Coronavirus Impact Updates

CDC Order to Temporarily Halt Residential Evictions Nationwide

Posted In Coronavirus

Coronavirus

On August 8, 2020, President Trump directed his administration to prevent residential evictions and foreclosures resulting from financial hardships caused by the COVID-19 pandemic. Specifically, his Executive Order (EO) states that the administration will take all legal measures needed to prevent this activity. In order to prevent the further spread of the virus, the EO tasks the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) to consider measures to temporarily prohibit residential evictions for failure to pay rent due to COVID-19 hardships.

In response to this EO, the CDC, which is part of the HHS, filed an Order on September 1, 2020 under Section 361 of the Public Health Service Act to temporarily halt residential evictions to prevent the further spread of COVID-19. This Order is set to be published (and made law) on September 4, 2020. Under Section 361 of the Public Health Service Act, the Secretary of HHS is authorized to take measures to prevent the entry and spread of communicable diseases from foreign countries into the United States and between states. The Order goes on to justify the measure of a temporary halt of residential evictions by stating that an eviction moratorium is like quarantine, isolation, and social distancing, which can be an effective public health measure utilized to prevent the spread of communicable disease. Furthermore, the Order states that housing stability helps protect public health because homelessness increases the likelihood of individuals moving into congregate settings, such as homeless shelters, which then puts individuals at higher risk to COVID-19. In short, the Order is a temporary eviction moratorium and is justified as a preventive measure against the further spread of COVID-19.

TERM AND SCOPE

Under the Order, a landlord (generally defined as any owner of a residential property or other person with a legal right to pursue eviction or possessory action), shall not evict any covered person (generally defined as any tenant, lessee, or resident of a residential property who provides to their landlord a declaration under penalty of perjury) from any residential property in the fifty (50) United States plus the District of Columbia during the effective period of the Order. The effective period of the Order is set to commence on September 4, 2020 and run to December 31, 2020. The Order does not apply in any State, local, territorial, or tribal area with a moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements (halt on evictions) in the Order and expressly states that any State, local, territorial or tribal area may enact any similar or greater level moratorium on residential evictions during the effective period.

RENT STILL REQUIRED; PENALTIES FOR VIOLATION

The Order does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation under a tenancy, lease, or similar contract. Further, nothing in the Order precludes the landlord from charging or collecting fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable lease. For a resident to invoke the CDC’s Order or protections therein and become a “covered person” or protected resident, the resident must provide an executed copy of the Declaration form found here (or a similar declaration under penalty of perjury is permitted) to their landlord. Note the Declaration can be provided at any time during the effective period of the Order. Additionally, the Declaration states that a resident/tenant can only be a “covered person” if they meet certain criteria. A “covered person” is someone that:

  1. has used best efforts to obtain available governmental assistance for rent or housing;
  2. either expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or $198,000 if filing a joint tax return), was not required to report income in 2019 OR received Economic Impact Payment stimulus check;
  3. is unable to pay full rent or make a full housing payment due to substantial loss of income, loss of compensable hours of work or wages, lay-offs or extraordinary out-of-pocket medical expense (7.5% of one’s adjusted gross income for the year);
  4. is using best efforts to make timely partial payments as the individual’s circumstances pay permit; and
  5. if evicted would likely become homeless or need to move into a new residence shared by others in close quarters.

Note, while a tenant/resident will need to meet the above criteria, it will be very difficult and time consuming for any owner, landlord or property manager to prove that a tenant/resident does not meet such criteria and/or is making false statements. The Declaration does state that false or misleading statements or omissions may result in criminal and civil actions for fines, penalties, damages or imprisonment, but the time and effort an owner, landlord or property manager would need to take to prove this would likely outweigh the owner, landlord or property manager waiting until the end of the moratorium to collect rent. In addition to the resident providing a signed Declaration, each adult listed on the lease, rental agreement, or housing contract is directed to also complete and provide a Declaration to landlord. Finally, the Order does permit “covered persons” being evicted for reasons other than not paying rent or making a housing payment.

In closing, the Order again states that the temporary halt on evictions constitutes a reasonably necessary measure under the law to prevent the further spread of COVID-19 throughout the United States and that the CDC has to take this measure due to the States, localities, or U.S. territories not meeting minimum standards to prevent the interstate spread of COVID-19. The Order states that public notice and comment would not be appropriate for the Order considering the public-health emergency caused by COVID-19, which has made it impracticable and contrary to the public health, and by extension the public interest, to delay the issuance and effective date of the Order in allowing notice and comment. Finally, the Order includes provisions related to violation of the Order. Specifically, a person found violating the Order may be subject to a fine of no more than $100,000 or one year in jail, or both, if the violation does not result in a death; or a fine of no more than $250,000 or one year in jail, or both, if the violation results in a death; 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.

NEXT STEPS

Based on review of the Order, should other governmental agencies and/or forces not intervene before Friday, September 4, 2020, it is anticipated that the Order will become law and there will be a halt on evictions for all residential landlords and properties in all States until December 31, 2020.  It is recommended that all owners, landlords and property managers be familiar with the Order and ready to receive and document Declarations from tenants/residents. As a preventive step or to discourage abuse of the moratorium by tenants, all owners, landlords and property managers should consider and seek legal counsel to notify tenants of their continued obligation to pay rent, comply with any other obligation under their lease and whether collection fees, penalties, and/or interest will be applied to past due amounts, regardless of receipt of any Declaration.

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