August 2020 - Gupta Evans and Ayres

Discussion: California Legislature Set to Halt COVID Related Evictions on August 31st Through AB 3088

August 29, 2020/in All Blog Posts, Corporate Litigation, Real Estate/by Ajay Gupta

On August 13th, the California Judicial Council amended its emergency rules to lift the statewide ban on evictions. In doing so, the Courts effectively passed the baton to the California Legislature to develop and pass a bill to address the looming eviction crisis set to erupt on September 1, 2020 when the statewide eviction ban is formally withdrawn. After weeks of drafts, negotiation and compromises between lawmakers, tenant advocates and landlord organizations, Governor Newsom has announced Assembly Bill 3088, known officially as the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 (the “AB 3088”). The Relief Act will be voted on in the Senate on August 31, 2020 and will need a 2/3 majority vote to pass and be sent back to the Assembly.

AB 3088 is intended to serve as a statewide eviction moratorium bill, applicable only to residential landlords and tenants. Commercial tenants will have to continue to rely on local eviction moratoriums, many of which (including San Diego) are due to expire at the end of September 2020. In large part, AB 3088 will serve as a “stop-gap” measure to address California’s eviction crisis, until the California Legislature reconvenes early next year. While AB 3088 is incredibly nuanced and detailed, the general points of the Relief Act are as follows:

For rent due between the covered period of March 1, 2020 through August 31, 2020, residential tenants cannot be evicted if they declare under penalty of perjury that they have experienced a “COVID-19-related financial distress”;
Only high income tenants (those earning 130% of the County’s median income) would be required to show proof of COVID-19-related financial distress;
For rent due between the transition period of September 1, 2020 through January 31, 2021, tenants would still be required to pay 25% of the outstanding balance, and such payment would be due by January 31, 2021;
All unpaid rent would be converted to consumer debt and residential landlords would be permitted to collect such debt in Small Claims court, beginning March 1, 2021;
The Relief Act would preempt any local ordinance, resolution, regulation, or administrative actions such that eviction moratoriums previously passed by cities and counties will be grandfathered in, but they won’t be able to pass any extensions.

To learn more about AB 3088, its specific provisions, how it may be interpreted in Courts, as well as several other interesting and related real estate topics, please check out the discussion we held (coincidentally) just hours after the Relief Act was announced.

PANELISTS

Founder, Gupta Evans and Associates
Ajay Gupta, Esq

Attorney Ajay Gupta is a certified bankruptcy specialist and has been working on real estate and bankruptcy matters since 2005. He is a thought leader on real estate matters in California with an emphasis on secured transactions and foreclosures. Mr. Gupta founded Gupta Legal Center, now Gupta Evans and Associates, in 2008. He has represented debtors and creditors as well as landlords and tenants in over hundreds of litigation matters over the past 15 years both in state and federal court.

Senior Attorney, Partner, Gupta Evans and Associates
Chris Evans, Esq

Chris Evans is a skilled litigator and Partner at Gupta Evans and Associates, with a focus on the Firm’s real estate and business litigation matters. Over the course of his career, Chris has successfully litigated or reached favorable settlements for both individual and entity clients in an array of matters ranging from lease disputes in both the commercial and residential context, commercial and residential eviction proceedings, disputes between business owners (often styled as the “business divorce”), fraud and fiduciary claims and complex real estate investment fraud. Chris graduated magna cum laude and Phi Beta Kappa from San Diego State University in 2010 and immediately pursued his legal career by graduating from the University of San Diego School of Law in 2013. In law school, Chris served as an Editor for the San Diego Journal of Climate & Energy Law and a member of the Phi Delta Phi Honors Society.

Broker Associate, Team Steven Wener, eXp Realty of California, Inc.
Steven Wener

Steven Wener is a thought leader, author and entrepreneur who currently works as a coach, mentor, and licensed real estate broker. He started door knocking at the age of ten with his father, became a licensed real estate agent in 1993, consistently receives numerous top performer awards and has helped thousands of families transact real estate. Steven has also been a radio show host, as well as spoken on stages across the United States, sharing his message of judgement, justification, vulnerability, accountability, commitment and personal story. Steven focuses on the personal, versus simply transactional points of view and developed an engaging, disarming and professional approach to both business and personal relationships. Steven is married to his beautiful wife Rebekah and they have 3 incredible children together which are his pride and joy.

