Rent Reckoning: Coronavirus and Eviction Moratoriums
This year has been a year like no other. As a pandemic has ripped across the world, an important issue that people are facing is whether or not they can afford their essential monthly expenses. With people losing their jobs and then having to deal with significant backups trying to get unemployment benefits, it has been an immense struggle for millions of Americans to make ends meet. Early in the pandemic, the federal government ordered a temporary moratorium on evictions; however, that moratorium, written into the CARES Act, expired in July. In response to that expiration, many states extended their own moratoriums on evictions. In addition the the response from various states, the Centers for Disease Control and Prevention issued an agency order that temporarily halted residential evictions starting September 4, 2020 through December 31, 2020 [1]. This order has become a source of contention throughout the United States.
Currently, there is a lawsuit that has been brought to the U.S. District Court for the Northern District of Georgia. In this lawsuit, the New Civil Liberties Alliance, joined with the National Apartment Association, is suing the U.S. Department of Health and Human Services, the C.D.C., and the respective Secretary and Acting Chief of Staff of those agencies. The C.D.C's order states that "a landlord, owner of a residential property, or other person with a legal right to pursue eviction or possessory action, shall not evict any covered person from any residential property in any jurisdiction to which this Order applies during the effective period of the Order" [1]. Richard Lee Brown, as with many other landlords across the United States, intends to evict his current tenant. Under the C.D.C's order, his tenant is a "covered person." His argument is that he has provided everything that he is responsible for per their contract and is suffering significant economic damages, so he should receive the unpaid rent and be able to replace the tenant with one who will actually pay their rent [2]. He continues to allege that the C.D.C. "exceeded its statutory and regulatory authority by issuing the halt in residential evictions order" and that the order violates the Supremacy Clause of the U.S. Constitution [2].
The District Court heard this case on October 20, 2020 and could potentially issue some sort of injunction in the coming weeks. Such a decision could affect millions of people as studies have shown that more than 6 million households were unable to make their rent or mortgage payments in September [3]. Various state courts have already had similar complaints filed. The Texas Supreme Court recently clarified that landlords can still pursue evictions by challenging the C.D.C. order.
Questions
Do you think that the CDC should have the ability to issue declarations halting evictions?
Is the C.D.C's order a violation of the Supremacy Clause?
What do you think will happen in these various lawsuits?
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That is such a hard situation, because both tenant and the landlord are potentially suffering. I think if there is going to be an order form the government for no evections, then landlords should be able to apply for compensation in situations where they cannot afford to let their payments on the property go unpaid. What happens if the landlord has a loan on the property and structure, and the bank forecloses? No one wins.
ReplyDeleteThat's the real problem right there Missy. The bank certainly doesn't want the property either. Most banks are doing everything they can right now to prevent foreclosures. In fact, the CARES Act has a potential to cover landlords if their loan is through Freddie Mac or Fannie Mae (https://www.fhfa.gov/Homeownersbuyer/MortgageAssistance/Pages/Coronavirus-Assistance-Information.aspx) in the same way the CDC is trying to protect renters- by waiving late payments and staling foreclosures.
DeleteI think that if the CDC has enough evidence to show that public health will be substantially impacted if evictions are not halted, they should have some ability to do so. However, this makes me question why they CARES act was not formally extended in the first place? It seems like the intent behind the CARES act is to protect those that have been negatively impacted by the virus (health, job, finances)-which is a great protection to offer. But it also seems like this is a situation which prioritizes the health and well-being of some individuals, over others. Everyone has been impacted by COVID-19 but some people have experienced especially extensive hardships. If a landlord is not getting their money and subsequently evicts a tenant for failure to pay-the landlord will pay the court costs and still won’t get their money, because if the tenant couldn’t pay their rent to begin with, they certainly won’t be able to pay the additional fees and potential restitution. I agree with Melissa- nobody really wins here.
ReplyDeleteIn response to whether the CDC’s order violated the Supremacy Clause, I feel like this can be argued on both sides. If we were not in the middle of a pandemic and under “normal” circumstances, the order may violate the Supremacy Clause-unless the CDC was granted certain power to issue the order. On the other hand, COVID has posed many questions of constitutionality and these lawsuits may be unsuccessful for that reason.
Do you think that the CDC should have the ability to issue declarations halting evictions?
