are placed in a precarious position
when "an unexpected illness or car repair will cause the rent
money to come up short. The next pay check may be less than a
week away, but California's extremely short 3-day time frame to
pay or move means that families must rely on extended family, or
social service agencies, to pay rent on time." WCLP and CRLA
counter opposition claims that this bill is unfair to landlords,
who still must meet their obligations, by noting that "a lender
foreclosing on a landlord's property must wait 105 days at the
very minimum before foreclosing, and the landlord may redeem at
any time." WCLP and CRLA, therefore, contend that "AB 265 is
extremely modest, when compared to the treatment afforded to
landlords and homeowners under the foreclosure statutes."
The Eviction Defense Collaborative (EDC) of San Francisco, an
organization that provides both legal and financial assistance
to tenants facing eviction, reports that it "is often able to
pay the back rent and help Ýtenants] get back on their feet,"
but while many landlords agree to accept payment beyond the
three-day notice period, there are others who refuse to accept
payment even when tenants would be able to pay within a few more
days. EDC concludes that when "tenants are able to reach out to
friends, families, and/or community organizations such as ours
and find resources to pay after the 3-day period, these tenants
should have the right to prevent eviction by paying the rent
owed, plus reasonable specified litigation costs."
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Asian Americans for Civil Rights & Equality (AACRE) argues that
this bill is necessary because "California is out of step with
tenant protections in states across the country and under
federal law," noting that "most other jurisdictions provide for
more time." Finally, AACRE notes that, as a practical matter,
tenants cannot move in three days and are "therefore forced to
defend themselves in court, rather than focusing on coming up
with the rent money or finding other housing."
Several other organizations provided letters of support that
refer to the originally introduced version of the bill.
Nonetheless, their arguments in support of that version of the
bill are substantially the same as those in support of the right
of redemption - that is, the bill will give tenants who could
pay the rent with a modest extension of time the right to do so.
ARGUMENTS IN OPPOSITION : The majority of letters of opposition
to this bill address the introduced version of the bill that
proposed extension of the notice period from three to fourteen
days. (The version of the bill creating a right of redemption
was not in print until April 6.) As noted above, creating a
right of redemption as an alternative was an attempt to respond
to arguments against extending the notice period. Specifically,
that extending the notice period would (1) permit a tenant to
live "rent-free" for an additional eleven days and (2) further
delay the UD process. These specific concerns are arguably
addressed by the right of redemption approach.
However, many other objections raised by opponents are seemingly
still relevant. For example, the California Business Properties
Association (CBPA) contends that, as a matter of standard
industry practice, landlords and property managers send
reminders and attempt to work out voluntary agreements with
tenants before ever considering issuing a three-day notice to
pay or quit. Moreover, CBPA points out that the three-day
period is "a legal minimum" and, as a practical matter, because
the notice is an action of "last resort," most tenants will be
afforded much more notice and time to pay. Similarly, the San
Francisco Association of Realtors, the Southern California
Cities Apartment Association, and the Orange County Apartment
Association write that standard leases already contain grace
periods and landlords typically work out payment plans with
tenants. These same opponents warn, however, that "if this bill
is enacted, landlords will have no reason to negotiate and they
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will be counseled to stop negotiating a delayed date to pay
rent." Finally, several of the opponents argue that while rent
payments are delayed, the landlords are still expected to make
payments to employees, service providers, and creditors.
Directly addressing the issue of the right of redemption, Aging
Services of California (ASC), a provider of senior housing in
residential care and assisted living settings, opposes even the
amended version of this bill because it would still cause
"additional delays in the eviction process" by requiring a court
"to stop the eviction action at any time during the process - as
long as the tenant pays the amount in arrears, the amount of any
subsequent rent due and the reasonable costs of the
proceedings." In addition, ASC opposes "the bill's attempt to
arbitrarily limit the tenant's portion of any attorney's fees,"
noting that the $350 "is significantly less than the average
cost of nearly $1,200 incurred by our members." Ý Note : Based on
the Committee's research on typical costs and fees, this latter
figure apparently refers to the cost of carrying a contested
eviction to completion. However, the $350 cap would only apply
where the tenant pays prior to trial, before the bulk of the
costs have been incurred. By offering payment after that date,
a tenant would be liable for full costs and fees, whether they
are $1,200 or more.]
REGISTERED SUPPORT / OPPOSITION :
Support
Tenants Together (sponsor)
AFSCME
Asian Americans for Civil Rights & Equality
Asian Law Caucus
Asian Pacific American Legal Center
Bet Tzedek Legal Services
California Rural Legal Assistance Foundation
City of Santa Monica
Coalition of Economic Survival
Community Legal Services in East Palo Alto
Eviction Defense Collaborative
Housing Rights Committee of San Francisco
Inner City Law Center
National Housing Law Project
San Francisco Tenants Union
Santa Monicans for Renters' Rights
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Western Center on Law & Poverty
Opposition
Aging Services of California
Apartment of Association, California Southern Cities
Apartment Association of Orange County
C & K Management Co., Inc.
California Association of Realtors
California Business Properties Association
Real Management Company
San Francisco Association of Realtors
Western Manufactured Housing Communities Association
Individual administrators of five senior living facilities
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334