WILMOTH Group Update - Nationwide Eviction Moratorium

Update – September 17, 2020

National Association of Realtors® (NAR) President Vince Malta met with officials from President Donald Trump’s administration on Sept. 16 to highlight concerns over a recent executive action halting evictions through 2020. Alongside other NAR liaisons and committee leaders, Malta stressed the need for a more sustainable long-term solution to representatives from the National Economic Council and White House Office of Domestic Policy Council.

“While NAR is supportive of administration efforts to ensure struggling Americans can remain in their homes, this order will bring chaos to our nation’s rental housing sector and put countless property owners out of business,” Malta said immediately following the announcement by the White House and the CDC.

Update – September 8, 2020

NAR (National Association of Realtors) is part of a 12-association real estate coalition that wrote a letter to the top Democrat and Republican leaders in the House and Senate. The letter requests renter and landlord aid in the face of Pres. Trump’s moratorium banning most evictions and foreclosures until Jan. 1, 2021.

In the letter, the coalition told Congress that the latest eviction ban will “ultimately harm the very people it aims to help. It will be impossible for housing providers, particularly small owners, to meet their financial obligations and continue to provide shelter to their residents.” I adds that it will also saddle renters “with an unmanageable amount of debt due to months of unpaid rent.”

The letter notes that a number of assistance proposals have been suggested, though it doesn’t back any specific solution. It does, however, ask Congress to “ensure whichever delivery mechanism(s) is chosen swiftly distributes funding at the property-level, while also protecting struggling renters.”

The letter is signed by:

  • CCIM Institute
  • Council for Affordable and Rural Housing
  • Institute of Real Estate Management
  • Manufactured Housing Institute
  • Mortgage Bankers Association
  • National Affordable Housing Management Association National Apartment Association
  • National Association of Home Builders
  • National Association of Housing Cooperatives National Association of REALTORS
  • National Leased Housing Association
  • National Multifamily Housing Council

Update – September 4, 2020

National Association of Realtors issues strongly worded statement in support of rental owners.

“While NAR appreciates and is supportive of administrative efforts to ensure struggling Americans can remain in their homes, this order as written will bring chaos to our nation’s critical rental housing sector and put countless property owners out of business,” Vince Malta, NAR’s president, said in a statement. “Any eviction moratorium must also come with rental assistance for property owners, the vast majority of which are mom-and-pop investors and are still required to meet their financial obligations even as they cease to receive income on their properties. An untailored eviction moratorium will bring more havoc to our economy, not less, and will put America’s 43 million renter households at significant risk.” 

Update – September 3, 2020

From our attorney Kathryn Ransburg:

Attached is a copy of the order from the CDC which will go into effect tomorrow. In short, it allows tenants to stop an eviction from happening by providing to you, the landlord, a declaration signed under penalties of perjury stating:

  1. The individual has used best efforts to obtain all available government assistance for rent or housing;
  2. The individual expects to earn no more than $99,000 in 2020 or $198,000 for joint filers;
  3. The individual cannot make full rent payments due to substantial loss of income, hours/wages, lay-off, or extraordinary out-of-pocket medical expenses (more than 7.5% of household income);
  4. The individual is making best efforts to make timely partial payments as close to the full payment as possible; and
  5. The individual will be made homeless or forced to live in close quarters if evicted.

A copy of the exact language that must be used is on pages 34-37 of the CDC Order. If the tenant gives this declaration to the landlord, an eviction cannot be filed. This Order does NOT prevent emergency evictions or evictions for anything other than failure to pay rent.

Right now, there is no ability to rebut the declarations in this document prior to filing, and because the document comes from the CDC, there is a serious question about whether it can even be heard in small claims or any other state court. I am assuming that if the tenant presents this declaration after the eviction has been filed, then we can challenge the validity of the declaration in court but we are still waiting on guidance from the courts. I and my colleagues are hoping there will be emergency requests for an injunction filed by national real estate stakeholders in order to keep this action from going into effect tomorrow.

Update – September 2, 2020

Here is a summary of the order from the National Association of Residential Property Managers.

From Inman Press:

The order does not relieve renters from the obligation of paying rent or complying with other terms of a lease. It also does not prevent landlords from tacking on fees, penalties or interest if a renter does not pay rent. Even under this eviction moratorium, renters can still be evicted for reasons other than failure to pay rent.

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.”

The National Association of Realtors and other housing groups blasted the order because it does not set aside any funding for either renters or property owners.

“While NAR appreciates and is supportive of administration efforts to ensure struggling Americans can remain in their homes, this order as-written will bring chaos to our nation’s critical rental housing sector and put countless property owners out of business,” said NAR President Vince Malta in a statement.

“Any eviction moratorium must also come with rental assistance for property owners, the vast majority of which are mom-and-pop investors and are still required to meet their financial obligations even as they cease to receive income on their properties.”

“An untailored eviction moratorium will bring more havoc to our economy, not less, and will put America’s 43 million renter households at significant risk. NAR strongly encourages Congress to pass immediate legislation that would instead provide emergency rental assistance programs directly to housing providers, protecting Americans’ access to affordable housing and our nation’s critical rental housing sector.”

From the National Association of Residential Property Managers:

Our team is working through the 37-page order and will be providing more analysis. Needless to say, we are disappointed in this action, especially since it is not coupled with any form of rental assistance to help keep landlords whole.

The order is written to be effective when it is formally entered into the Federal Register on Friday, September 4.

The order applies to renters who swear under penalty of perjury that the following are true:

  1. The individual has used best efforts to obtain all available government assistance for rent or housing;
  2. The individual either (i) expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return), (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;
  3. The individual is unable to pay the 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;
  4. 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; and
  5. Eviction would likely render the individual homeless – or force the individual to move into and live in close quarters in a new congregate or shared living setting – because the individual has no other available housing options.

It does not apply to evictions for things other than non-payment of rent, and it does not prevent charging late fees.

On Tuesday September 1, 2020 the Trump administration did something no real estate investor ever imagined possible. A nationwide ban on evictions. through the end of 2020 will apply to most renters.

It can be argued a President does not have the power to make such an order apply to individual states rights. This order though is based in a 1944 Public Health Service Act which gives the President broad quarantine powers. The order was put forward by the Centers for Disease Control (CDC) making this a national health order. 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.

There are a few conditions for the moratorium to apply.

  • Tenants have to attest to substantial loss of household income
  • Tenants have to attest to the inability to pay full rent
  • Tenants have to make best efforts at paying partial rent
  • Tenants have to attest that eviction will leave them homeless or force them to live with others in close quarters.

There is a form that the government will publish on the CDC website that must be completed by the tenants in order to apply this moratorium to their situation. The order provides for criminal penalties for landlords who violate it. It does not relieve tenants of their obligation to pay rent. It also does not apply to tenants earning more than $99,000 annually.

Bob Pinnegar, president and CEO of the National Apartment Association, said his organization and its members were deeply concerned by the moratorium. He said the lack of money for rental assistance risked creating a cascade when apartment owners did not receive rental payments and then fell behind on maintaining their properties or paying property taxes or mortgages.

We will update this post as more information is learned.

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WILMOTH Group is headquartered in Indianapolis, Indiana and Fort Myers, Florida. We focus on providing creative local solutions for a variety of residential real estate needs including, properties for sale, property management services in Indianapolis, and short-term management services in Tampa and Fort Myers.