Hopefully you have not experienced a tenant presenting you with the CDC Declaration halting an eviction. While the order that first created this option occurred in September 2020 to run through the end of the year, it appears possible it will now be extended. Effectively, this order provides tenants protection if they are not paying rent.
There are several truths and myths about this document. We hope, upon review, you will be more prepared if you are presented this declaration from your tenant.
On Tuesday, September 1, 2020 the Centers for Disease Control (CDC) issued a national health order that essentially created a nationwide ban on evictions through the end of 2020. This order is based in a 1944 Public Health Service Act which gives the President broad quarantine powers. The CDC claims that to stop the spread of the COVID 19 virus the nation can not have renters ending up in shelters or other crowded living conditions.
What does the CDC declaration provide?
- Tenants have to attest to the inability to pay full rent or make a full housing payment 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;
- The individual has used best efforts to obtain all available government assistance for rent or housing;
- The individual is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other nondiscretionary expenses;
- Tenants have to attest that eviction will leave them homeless or force them to live with others in close quarters. The tenant has no other available housing options.
- The order provides for criminal penalties for landlords who violate it. Criminal penalties for landlords who violate the order include “a fine of no more than $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of no more than $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law. An organization violating this Order may be subject to a fine of no more than $200,000 per event if the violation does not result in a death or $500,000 per event if the violation results in a death or as otherwise provided by law.”
- It also does not apply to tenants earning more than $99,000 annually.
There are some myths or misunderstandings about what the CDC declaration provides.
- Many tenants believe they do not need to make any rent payments at all through the end of the year. This is not true. Tenants have to make best efforts at paying partial rent.
- Some tenants believe that this is a rent forgiveness program. The order does not relieve tenants of their obligation to pay rent. Their balance continues to accrue potentially reaching a level the tenant will never be able to become current again.
- Just one person needs to execute the declaration and it will apply to the whole lease. This is absolutely not true. In the declaration first paragraph it is very specific that each adult listed on the lease must complete their own declaration.
- The declaration provides complete protection to the tenant from eviction. This is not correct. The declaration is clear: You may still be evicted for reasons other than not paying rent. So, lease violations are still cause for an eviction.
- All late fees, penalties or interest must stop. Totally incorrect. Part of the attestation by the tenant is that: “I further understand that fees, penalties, or interest for not paying rent or making a housing payment on time as required by my tenancy, lease agreement, or similar contract may still be charged or collected.”
- Landlords may not file for eviction until after January 1, 2021. This myth was clarified October 9th when the CDC released an update indicating landlords can still file eviction for nonpayment but that the cases can not be heard until after the start of 2021.
- There are no penalties for a tenant to falsely complete the declaration. This is also not correct. It clearly states that the tenant may be prosecuted, go to jail, or pay a fine if you lie, mislead or omit important information.
CDC Declaration Summary
Thus concludes a summary of the CDC declaration facts and myths. It is a simple document. The concerns regarding causing tenants to move to homeless shelters and the pandemic are fair and legitimate. It would have been helpful to landlords if this agreement required tenants to enter into a payment plan. As it is, our experience is there are no further efforts by the tenant to make rent payments. As the balances grow, it seems unlikely they will have the ability to pay the accrued balance whenever the order is allowed to expire.
Many real estate related organizations have spoken out and organized against this order. A few individual lawsuits are now making their way through the legal system. A change in our government will likely create more questions about this order leaving it ultimately to the courts to decide its ongoing validity.