Federally Mandated Eviction Ban Expanded and Extended
A sweeping federal eviction moratorium, announced September 1st by the Centers for Disease Control and Prevention (CDC), enacts a four-month ban on the eviction of tenants for unpaid rent. The CDC’s announcement is meant to protect renters from eviction and the possibility of becoming homeless as well as to prevent the spread of the coronavirus and added exposure to the virus if tenants must move to a crowded shelter.
This new moratorium applies to all residential rental properties regardless of how the properties are owned or financed. An earlier eviction moratorium established in March was limited in scope to tenants in buildings with federally financed mortgages. In addition, many states enacted eviction moratoriums earlier in the pandemic. This new moratorium supersedes all other eviction bans and impacts all multifamily owners.
Many of the early bans on evicting tenants began to expire this summer as extra unemployment funding simultaneously expired. Widespread unemployment and lost wages related to the economic shutdown during the pandemic led consumer advocacy groups to warn of a potential wave of evictions of millions of tenants unable to pay their rent.
Tenant eligibility for new moratorium
The new national eviction moratorium lasts through December 31, 2020 for eligible tenants. Evictions for criminal activity, damaging property or endangering the health and safety of other tenants are still permitted.
To be eligible for protection from an eviction, tenants must sign a form and send it to their landlord. To avoid eviction under the new moratorium, tenants also must:
- Have attempted to obtain all available government assistance for rent.
- Expect to earn a maximum of $99,000 in annual income in 2020 or $198,000 if filing a joint tax return.
- Be unable to pay the full rent because of COVID-19-related hardship including the loss of household income, loss of hours of work and wages, unemployment or substantial medical expenses.
- Make an effort to make timely partial rent payments as close as possible to the full rent.
- Face being forced into homelessness or into a new shared living arrangement in close contact with others because of a lack of other housing options.
An example of the required declaration by tenants can be found at the end of the CDC’s announcement.
Rent collection and late fee rules
The eviction moratorium does not mean that all tenants can skip paying their rent. Tenants are expected to pay some or all of their rent in accordance with their lease if possible. Landlords can work with their tenants to develop a payment plan just as they have in the past.
The moratorium explicitly states that landlords can continue to charge late fees, penalties and interest on unpaid rent.
A draft version of the order explains the continued obligation of tenants:
This Order does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract. Nothing in this Order precludes the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.
Both tenant and landlord advocates dissatisfied with policy
While tenant advocates expressed gratitude that the wave of anticipated evictions was halted, they fear that the moratorium only temporarily resolves the housing crisis because it lacks financial aid to renters. When the moratorium expires, tenants will be faced with the obligation to pay potentially months of unpaid rent as well as late fees and interest. Tenants unable to make up back payments at that time would face the threat of eviction.
Landlord advocates, including the National Multifamily Housing Council and the National Association of Home Builders, immediately expressed frustration that the moratorium doesn’t include any financial aid to tenants or property owners. Property owners continue to be required to pay their mortgages and operating costs and provide adequately maintained shelter for their residents even when rent goes unpaid.
"Congress and the White House must get back to work on negotiations to enact a COVID-19 relief bill with at least $100 billion in emergency rental assistance," Diane Yentel, CEO of the National Low Income Housing Coalition, wrote in a statement. "Together with a national eviction moratorium, this assistance would keep renters stably housed and small landlords able to pay their bills and maintain their properties during the pandemic."
Doug Bibby, president of the National Multifamily Housing Council, wrote in a letter to members of that organization that eviction moratoriums don’t address the financial stress renters are facing.
“Moreover, they do not address the financial pressures and obligations of rental property owners,” he wrote. “Without mortgage forbearance protections and protections from other property-level financial obligations such as property taxes, insurance payments and utility service, the stability of the entire rental housing sector is thrown into question.”