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What Does the CDC’s Eviction Moratorium Mean for Landlords?

News,Real Estate

Due to the current COVID-19 pandemic sweeping the country, the Centers for Disease Control (CDC) issued an order (the Order) on September 4, 2020, that temporarily places a moratorium on residential evictions. This order is in effect from September 4, 2020, through December 31, 2020.

At this time, many tenants have questions about how the order works: What exactly is a “moratorium on evictions”? To whom does the Order apply? What do they need to do? Likewise, many landlords are wondering: Does this mean that all of their tenants can stop paying rent? Is this the same as the recent CARES Act? Can the CDC even issue an order like this? Fortunately, the expert real estate attorneys here at The Farah Law Firm can help you interpret this recent action and provide answers to your questions.

Why is the CDC issuing this order?

The rapid spread of COVID-19 has crippled a large number of industries across the country. As of August 2020, there were 13.6 million unemployed people in the U.S. Though this was an improvement from the previous month, the average number of unemployed people over the prior six-month period hit levels not seen since the Great Depression. These staggering unemployment figures have led to a growing number of people struggling to pay for their necessities—including  their rent.

One of the most effective ways scientific studies have shown will slow the spread of the coronavirus is limiting person-to-person contact. But, if people have to leave their residences because they cannot afford rent and are forced to stay with others, it becomes impossible to not come into close contact with other people, thus potentially catching or spreading the disease. In light of this difficulty, the CDC issued an order (85 FR 55292) to help keep people in their homes.

The Order is a temporary eviction moratorium with the goal of slowing the spread of the coronavirus. Under section 361 of the Public Health Service Act (42 U.S.C. §264) and 42 CFR §70.2, the CDC is allowed to issue such orders if the Director of the CDC feels that any individual state’s orders are not enough to curb the spread of communicable diseases. It should be noted though that the Order does not overrule a state’s order if that state’s order is more stringent.

What does “eviction moratorium” mean?

Under the Order, a landlord (a term which applies the owner of a residential property or any other person who would have a legal right to pursue an eviction) is not allowed to evict a “covered” residential tenant solely because of the nonpayment of rent. As of the date of this article, this moratorium is being interpreted as a halt on all steps of the eviction process.

In Texas, there are four steps that a landlord normally must go through in order to evict a tenant. These are:

  1. The notice to vacate
  2. The filing of an eviction petition with the court
  3. The hearing held by the court
  4. The issuance of a writ of possession

The Order stops an eviction at any of the above steps, even if the eviction was already in process. However, for any eviction that was already in process, it is suggested that an abatement be requested until January.

Who exactly is “covered”?

For a tenant to take advantage of the moratorium, the Order states that a tenant must truthfully meet the requirements in accordance with the statements below; must sign under the penalty of perjury (28 U.S.C. §1746) a document containing the statements below (a Declaration); and lastly, must give the signed document to his or her landlord. The necessary statements in the Declaration are:

  • That the tenant has used his or her best efforts to access any and all available government rental/housing assistance.
  • That the tenant either (a) expects to earn less than $99,000 for the year 2020 (or less than $198,000 if filing jointly); (b) was not required to report any income in 2019; or (c) received an Economic Impact Payment from the CARES act (commonly referred to as a “stimulus check”).
  • That the tenant is unable to pay his or her full rent because of either (a) a substantial loss in income, (b) a reduction in payable work hours, or (c) extraordinary out-of-pocket medical expenses.
  • That the tenant is using his or her best efforts to pay as close to full rent as possible.
  • That if the tenant were evicted, he or she would likely either become homeless or would be forced to move in to close quarters with others because he or she has no other available housing options.
  • That the tenant understands that he or she must still pay rent and comply with all other obligations of his or her lease/rental agreement. Also, that the tenant understands that any other late fees, penalties, or interest for not paying rent may still be charged.
  • Finally, that the tenant understands that this Order ends on December 31, 2020. At that time, they may be required to pay all of the unpaid rent, and a failure to do so may make them subject to an eviction following state and local laws.

There are a few definitions and points that should be noted. First, “available government assistance” in the first statement means any governmental rental or housing payment benefits available to the individual or any household member. Next, the loss mentioned in the third statement does not strictly have to be due to COVID-19. Any loss of work or hours during this time will qualify. Furthermore, in that same statement, “extraordinary” refers to any unreimbursed medical expense likely to exceed 7.5% of the tenant’s adjusted gross income for the year. In the fifth statement, “other available housing” means any available unoccupied residential property or other space for occupancy in any seasonal or temporary housing that would not violate federal, state, or local occupancy standards and that would not result in an overall increase of housing cost to the tenant. Be aware that this does include housing at a lower level of accommodations than the tenant’s regular housing.

During the effective period of the Order, the tenant should pay whatever is possible toward his or her rent and should work with his or her landlord to arrange for any possible payment options, as the statements require that a tenant use his or her best efforts. Also, to be clear, the Order does not erase any due rent or fees. As the last statement points out, once the moratorium ends on December 31, 2020, the landlord could ask for all of the unpaid rent in one lump sum, which could include any late fees or other charges for each period the rent was due but not paid during the moratorium.

This next note is probably the most important. Just because a tenant meets all of the requirements in the statements above, it does not mean they are automatically covered. To be covered, a tenant must meet the requirements, sign a Declaration with the above statements under the penalty of perjury, and give the Declaration to their landlord. Along with the Order, the CDC also provided a form (found here) with the statements that can be signed, printed, and given to a landlord. But the submitted document does not have to be the specific provided form. Any document that contains the statements and is signed and submitted would suffice. The Order does not place a responsibility on a landlord to provide a blank form or any other information about the moratorium to a tenant. The Declaration does not need to be notarized, just signed by the tenant. Lastly, every adult on the lease/rental agreement must sign and submit, either all on one document or each on individual documents.

What does the eviction moratorium mean for landlords?

Until a landlord has received a Declaration from a tenant, it is business as usual. All communications and eviction proceedings can continue as normal. Once a tenant gives their landlord a signed Declaration, they are then covered by the Order and only then can the landlord not evict for nonpayment of rent. However, the landlord is still allowed to evict for other nonmonetary reasons. For example, if a tenant is engaging in criminal activity; is threatening the health and safety of others; is damaging or posing a significant risk of damage to the property; is violating any applicable building, health, or similar code; or is violating any other lease/rental agreement obligation besides the payment of rent, the Order does not protect them and the eviction can proceed.

The Order applies to all residential tenancies (but not commercial tenancies), regardless of how many leasable spaces the landlord owns. Also, the Order applies to both written and oral rental arrangements (though if you have an oral agreement in place, we highly suggest you contact the attorneys at The Farah Law Firm to get a written agreement in place; oral agreements are only as good as the paper they are written on!). Finally, the Order does not in any way interfere with any provisions or requirements a landlord has under the CARES Act.

As stated previously, a landlord and tenant should make their best efforts to work hand in hand to stay current on rent. Unfortunately, while the Order may stop the eviction of a tenant, it does nothing to protect a landlord that may, for example, be using the monthly rental income to actually pay for the property’s expenses and mortgage. Additionally, the possibility of a large lump sum payment due in January 2021 could spell added trouble for a tenant who was already struggling to make past rent payments.

Whether you are a tenant, a landlord, or just curious about the Order and how it may affect you, contact The Farah Law Firm regarding your situation and we’ll be happy to lend our expertise as we all attempt to maintain some normalcy in the uncharted territory of this pandemic.

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