You may have seen recent headlines referring to an “eviction crisis”:
The COVID-19 Eviction Crisis: an Estimated 30-40 Million People in America Are at Risk – The Aspen Institute
Experts fear the end of eviction moratoriums could plunge thousands of people into homelessness – CNBC
President Trump signed an eviction moratorium order that effectively bans evictions nationwide through the end of the year. According to the Centers for Disease Control and Prevention (“CDC”), the moratorium order has been issued to provide housing stability and to prevent the further spread of COVID-19. However, it is important to note that rent is NOT cancelled through the end of the year. Let’s dive into how this order effects landlords and owners of real estate…
According to the moratorium, there are stipulations in order to receive this “eviction protection.”
Those who are eligible must meet additional criteria before presenting their landlords with a declaration, which will be made available on the CDC website. This criteria includes:
- The resident has sought all available government rental assistance
- The resident will earn no more than $99,000 in 2020 (or $198,000, if filing jointly)
- The resident can’t pay their rent in full due to a substantial loss of income
- The resident is trying to make timely partial payments, to the extent they can afford to do so
- The resident would, if evicted, likely end up homeless or forced to live in a shared living situation
What to do if you (the landlord) receives a CDC Declaration from a tenant?
According to Colton Addy from Snell & Wilmer Law, if a landlord receives a CDC Declaration from a tenant, the landlord should respond in writing to the tenant to encourage the tenant to make partial payments of rent (and similar housing-related payments) to the extent the tenant is able, in accordance with the CDC Declaration. Additionally, the landlord’s written correspondence should remind tenants that the rental amounts are not forgiven and will ultimately need to be paid.
Additionally, many tenants may not be aware of the government assistance programs that are available to tenants to help tenants pay their rent during the COVID-19 Pandemic. Landlords should include a list of available resources that tenants can use to pay their rent. The Department of Housing and Urban Development (HUD) has stated that nonprofits that received Emergency Solutions Grants (ESG) or Community Development Block Grant (CDBG) funds under the CARES Act may use these funds to provide temporary rental assistance to tenants.
The following websites provide information on federal assistance that is available:
Additionally, landlords should include other programs that may be applicable in their jurisdiction. Landlords may also consider filing an eviction proceeding for one of the reasons permitted by the CDC Order, but landlords should use caution in pursuing such actions as eviction proceedings in the current climate are likely to draw additional judicial scrutiny.
The penalties for individuals who violate the Order are severe, including:
- A fine of up to $100,000 and up to one year in jail, if the violation does not result in a death; or
- A fine of up to $250,000 and up to one year in jail, if the violation results in a death.
The penalties for an organization violating the Order are even more severe.
In summary, the moratorium order provides temporary relief to those residential tenants facing eviction who submit the required declaration, through the end of the year. The order, however, does not absolve a tenant from paying rent or restrict a landlord from applying penalties, interest, or late fees on the tenant’s account for non-payment of rent. Additionally, the order does not relieve landlords of their debt service obligations if a tenant seeks relief under the order.
Disclaimer: The materials contained in this blog post are for educational and informational purposes only. Nothing in this blog post is to be considered as the rendering of legal advice. Readers are advised to obtain legal advice from their own legal counsel. Additionally, please note that the orders and laws related to the COVID-19 Pandemic are changing on a daily basis and your jurisdiction may have stricter rules related to evictions in place. Please verify the rules currently affecting your property at any given time.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.