What Are The Unseen Costs Of California’s Eviction Moratorium?

One common theme that’s been played out in the media across California over the last three months is that landlords should cancel rent, and everything possible should be done to help tenants.

As the State of California continues to struggle with Coronavirus, the eviction moratorium has been extended until the end of September, giving some tenants the ability to continue living rent free.

Even though the eviction moratorium was necessary during the early days of Covid-19, to keep people off the streets and slow the spread of the virus, the reality is that it’s been brutal for landlords across the state.

The Unforeseen Costs Of California’s Eviction Moratorium

One common theme that’s been played out in the media across California over the last three months is that landlords should cancel rent, and everything possible should be done to help tenants.

Sadly, even though there are some institutional investors own rental properties across California who have the ability to forgive back rent, many of the landlords in the state that have been hardest hit are smaller, “mom and pop” landlords who rely on the monthly rent from their rental properties to survive.

In the past, eviction has always been a legal protection that landlords could fall back on when their tenants didn’t pay their rents, but now that some tenants have not paid in months, eviction is not an option, and the only option landlords have is to wait until the eviction moratorium has ended.

Could more landlords choose to forgive their tenants back rent in favor of tax deductions or other incentives? While some landlords have been able to do just that, smaller landlords can’t walk away from money owed that easily. After not collecting rent for months, they face the real possibility of mortgage defaults in the coming weeks.

What Comes Next?

As of July 2020, more landlords across the State of California are challenging the eviction moratorium in the courts. This has led the Governor to leave the matter in the hands of local municipalities, so it’s unlikely that we will see any legal action that stops the eviction moratorium any time soon.

The State of California continues to “kick the can” and push off evictions for a few more months in the hope that the economy will improve and more people will go back to work but the opposite is happening right now.

More industries are going into lockdown in California, schools remain closed, and it’s unlikely that the battle against Coronavirus will be won anytime soon.

With the next expiration of the eviction moratorium approaching on September 30th, along with elections in November, this fall will likely be one that everyone remembers since it’s a time in history when everything is on the line.

Contact GoldenWest Management

To learn more about what’s happening with the rental market in California, or to speak with us about our property management services, contact us today by calling (866) 545-5303 or click here to connect with us online.