Evictions: a game no one can win

Good intentions can often cause the opposite of the intended result. Laws that give renters every chance to avoid eviction when they stop paying rent, ironically end up increasing the costs of renting and reducing the availability of rental units. To understand this irony, it is important to first understand the costs and timeline faced by small housing providers when they realize their tenant is no longer paying rent.

In San Jose, evictions happen primarily for one reason — non-payment of rent. However, there are 13 Just Causes for evictions allowed under Tennant Protection Ordinance. Evictions are expensive and time consuming for the housing provider, and most would prefer to avoid such situations.

The process

When the housing provider files an eviction in San Jose, the San Jose Housing Department (SJHD) is notified, and the renter is immediately provided a free defense attorney from the non-profit Law Foundation. Alternatively, the housing provider must pay for their attorney and the court fees.

In the initial appearance in court, the judge mandates voluntary mediation so that both parties have a chance to resolve the situation. Project Sentinel, another non-profit, offers to provide mediation services. If the mediation stalls or it appears that there is no resolution, the Law Foundation legally, requests a jury trial; but this request is often used as a negotiation and stalling tactic. This process differs dramatically from the past where evictions had been mostly handled directly by judges in a court of equity.

The cost

Unfortunately, the Housing Provider recognizes that a jury trial will cost upwards of $30,000. And usually if someone loses in court, they pay court and attorney fees to the winning party, but the city only allows for the renter to pay $2,500 if they receive an eviction judgement. This means the Housing Provider bears the full financial burden of the entire eviction process. The high cost of a jury trial strongly encourages the housing provider to settle any rent owed in mediation often settling for less than the full amount due but with the benefit of having the renter vacate the premises.

If there is no agreement and the renter still presses for a jury trial, then it is 3–4 months to get into court. The entire process takes approximately 6–9 months while the renter lives rent free. The Housing Provider will end up paying $30,000 for court and legal fees. These fees plus unpaid rent ends up costing approximately $60,000. The limit for small claims filing is $10,000 and the expense of additionally filing in superior court is prohibitive leaving the housing provider with substantial unrecoverable losses.

Assistance for renters with a caveat

If the parties agree to a stipulated agreement, the San Jose Housing Department will offer to pay the past due rent but not late fees and not legal fees. The renter must apply for the aid within a certain time frame and once approved, the SJHD must pay the back rent to the housing provider within a certain time frame. One of the major problems with this process is that the SJHD program will not work with tenants until an eviction has been filed. Unfortunately for both the renter and the Housing Provider, an eviction must be filed to get anywhere in the system.

More risk means higher cost

Another problem with the current eviction process is that there’s no documentation of an eviction being filed if a mediation occurs. Only if the renter breaches the stipulated agreement will there be a public court record. And the benefit to the renter is that they have a debt wiped clean with no paper trail, and no eviction on the record. But that means Housing Providers gamble when taking in new applications because they don’t know if the renter has a history of paying rent. The risk of taking on new renters is huge. And when risk goes high, costs go up further.

More risk means higher level of scrutiny of applications

As a result, Housing Providers are less likely to take risks in renting out apartments, they can become stricter about who applies with income qualifications, rental history and housing references — the bar gets raised for everyone. And small housing providers used to take the risks, to give someone an extra chance, but no one is taking chances especially after the eviction moratorium.

How evictions increase rents:

• Loss of rent
• Cost of eviction with or without jury trial
• Increased risk (ex. new renter may not pay)
• New renters have higher scrutiny on their applications and less may qualify
• Eviction moratorium created more losses
• Less rentals available as apartments remain empty

Solution — San Jose rental vouchers

Rental vouchers from the city to qualified renters with an agreement that outlines their responsibility would eliminate evictions, reduce costs and risk, as well as put empty apartments/housing back on the market. We could have an impact on increasing housing stock by simply using the current housing stock. Rental vouchers are not the complete solution, just part of the solution to add housing availability, reduce costs, and avoid displacement.

San Jose should not force the filing of an eviction in order to get assistance for renters.

Rental Vouchers 2009 in San Jose: https://records.sanjoseca.gov/Resolutions/RES75032.PDF