ReplyDeleteThis is a hard question for me because I am a landlord. I have two renters that have received community assistance to pay their rent. One paid one month late but I was contact in advance my her and community action to let me know they were working on getting her rent. It arrived about 40 days late. Even considering this I support the ability to issue this type of an order. However, I think it should have also addressed the concern of the lard lords. I am not a large property management company. I have rentals as a retirement investment. If I was retired and living on this income, I could have been in a lot of trouble myself.
Is the C.D.C's order a violation of the Supremacy Clause?
The Supremacy Clause allows the federal government to establish control over the areas that the constitution has allowed. If the cares act has the ability to place a moratorium on evictions then it established that the federal government has the right. It would have been cleaner to have the act extended or linked to the national emergency. That being said we have established that the federal government has the right under a specific act. If congress has given the CDC the right to regulate public health it is not a hard argument to show that thousands of people on the street would be a public health problem. Personally, I think the states should own this one but individual politicians will be under pressure from property managers losing money and make this very difficult. The CDC if far enough removed they could act without this pressure.
What do you think will happen in these various lawsuits?
I think the moratorium will stand. The political impact of large scale evictions would be a difficult pill to swallow.
I really appreciate the perspective that you have as a landlord. While I sympathize with people on both ends of this issue, most of what I have heard in the past was from the point of view of the renter who could not afford their rent. The Bloomberg article was the first time I saw anything from a landlord's perspective. Researching about these cases was really eye-opening!
DeleteI don't think the moratorium will stand. The constitution doesn't take into account "pandemics have exceptions". The executive branch allowing the HHS and CDC to issue such an order is a far stretch from emergency conditions pertaining to “inspection, fumigation, disinfection, sanitation, pest extermination” that is within its emergency pandemic swath.
DeleteThere is an executive order tied to this also. It is also a far stretch from creating an order to stop evictions. It describes efforts to explore how not to evict tenants. (https://www.whitehouse.gov/presidential-actions/executive-order-fighting-spread-covid-19-providing-assistance-renters-homeowners/)
The first exec order with a moratorium is tied to the pre-emptive CARES act. Makes sense, don't evict people because we have a act being passed shortly.
This wild order from a "branch" within the HHS that also ties the reason to a study that has a wide range of data and error of margin is a fire first, decide if I'm wrong later action. (my words and analysis) (https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/)
Based on U.S.C. § 70.2 Measures in the event of inadequate local control -- it appears the CDC has the authority, although the plaintiff makes a strong point that banning evictions is not on the list (which we realize is not comprehensive).
ReplyDeleteOn the CDC’s own website is an explanation of what they do, why they exist, what they’re charged with.
Under CDC Rules and Regulations [ https://www.cdc.gov/regulations/index.html ] at the section Who Is In Charge? specifies “The Federal Government]” and among its duties “ May assist state and local authorities in preventing the spread of communicable diseases.” So IS the Commerce Clause at question here? Is the CDC usurping the authority of the state (NC) by issuing and enforcing the federal ban on evictions that affects North Carolina, too? Because reading that sentence, I wonder what “assist” means. If North Carolina enacts a moratorium on evictions, but landlords are routinely kicking people to the curb, could the CDC then step in to “assist”?? As well, “preventing the spread of communicable diseases” is quite broad without specifics as to how and by what method, where, and when.
The President issued an executive order in early September that gave broad reach to the CDC to implement the order. The CDC is a government agency, part of the Department of Health and Human Services. Alex Azar is the Secretary, the Surgeon General (Vice Admiral (VADM) Jerome M. Adams, M.D., M.P.H.) works in the HHS department and is appointed. From a simple perspective, Congress formed the agency to make the rules, the President issued the executive order to allow for expansive power in the CDC, which determined a moratorium on evictions was an important factor in trying to stem the pandemic’s spread.
I think the plaintiff has a good argument – that the CDC powers under Public Health Code 42 – aren’t specific to the power to ban landlords form kicking out tenants who haven’t paid rent. Especially given (if I’m reading this right) U.S.C. 42 §264 (e) says that regulations in the code shouldn’t be interpreted as “superseding any provision under State law (including regulations and including provisions established by political subdivisions of States), except to the extent that such a provision conflicts with an exercise of Federal authority under this section or section 266 of this title.” Section 266 deals with quarantine in time of war.
Also, the conjecture posited by the plaintiff, that evictions will bring about mass homelessness and rapid community spread of the virus, is also solid. Unless there’s data to show … it really is a possibility and nothing more until it happens, possibly.