Senior Attorney, Gupta Evans and Associates
Jake Ayres, Esq

Jake Ayres is an experienced and versatile attorney and the senior associate at Gupta Evans and Associates, PC. Drawing on his depth of experience in litigation from two AmLaw 200 firms, Jake represents individuals and businesses in both real estate litigation and transactional matters, including disclosure and HOA disputes, foreclosures, asset purchases, and private placements. Jake also is also part of the vanguard of service providers to the legal cannabis and hemp industries, advising businesses therein regarding compliance with regulations and dispute resolution.

Senior Vice President and Director, Hughes Marino
Star Hughes-Gorup

Star Hughes-Gorup is a senior vice president and director at Hughes Marino, San Diego’s leading commercial real estate firm that exclusively represents tenants and buyers. Star is a licensed broker in eight states, handling complex transactions for her clients throughout the country. She is a five-time winner of The Irvine Company’s prestigious “Broker of the Year” award, a three-time winner of San Diego Magazine’s “Woman of the Year” award, a three-time winner of the Business Journal’s “Women Who Mean Business” award, a two-time winner of San Diego Metro Magazine’s “40 Under 40” award, among many other honors.

Residency Program Director, New York Presbyterian
Dr. Manish Garg MD

Dr. Manish Garg MD is a Professor of Emergency Medicine and the current Residency Program Director in the New York-Presbyterian health system. He holds a dual faculty appointment at Cornell & Columbia medical schools and works clinically in their hospitals. Dr. Garg was on the front-lines of the New York City epicenter of the COVID-19 pandemic caring directly for patients. As a researcher, Dr. Garg has secured grant funding that originated from the National Institutes of Health and the Centers for Disease Control & Prevention to investigate emerging infectious diseases. He has authored many scientific literature contributions including multiple COVID-19 manuscripts.

Upcoming Webinar: Exploring California’s Looming Eviction Crisis – Legislative Options for Renters and Landlords

August 26, 2020/in All Blog Posts, Real Estate, Webinars/by Ajay Gupta

This Friday, August 28th at 4PM, we’re hosting an all star panel to discuss California’s eviction crisis and we hope you’ll join us.

Free registration can be found here

On August 13th, the California Judicial Council amended its emergency rules to lift the statewide ban on evictions. Measures passed by Governor Newsom and local cities still remain in place to try and slow the pace of evictions; but, by and large, the now-lifted statewide eviction freeze was the only thing that was stopping the flood of evictions that everyone knows is coming.

California has a disproportionate number of residential renters, about 45% compared with 36% for the rest of the country. On the commercial front, it is clear that the restaurant and retail sectors have suffered hardest from the COVID crisis. Tenants in these sectors tend to have massive capital investments in location and are generally intimately tied to the location itself. These two sectors also employ about 1 out of every five people across the country and the employees tend to be residential renters.

In a very real sense, the first true signs of the fallout from COVID will happen through the eviction process. Up until now, the California Legislature has been content to punt on the issue of dealing with the eviction crisis because the Judicial Council ban effectively handled that issue for them. With that option gone, the California legislature is considering two bills AB 1436 and SB 1410 to address the medium run needs of landlords and tenants. It is likely that one of these two bills, or a compromise between the two, will be passed before the Judicial Council’s statewide eviction ban is lifted next Tuesday, September 1st.

Ultimately, there are only two options: On the one hand, California and the Federal government must continue to infuse money into the system to protect tenants and landlords from the inevitable fallout of COVID. Assuming the well goes dry or is otherwise channeled to other pastures, California is going to have to figure out how to spread this pain between tenants, landlords and, ultimately, the banks, in a manner that is not only economically feasible, but fair and equitable to all parties.

WEBINAR AGENDA

• Introductions

• Dr. Manish Garg, MD (10 minutes): From the front lines of the New York emergency room, what COVID was like and where it’s going over the next year. Dr. Garg will explain his opinions on vaccines, testing, tracking and treatment.

