Saving Lives or Killing Landlords: The Eviction Moratorium

On September 4, 2020, the CDC implemented a ban on evictions. From this time until December 31, does this mean you can’t evict tenants? Let’s demystify this new broad-sweeping rule and find out how it affects you as a landlord.

Way back on August 8th, President Trump issued an executive order giving authority to the CDC to ban evictions if it so chose. As a medical professional, I thought it odd to be giving an economic power to a medical institution. When the CDC issued the moratorium, it stated that with more people living with family members or in homeless shelters due to eviction, we would see increased exposure to the virus. Whether you think this will help tenants, harm landlords, I’m not here to discuss. What you really want to know is the details on this new rule. Keep in mind I’m not an attorney. Talk to yours for the details.

Who does this apply to?

Previous eviction moratoria applied to those landlords receiving the benefit of government-backed mortgages. This one applies to all landlords.

When does it take effect?

From September 4 through December 31, 2020.

Who can’t be evicted?

Anyone who can’t (doesn’t) pay rent and meets certain criteria cannot be evicted for nonpayment of rent. Any other reason you may evict a tenant, such as threatening the safety of neighbors, is still allowed. I recommend you document well any infractions to the lease and follow the lease very carefully. You can still add late fees and other fees to the tenant’s account. It’s not clear on whether you can evict for nonpayment of fees, but I suspect you’ll have an uphill battle if you try.

What does the tenant have to prove?

  • The tenant must use their best efforts to obtain rental assistance. Unfortunately we don’t know what is meant by ‘best efforts’. In my experience tenants aren’t aware of all the assistance available and I help them obtain assistance as much as possible. It’s work, but it increases their chances of being able to pay. It helps the tenant and helps you.
  • The tenant can’t bring in income of more than $99,000 individually or $198,000 jointly. This probably won’t apply except to high-end rental units and if they are making that much money they probably can pay the rent and don’t want to risk bad credit.
  • The tenant must certify that they can’t pay the rent due to COVID-19. It can’t be for other problems, like lost wages or medical bills, if not due to COVID-19.
  • The tenant has to certify that they would have to move in with others in close-quarters or become homeless if evicted.

There are a few hurdles that must be passed in order for a tenant to enjoy the benefits of this new rule. Savvy tenants won’t have much problem, though. The biggest problem I see is that ‘Eviction Moratorium’ is big news, but most won’t know the details and will just think that they can’t be evicted. This may have the unintended consequence of tenants not paying or not following the rules because they think they can’t be evicted, then suddenly being on the street because they didn’t meet the required criteria.

Also, it may be difficult to prove exactly why the landlord is evicting someone in court if it is not due to nonpayment of rent. Traditionally, these other reasons were more difficult to prove and probably will continue to be so.

This rule doesn’t absolve the tenant of requirement to pay rent. All that back rent plus late fees is still due. This may have the effect of just ‘kicking the eviction can’ down the road into 2021, when the courts may see a huge amount of eviction cases as tenants have 3-4 months of back rent due and haven’t paid.

I’d recommend being proactive and talking to your at-risk tenants right now. Get them on a payment plan and get them started applying for assistance. They need to be telling you their issues right away so you can help them stay on track. You may consider waiving late fees as well if you haven’t already. Let them know that their rent is still due and they risk having an eviction on their record and getting kicked out in January.

This is a difficult time, but I know you want to help your tenants. Helping them get assistance right now is a win-win. Staying proactive is the best thing you can do to stay in the black as we go through this challenging time.

Dr. Equity