What the CDC Eviction Moratorium means for Landlords?
If you are a landlord, you have probably heard the most recent news from the CDC halting evictions for non payment through the rest of 2020. Considering evictions in my home state of Pennsylvania were halted back in May, its been a tough year for many landlords. As far as I am aware, there is no relief for landlords who still need to pay their bills, despite the lapse in income.
What You Need to Know
The eviction moratorium covers 43 million income eligible renters across the country and is aimed at helping renters in localities where city or state eviction moratoriums do not provide greater protections. It does not establish rental payment assistance to help cover landlord expenses nor does it cancel rent. Payments that go unpaid will be due as soon as the moratorium ends at the end of the year. Therefore, months of rent may be due at once. If not paid, the eviction process can then be started.
This order was published September 4 through December 31 of 2020. In order for tenants to invoke protection they must provide their landlord with a signed copy of the declaration included in the order.
Who is Eligible?
All renters who earn less than $99,000 and all joint filers who earn less than $198,000 are protected from eviction due to nonpayment. This is the widest-spread eviction moratorium yet in the US during the pandemic.
Additional criteria required to be eligible is:
The tenant has tried to obtain government rental assistance.
The tenant meets the income eligibility requirements, with an expected income in 2020 less than $99,000, or $198,000 for joint filers, received a stimulus check under the CARES Act or was not required to report any income to the IRS in 2019.
The tenant is currently unable to pay rent in full due to loss of income or heightened medical expenses.
The tenant is trying to make timely partial payments, using his or her “best efforts.”
The tenant has no other housing options without posing a health risk, including living in close quarters with others or resorting to homelessness.
The order stops evictions for nonpayment of rent, as long as the tenant meets the criteria above and gives his or her landlord a signed declaration. By signing the declaration, the tenant acknowledges that rent is still due, he or she must still follow the parameters of the lease agreement and that at the end of the moratorium, any rent that went unpaid is due in full.
By signing it, however, you are also attesting to attempts to receive government aid and promising to pay what you can in rent continuously, among the other requirements, under penalty of perjury.
However, if a tenant violates the lease in another way, such as breaking the law or threatening the health and safety of other residents, eviction can still occur. Keep in mind, this does not supersede local moratoriums, so if a state or city eviction moratorium prevents ALL evictions for any reason, the federal order does not reestablish evictions for reasons beyond nonpayment of rent.
Who is NOT Eligible?
If a renter earns more than $99,000 per year, or more than $198,000 per year as a joint filing couple, they are not eligible for the eviction moratorium.
Final Thoughts
While many tenants will fall under protection of the order, landlords do not receive any relief. The forbearance on foreclosures under the CARES Act which delayed foreclosure activity through the end of July has now expired. This means landlords are not granted the same forgiveness due to lack of payment, yet their tenants do not have to pay.
On average the mortgage makes up about 1/3 of the cost to operate a rental property, therefore if landlords are struggling to pay their mortgage, they may also be struggling to pay taxes, employees, contractors and general upkeep.
While I understand the importance of protecting tenants from eviction during this time, I am also human. I know times are tough for people. If I have a tenant who needs help, I’ll help them. Unfortunately, despite the good intentions of this moratorium, it has allowed unreliable tenants an extended excuse to not pay rent. The same tenants we always struggle with are the same tenants taking advantage of the eviction moratorium. Its unfortunate and very challenging for landlords.
The domino effect this order may potentially have on landlords and their families, incomes, contractors, employees and ultimately the future housing market will be tough to overcome. I’m hoping the country can get back on its feet sooner than later to restore the bit of normalcy we once had.
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