• Chris Evans, esq (10 minutes): Real Estate attorney and evictions expert provides a brief overview of SB 1436 and 1410. Mr. Evans will explore some of the salient details of what has been proposed, the changes, and the politics involved in these incredibly important bills.

• Round table discussion (30 Minutes): Our seasoned panel below will explore options for both residential and commercial landlords and tenants.

• Town Hall Style Meeting: We’ll invite participants into our discussion to ask questions, forward opinions, and generally participate in the discussion. This will likely be limited to 20 people, so email me once you’re registered so we can make appropriate accommodations.

PANELISTS

Attorney Ajay Gupta is a certified bankruptcy specialist and has been working on real estate and bankruptcy matters since 2005. He is a thought leader on real estate matters in California with an emphasis on secured transactions and foreclosures. Mr. Gupta founded Gupta Legal Center, now Gupta Evans and Associates, in 2008. He has represented debtors and creditors as well as landlords and tenants in over hundreds of litigation matters over the past 15 years both in state and federal court.

Chris Evans is a skilled litigator and Partner at Gupta Evans and Associates, with a focus on the Firm’s real estate and business litigation matters. Over the course of his career, Chris has successfully litigated or reached favorable settlements for both individual and entity clients in an array of matters ranging from lease disputes in both the commercial and residential context, commercial and residential eviction proceedings, disputes between business owners (often styled as the “business divorce”), fraud and fiduciary claims and complex real estate investment fraud. Chris graduated magna cum laude and Phi Beta Kappa from San Diego State University in 2010 and immediately pursued his legal career by graduating from the University of San Diego School of Law in 2013. In law school, Chris served as an Editor for the San Diego Journal of Climate & Energy Law and a member of the Phi Delta Phi Honors Society.

Steven Wener is a thought leader, author and entrepreneur who currently works as a coach, mentor, and licensed real estate broker. He started door knocking at the age of ten with his father, became a licensed real estate agent in 1993, consistently receives numerous top performer awards and has helped thousands of families transact real estate. Steven has also been a radio show host, as well as spoken on stages across the United States, sharing his message of judgement, justification, vulnerability, accountability, commitment and personal story. Steven focuses on the personal, versus simply transactional points of view and developed an engaging, disarming and professional approach to both business and personal relationships. Steven is married to his beautiful wife Rebekah and they have 3 incredible children together which are his pride and joy.

Jake Ayres is an experienced and versatile attorney and the senior associate at Gupta Evans and Associates, PC. Drawing on his depth of experience in litigation from two AmLaw 200 firms, Jake represents individuals and businesses in both real estate litigation and transactional matters, including disclosure and HOA disputes, foreclosures, asset purchases, and private placements. Jake also is also part of the vanguard of service providers to the legal cannabis and hemp industries, advising businesses therein regarding compliance with regulations and dispute resolution.

Star Hughes-Gorup is a senior vice president and director at Hughes Marino, San Diego’s leading commercial real estate firm that exclusively represents tenants and buyers. Star is a licensed broker in eight states, handling complex transactions for her clients throughout the country. She is a five-time winner of The Irvine Company’s prestigious “Broker of the Year” award, a three-time winner of San Diego Magazine’s “Woman of the Year” award, a three-time winner of the Business Journal’s “Women Who Mean Business” award, a two-time winner of San Diego Metro Magazine’s “40 Under 40” award, among many other honors.

Dr. Manish Garg MD is a Professor of Emergency Medicine and the current Residency Program Director in the New York-Presbyterian health system. He holds a dual faculty appointment at Cornell & Columbia medical schools and works clinically in their hospitals. Dr. Garg was on the front-lines of the New York City epicenter of the COVID-19 pandemic caring directly for patients. As a researcher, Dr. Garg has secured grant funding that originated from the National Institutes of Health and the Centers for Disease Control & Prevention to investigate emerging infectious diseases. He has authored many scientific literature contributions including multiple COVID-19 manuscripts.

