On September 1, 2020, the U.S. Center for Disease Control and Prevention (CDC) issued its order regarding the “Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19″. The order went into effect on September 4, 2020 and prohibits residential landlords from evicting certain tenants through December 31, 2020. 

Who Does the CDC Order Protect? 

The order protects tenants who sign and submit a declaration swearing to the fact that they: 

  • Have used their best efforts to obtain government assistance for housing 
  • Are unable to pay their full rent due to a substantial loss in income 
  • Are doing their best to make timely partial payments 
  • Would become homeless or have to move into a shared living setting if they were to be evicted 

In addition to the above requirements, one of the following financial criteria must apply for a tenant to be protected: 

  • Expect to earn no more than $99,000 (individuals) or $198,000 (filing joint tax return) in 2020 
  • Not have been required to report any income to the IRS in 2019 
  • Have received an Economic Impact Payment (stimulus check) under Section 2201 of the CARES Act 

The moratorium covers those who meet these requirements, so long as they sign a declaration affirming these facts and provide it to their property manager, owner of the residential property, or another person who has the right to evict the resident. Additionally, we are aware that many judges are permitting these Declarations to be submitted in Court at hearings on non-payment cases. Each adult listed on the lease or rental agreement must complete a declaration in order to be protected by the moratorium. Unless the CDC order is extended or changed, the order stays the eviction of covered tenants through December 31, 2020. 

The order does not apply in places with their own moratorium on residential evictions that provide the same or greater level or public-health protection than the requirements in the CDC order.  

How Is the CDC Order Impacting Property Managers? 

The CDC order ultimately harms property managers as they cannot evict covered residents solely on the grounds of non-payment, nor can they regain possession and lease the property to another resident who is able to pay the rent. Property Managers are currently “stuck” because if a resident is unable to pay rent now, they most likely will not be able to pay later. Though a CDC Order prevents the eviction of residents, it does not relieve their rent obligations – delinquent balances will continue to accrue and increase. 

The National Apartment Association (NAA) and National Multifamily Housing Council (NHMC) have been aggressively lobbying against the order. They have called for direct rental assistance, which is the only policy that keeps people housed and directly addresses owners’ and operators’ needs. Despite continued calls for this much-needed relief from a chorus of voices, including renter advocates and real estate groups, Congress has failed to enact direct rental assistance. This inaction, paired with the CDC eviction moratorium, devastates the industry in the short-term and furthers the housing affordability crisis to the detriment of the broader economy in the long-term. 

“Eviction moratoria saddle the apartment industry solely with the responsibility of offering a service without compensation, all while operating at a potential deficit,” said NAA President & CEO Bob Pinnegar. “Rental housing works on extremely narrow margins and, though last paid themselves, owners still need to pay extensive bills.” 

In the long-run, the CDC order hurts all parties. Property Managers are not receiving rent payments, which means they can’t take care of their properties, can’t pay their employees, or their own property tax bills; residents are accruing increasing amounts of debt that they may never be able to repay; and local courts are left to arbitrate between public health and personal property rights. 

A high participation rate of residents in the CDC moratorium could be very detrimental to landlords. Facing a severe reduction of cash flows, property owners risk bankruptcy, foreclosure, and staff layoffs. 

Unlike the CARES Act moratorium, which had no enforcement mechanism, the CDC eviction moratorium imposes significant criminal penalties on violators. An individual who violates the order, can face a fine of up to $100,000 and/or one year in jail. If a company violates the order, they could face a fine of up to $200,000 per violation. If a landlord evicts a resident in violation of the order, and the resident then passes away due to COVID, a $500,000 fine is possible. 

The order does not prevent a property manager from seeking to challenge the truthfulness of the resident’s declaration in any state or municipal court, nor does it prevent landlords from filing Rent Suit actions for failure to pay rent – it only forestalls the physical removal of the resident from the unit. However, the protections of the order apply to the resident until the court decides otherwise. 

What Happens When the Order Expires? 

Assuming the moratorium is not extended, when the order expires on December 31, landlords will again be able to evict tenants in accordance with state law. While it is not the property manager’s responsibility to provide documents about the moratorium to residents, it is essential that you still communicate with your residents consistently. Active conversations regarding a resident’s ability and intention to pay, current economic situation, and awareness of the consequences and alternatives to non-payment are critical.  

Utilizing software to manage your delinquencies and improve your rent collection processes and results is more necessary than ever during these uncertain times. ClickNotices’ cutting-edge technology helps increase productivity and streamline rent collection both during and after the COVID-19 crisis. ClickNotices offers a range of services, depending on your location and needs. From providing a variety of Notice products to boost resident communication to full-service Eviction Management Services, we have your delinquency management covered with transparency, consistency, and efficiency. Leveraging our platform will help manage your daily delinquency during the crisis and better position yourself when the dust settles. 

Disclaimer: The information provided in this blog post does not, and is not intended to, constitute legal advice.