What Does the CDC’s Temporary Halt in Residential Evictions Order Mean for Landlords?
The CDC has issued an eviction moratorium until March 31st, 2021. Any individual with the right to pursue an eviction, whether it be landlords or owners of residential properties, is prohibited from doing so against any occupants who are unable to pay due to the coronavirus pandemic.
Evictions are still permitted for reasons that have nothing to do with non-payment of rent due to the coronavirus pandemic, and foreclosures of home mortgages are not precluded.
This moratorium is different from the CARES Act. It only applies to those areas that don't already have an eviction moratorium of their own or areas where protections are less substantial than those provided by the CDC. That means states like California, which passed its own COVID-19 Tenant Relief Act (AB 3088), aren’t covered by the CDC moratorium.
The CARES ACT
The CARES Act, which expired on July 24, 2020, prohibited evictions for 120 days against those unable to pay their rents due to the coronavirus pandemic. It also prohibited landlords from charging late fees, penalties, or charges against tenants protected from eviction.
Unlike the CARES Act
The new protections from the CDC are available to all residential occupants instead of only those who get federal housing assistance or who live in a federally related or financed property.
The CDC's moratorium only applies to those areas that don't have their own moratoriums or where protections are less substantial than those provided by the CDC moratorium.
The CDC moratorium doesn't mean late fees, fines, or interest cannot be incurred due to rent that goes unpaid during the moratorium.
How the Moratorium Works
To make use of the moratorium, tenants have to fill out a declaration form. The form is then given to whoever has the right to start the eviction process. The declaration must include the following from each adult tenant listed on the lease or rental agreement:
- That the tenant has tried to the best of their abilities to get any available governmental rental or housing assistance.
- Financially, the tenant:
- Cannot make over $99,000 (or $198,000 for joint filers) during the 2020 calendar year.
- Wasn't required to file an income tax return with the IRS for 2019.
- Or received an Economic Impact Payment ("stimulus") under the CARES Act.
- That the coronavirus pandemic has resulted in the tenant being unable to make rent payments because of:
- Substantial loss of income.
- Loss of work hours or wages.
- Being laid off.
- "Extraordinary" out-of-pocket medical expenses.
- That the tenant is doing their best to make partial rent payments given the tenant's other non-discretionary expenses.
- That the eviction of such a tenant would lead to the tenant being either:
- Moving into a "closed quarters" living space.
The declaration is considered "sworn testimony," so anyone who fills it out untruthfully can face charges or a fine. The statement also does not have to be filed in court. It only has to be submitted by tenants to their landlords.
The moratorium does not forgive rent. Tenants still have to follow their lease terms and pay as much of their rent as possible. Tenants may also face fines, penalties, and interest for not paying their rent.
Tenant Evictions Persist
The CDC moratorium only affects tenants at risk for eviction caused by non-payment of rent due to the coronavirus pandemic. Tenants can still be evicted for willful destruction of property, alleged illicit activity, lease agreement violations, etc.
The CDC order also doesn't cover commercial tenants, which means office and retail spaces, for example, get no protections. Only tenants of apartments or houses are protected. Those living in hotels or motels are also still subject to eviction.
Tenants who are protected by the moratorium are still at risk of eviction. As reported by NPR, the CDC's moratorium hasn't entirely stopped evictions. The following problems persist:
- Not all judges are asking landlords if they've received declarations from tenants.
- Not all tenants are showing up to their eviction hearings.
- Judges don't ask whether or not tenants know what rights have been afforded to them by the CDC's order.
- Not all tenants know what their rights are given the CDC order.
- Some judges have been granting landlords the right to evict protected tenants despite the CDC order.
How Landlords Can Protect Themselves
The penalties for ignoring the CDC's moratorium are stiff for landlords: upwards of $100,000 and a year in jail for a first offense. A landlord that tries to evict a tenant for not paying their rent will have to provide sworn testimony that they never received a declaration from the tenant. Being dishonest with the court could also come with a charge or fine, so property owners should always be truthful.
Some have voiced the concern that the CDC's moratorium may prompt landlords to take the following actions that will have adverse consequences for existing or potential tenants:
- Imposing fees or higher interest rates that tenants will have to pay and past due rent in January 2021.
- Ceasing to provide maintenance or amenities to non-paying tenants.
- Choosing not to rent properties that were previously rented or under consideration as a rentable, and instead:
- Keeping spaces unrented.
- Selling off rental properties.
- Not investing in new rental opportunities.
- Investing in REITs instead.
- Converting rental properties into Airbnbs or condos.
- Being more stringent with future tenants by demanding:
- Proof of income.
- A "good" job.
- A higher deposit.
Some have also expressed the concern that providing a moratorium on evictions may discourage tenants from seeking employment.
Bottom Line on the CDC’s Temporary Halt in Residential Evictions Order
Like moratoriums offered by states and local jurisdictions, the CDC's moratorium on evictions only provides temporary protections for tenants through March 31, 2021.
The risk of systemic failure still exists in the near future, which may be warded off by some federal intervention in the form of monetary assistance for both property owners and residents. Many believe that economic stimulus directly to both parties is a better solution. No matter what happens, though, the coronavirus pandemic's effects will be widely felt by tenants and landlords nationwide in both predictable and unpredictable ways.
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