Update for California Landlords and Renters: California’s Eviction Ban Is Expected to Be Lifted

August 12, 2020/in All Blog Posts, Corporate Litigation/by Dylan Contreras

On August 13, 2020, the Judicial Council of California will vote on a proposal to lift California’s statewide eviction ban. If the ban is lifted, starting September 1, 2020, California State Courts can resume all unlawful detainer proceedings that came to a sudden halt in April of 2020 and begin processing all unlawful detainer complaints filed during the eviction freeze.

In response to the Coronavirus pandemic, on April 6, 2020, the Judicial Council of California, the policymaking body of California State Courts, adopted multiple Emergency Rules including Emergency Rule No. 1 (the “Emergency Rule”). The Emergency Rule froze all on-going eviction proceedings—regardless of whether the tenant was affected by COVID-19—and prohibited all California State Courts from issuing a summons for any unlawful detainer complaint. The Emergency Rule essentially serves as a blanket suspension on all commercial and residential evictions across California.

The Judicial Council’s intent to lift the statewide eviction ban and amend the Emergency Rule is founded on the rationale that the Emergency Rule was always meant to be temporary. California Chief Justice Tani G. Cantil-Sakauye has repeatedly insisted that the inevitable eviction crisis is best left to the legislative and executive branches of government where open and transparent meetings and hearings can be had to determine “permanent measures and permanent solutions.”

The Judicial Council’s likely decision to lift the Emergency Rule comes at an uncertain time during our nation’s fight against the novel Coronavirus pandemic. Federal unemployment benefits were recently reduced from $600 to $400 per week, and California’s unemployment rate still lingers around 16.3 percent—four percentage points higher than it was during the Great Recession. However, the Emergency Rule’s purpose was less of a tenant relief measure and more a measure meant to alleviate stress on the Courts. Stress caused by a reduction in Court workers, mandatory stay-at-home orders, and an overall lack of infrastructure to support a wave of unlawful detainer filings that would otherwise flood the resource-strapped Courts.

Given the unstable economic condition, the Judicial Council’s plan to lift the Emergency Rule may only worsen California’s renters’ financial struggles, but only if the legislative and/or executive branches do not take swift action. To this point, California lawmakers are already asking the Judicial Council to postpone the vote to lift the eviction ban for another three weeks.

Although the Emergency Rule has protected California renters from eviction, landlords have argued that the Emergency Rule is too broad. For over five months, the Emergency Rule has prevented landlords from taking any legal action against any tenant, regardless of whether the tenant has been affected by COVID-19. Landlords claim that the Emergency Rule prevents them from evicting a tenant that has simply chosen not to pay rent knowing that the landlord has no recourse. In this instance, the Emergency Rule effectively permits tenants to occupy the property rent-free, while the landlord carries the burden of paying for the property’s mortgage and other related expenses.

Another complaint amongst landlords is a tenant that refuses to vacate the property, despite the landlord serving the tenant with proper notice of lease termination. Again, the landlord is forced to tolerate a tenant that occupies the property unlawfully and likely rent-free while also paying for the property’s mortgage and other expenses.

The California Legislature is intent on passing a solution to afford relief to residential tenants. One such measure that the State Legislature is considering is AB 1436, which strikes a balance of protecting financially impacted tenants from eviction while also preserving landlords’ rights.

AB 1436 prohibits landlords from evicting tenants that cannot pay rent due to the economic effects of COVID-19. However, the proposed law permits landlords to evict a tenant that is not financially affected by COVID-19 and fails to pay rent, or a tenant that occupies the property unlawfully. In its current form, AB 1436 satisfies landlords’ interests and concerns and protects tenants that have felt the financial impacts of COVID-19. AB 1436 does not apply to commercial tenancies.

The first time the Judicial Council attempted to lift the statewide eviction ban caused by the Emergency Rule, back in early-June, tremendous pushback from State Legislature and tenant organizations caused the Judicial Council to, ultimately, delay its vote. The Judicial Council recently received similar complaints from tenants that fear they will become homeless if the Emergency Rule is repealed and small landlords that face losing their livelihoods or filing for bankruptcy if the Emergency Rule remains in effect. If the Judicial Council does in-fact lift the eviction ban, the Emergency Rule will sunset on September 1, 2020. Check back to our website for updates about the Emergency Rule and AB 1436.