Los Angeles Housing and Community Investment Department Provides Guidance on Rent Repayment Agreements

We previously wrote about the LA City Council’s March 31, 2020 Ordinance which, among other things, gave tenants up to 12 months following the expiration of the Local Emergency Period to repay past due rent that was unpaid due to COVID-19. The Ordinance gave the tenant and landlord the option to mutually agree to a repayment plan “selected from the options promulgated by the Housing and Community Investment Department” prior to the expiration of the Local Emergency Period, or within 90 days of the first missed rent payment, whichever comes first.

On April 7, 2020, the Housing and Community Investment Department released a COVID-19 Eviction Protections Fact Sheet, which included a form repayment agreement and the following suggestions on terms of a repayment plan:

• Tenant to repay on a monthly basis: ($Balanced Owed) divided by 12 monthly payments. For example: ($2,000 past due rent/12 payments = $166.67 monthly payment).

• Tenant to repay on a bi‐weekly basis: ($Balanced Owed) divided by 26 bi‐weekly payments. For example: ($2,000 past due rent/26 payments = $76.92 bi‐weekly payment).

• Tenant to repay on a weekly basis: ($Balanced Owed) divided by 52 weekly payments. For example: ($2,000 past due rent/52 payments = $38.46 weekly payment).

While these suggestions are helpful in providing an approved framework for a rent repayment plan, it is still unclear whether other repayment terms are permissible.

Additionally, neither the March 31, 2020 Ordinance nor the HCIDLA’s Fact Sheet describe whether a breach of a repayment agreement for failure to pay rent would give rise to an eviction action based on a Three Day Notice to Pay Rent or Quit if the breach occurs prior to the expiration of the 12-month repayment period permitted under the City’s Ordinance.

Unless guidance is provided, anticipate litigation over this issue once the moratorium on evictions expires.

John B. Marshall and Nicholas Kanter are attorneys in our Real Estate and Business Litigation Practice Groups.

This information provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact or situation.