Personally, I think the order is a good one, keeping people solidly on the ground with somewhere to be and stay for the long haul during the global health crisis. I wonder if only landlords with Employment Identification Numbers, registered as LLC or dba or some such, would have been eligible for federal funding relief. Because that’s got to be tough – to own properties and be unable to pay mortgage.
Also, I found this quaint little reading, of April 2019.
ReplyDeletehttps://www.cdc.gov/ncezid/dgmq/feature-stories/pandemic-flu-100.html
which includes the Final Rule for Control of Communicable Diseases: Interstate and Foreign
here: https://www.cdc.gov/quarantine/final-rule-communicable-diseases.html
Diane - thanks for these.
DeleteIf I'm an analyst I would be on board with all the pandemic planning that was accomplished prior to 2020. I do remember the Gov't saying that all the pandemic reg's published were basically not relevant to what we have today. (my words) It's like having a plan for a bicycle to hit your car when there are 8 train tracks merging at your car.
DeleteCOVID has definitely provided a crystal-clear picture of how we are all interconnected. As I read the case and statutes I thought about both parties and how just like illness can spread so can homelessness. If the tenant is unable to pay their rent how can the landlord possibly pay their mortgage? What financial impacts could there be on the landlord’s own home? Do I think that the CDC should have the ability to issue declarations halting evictions? While I can see both sides, yes. I read §264. Regulations to control communicable diseases and their intent is to prevent the spread. Moving people out of their homes in a pandemic and into close proximity with friends or family members (who are most likely older) or out onto the streets does not assist in prevention. The CDC does not however remedy the issue at hand for the landlords and accordingly to Craig L. Price, real estate lawyer and partner at Belkin, Burden and Goldman, “real estate is a “passive” industry, landlords do not qualify for small-business loans or paycheck protection under the CARES Act which will inevitably put them in a financial bind. The mission for the Center for Disease Control is to “prevent the introduction, transmission or spread” and unfortunately regulations to accomplish this may cause significant economic issues.
ReplyDeletehttps://www.nytimes.com/2020/04/18/realestate/how-can-landlords-get-relief-if-their-tenants-cant-pay-rent-because-of-coronavirus.html
Omg, this is my third try to post.... what is the relationships to all this?!!
ReplyDeleteI believe the CARES Act had good intentions, however it was impossible to predict the long term impact of the pandemic in the initial phase.
ReplyDeleteRegardless of intent, landlords have an obligation to pay the bank a balance due on the outstanding mortgage which will have a lasting impact on credit etc.
CDC can post guidance or declarations etc, however, it doesn’t pay the bills. I can certainly understand the Government doesn’t want to put people on the streets, however, neither do landlords. The pandemic has put many in lose lose situations overall. Regardless of the outcomes of the lawsuits, or Covid situation, landlords need renters and renters need homes.
This is a difficult situation but at the same time there have been multiple programs that have been approved to help those that are facing eviction or who are behind on their payments. However, I don’t know the exact requirement or policies to qualify for those programs I know that certain states have offered a rental assistance program that would pay for rent or mortgage that would help both landlord and tenant. But I feel that the issue is a topic that needs to be addressed a little closer because the delay of rent affect both parties (landlord and tenant).
ReplyDeleteAnd I think it will stand because There would be such a large eviction rate and I believe that is something that we are trying to prevent.
No, the CDC should not have the ability to issue a declaration halting evictions. I think there should be different assistance available to the tenant to help with making rent. This should be more accessible. The burden should not be on the landlord. The CDC addresses the problem of those getting eviction but this situation hurts both the tenant and the landlord. I can see how this would impact a lot of people who are going through tough times during the pandemic. I don’t think putting the burden on the landlord is a real solution for the underlying issue.
ReplyDeleteJust a quick update on this post...I spoke today with a guy who heads a non-profit that deals only with eviction cases. He says that even though the preliminary injunction was denied, landlords continue to file eviction cases. He has more than 20 clients who already owe more than $20,000 in back rent, and likely will have to file bankruptcy sometime after the first of the year. He is also in litigation with a large law firm that is willing to settle the 16 cases it's handling if the clients will pay the legal fees, which are currently more than $30k. Unless banks are willing to step up and forgive mortgage payments for landlords, this is gonna end ugly for people.
ReplyDelete