In a bit of a surprise, the Centers for Disease Control and Prevention (CDC) just issued a nationwide order halting many pandemic-related residential evictions through the end of 2020. At first glance, the order looks to cover more than 40 million residential renters if they meet certain defined income and other eligibility requirements. This new action follows President Trump’s Executive Order of August 8, 2020. That order directed the CDC (and other federal agencies) to review whether temporarily halting evictions for failure to pay rent would be reasonably necessary to prevent the further spread of COVID-19. In short, the CDC answered that question in the affirmative.
By its terms, to prevent an eviction, a resident must provide a written certification covering several requirements: (1) that they have used “best efforts” to obtain available government assistance for rent or housing; (2) they must certify one of three things related to their income- (a) that the individual expects to earn no more than $99,000 in 2020 (or $198,000 if filing a joint tax return); or (b) that they were not required to report any income to the IRS in 2019; or (c) that they received a stimulus check under the CARES Act; (3) they must certify that they are unable to pay the full rent due to “substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses”; (4) they must use “best efforts” to make partial payments on time that are “as close to the full payment as the individual’s circumstances may permit, taking into account other non-discretionary expenses”; and (5) residents must certify that an eviction would likely “render the individual homeless—or force the individual to move into and live in close quarters in a new congregate or share living setting—because the individual has no other available housing options.”
There is a written certification form in the CDC’s order. Please note that the certification must be signed under penalty of perjury. And criminal penalties are in there for violations of the CDC order.
Importantly, your tenants will still owe their rent. This order does not change the lease rental amount. Furthermore, management is still permitted to charge fees, penalties, and/or interest related to the failure of a resident to pay on time.
Now, there are important exclusions to this order. The CDC’s mandate does not preclude evictions for any of the following reasons: (a) criminal activity on the premises; (b) threatening the health or safety of other tenants; (c) damaging or posing an immediate and significant risk of damage to the property; (d) violating building codes or health ordinances related to health and safety; or (e) violating any of the terms of the rental agreement other than the timely payment of rent.
It is obviously unknown how local judges will react to the declaration when faced with an eviction complaint for reasons other than failure to pay rent related to COVID-19. State and/or local eviction moratoriums remain in place (although many have expired or are scheduled to expire).
As the order is literally hot off the presses, it will take a little time for the industry to review and analyze exactly what it means. After an initial read, I do not see assistance for property owners/management who still have to pay the mortgage and related expenses for properties (which are largely funded by monthly rent from residents). While housing advocates appear pleased that some evictions are being halted, industry representatives remain concerned that orders like this are kicking the can down the road until another day without providing a solution (or even a path toward a solution) to address the economic needs of all.
There will be more to come here.
Just A Thought.