COVID-19 and the Eviction Moratorium: Part Two – How It Works

In our last blog, we talked about the various federal and state attempts to mitigate COVID-19’s impact on the real estate and rental market. From the $2.2 trillion federal stimulus introduced with the CARES Act to Indiana Governor Eric Holcomb’s previous suspension on evictions, there were different strategies employed to mitigate financial strain and avoid mass homelessness. However, recently we saw an unprecedented executive action from the Centers for Disease Control and Prevention under the Trump administration, and a nation-wide eviction moratorium that is far more expansive than the CARES Act.[i]

Coming in as other eviction moratoria eviction protections have either expired or are set to expire,[ii] this new federal eviction moratorium officially took effect on September 4th and is tentatively expected to end on December 31st, 2020. The action suspends the possibility of evictions for millions of renters who have suffered financially because of the COVID-19 pandemic.[iii] It is important to note though that it does not come with any accompanying financial assistance,[iv] and tenants are still responsible for any unpaid rent, including any additional charges or accrued interest, when the moratorium expires. This has led many to see this as a “band-aid” rather than a long-term solution to the problem.

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[i] Lieber, R. (2020, September 02). The New Eviction Moratorium: What You Need to Know. Retrieved from https://www.nytimes.com/2020/09/02/your-money/eviction-moratorium-covid.html

[ii] Lightfoot, X. D., & Wells, H. R. (2020, September 3). CDC Enacts New Residential Eviction Moratorium. Retrieved from https://www.natlawreview.com/article/cdc-enacts-new-residential-eviction-moratorium

[iii] Lieber, R. (2020, September 02).

[iv] Badger, E. (2020, September 03). Why an Eviction Ban Alone Won’t Prevent a Housing Crisis. Retrieved from https://www.nytimes.com/2020/09/03/upshot/eviction-moratarium-rent-crisis.html

What Does It Say?

According to the order, any “landlord, owner of residential property, or other person with a legal right to pursue eviction or possessory action” is prohibited from evicting a “covered person” through the end of this year.[i] In this case, a “covered person” is defined as “any tenant, lessee, or resident of a residential property who provides to their landlord… a declaration under penalty of perjury.” Most notably, the order seems to include evictions that are already underway and currently filed, but are waiting on hearings that are covered under the moratorium. It also seems to cover rent to buy and contract deed transactions in addition to leases. There are limitations though: the moratorium only protects against evictions for nonpayment of rent and does not protect against expirations, thus allowing for late fees and penalties if they are already allowed in the lease.[ii]

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[i] Lightfoot, X. D., & Wells, H. R. (2020, September 3).

[ii] Vetstein, R. (2020, September 3). CDC eviction moratorium lawsuit legal challenge. Retrieved from http://massrealestatelawblog.com/tag/cdc-eviction-moratorium-lawsuit-legal-challenge/

Who is Eligible?

In order to qualify for the protections offered by the moratorium, a tenant must be able to attest to certain facts relating to their hardship or inability to pay rent prior to gaining eviction protection. According to the moratorium order, a renter needs to match the following requirements: [i]

• The tenant used their “best efforts” to obtain any/all forms of government rental assistance
• The tenant experienced a “substantial” loss of household income, a layoff, or “extraordinary” out-of-pocket medical expenses.
• The tenant expects to earn no more than $99,000 in annual income for 2020 (or no more than $198,000 if filing a joint tax return), was not required to report any income in 2019 to the IRS, or received a stimulus check through the CARES Act.
• The tenant must make their “best efforts” to make “timely” partial payments that are as close to the full amount due as “circumstances may permit,” considering other nondiscretionary expenses.
• The tenant’s eviction would “likely” lead to either homelessness or their having to move to a place that was more expense or where they could get sick from being close to others

Assuming they meet these requirements, renters must fill out and sign the CDC’s Declaration Form,[ii] delivering it to their landlord, the owner of the residential property where they live, or another person who has a right to have them evicted or removed from where they live.[iii] If a landlord challenges their renter’s initial assessment, the renter should provide “reasonable” specifics to prove their eligibility. Furthermore, the order claims that the declaration is a “sworn testimony,” so it is possible to be prosecuted, jailed, or fined if you lie, mislead or omit important information. [iv]

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[i] Lieber, R. (2020, September 02).

[ii] Lieber, R. (2020, September 02).

[iii] Vetstein, R. (2020, September 3

[iv] Lieber, R. (2020, September 02).

Is This Legal?

The CDC’s moratorium on evictions is considered “unprecedented,” as its public health emergency powers usually involved quarantines to prevent the spread of diseases. The organization claims that the order was an “emergency action,” which it is entitled to take under the law,[i] citing Section 361 of the Public Health Service Act as authorizing the moratorium. It states that allowing mass evictions would be “impractical and contrary to the public health” according to the CDC, while also arguing that the order could help save the housing market[ii] and mitigate the financial impact of the pandemic.[iii]

Despite the CDC’s intentions though, there are several issues with the moratorium, leading many to argue that might be illegal and unconstitutional. Many state and county courts could ignore the order, following their own local rules instead (especially if they already have a moratorium in place),[iv] and even if they do agree to follow it, the requirements are often so vaguely worded that they can be interpreted rather broadly. Still, the order does provide the federal government, with the authority to prosecute potential violators, so there will likely be major conflict on this matter in the near future.[v]

In our next blog, we’ll discuss what real estate managers can do in response to the moratorium. Until then, if you would like further information, please call us at (219)-230-3600 or contact us via email at support@ccsklaw.com.

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[i] Lieber, R. (2020, September 02).

[ii] Badger, E. (2020, September 03).

[iii] Lieber, R. (2020, September 02).

[iv] Lieber, R. (2020, September 02).

[v] Lightfoot, X. D., & Wells, H. R. (2020, September 3).