Following an Executive Order by President Trump on August 8, 2020, the Centers for Disease Control (CDC) filed a notice of an agency order on September 1, 2020, in the Federal Register entitled Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19 (the Order). It prohibits evictions until December 31, 2020, for eligible renters impacted by the pandemic. The Order also includes the form of Declaration required to be provided under penalty of perjury by each tenant named in the lease. Note that this Declaration may be provided by the tenants at any time and once provided, no eviction action may be pursued. The Order applies to all property leased for residential purposes, including single family, multifamily, and mobile homes (but excluding short-term rentals).
Although evictions are traditionally state or local judicial matters, violations of the Order may be enforced by federal authorities as well as state and local authorities cooperating pursuant to the CDC’s statutory authority to accept state and local cooperation. Violations carry potential criminal penalties for individuals of up to one year in jail and a fine of up to $100,000, which increases to up to $250,000 if a death occurs as a result of the violation. For organizations, violations can carry a penalty of up to $200,000, which increases to up to $500,000 if a death occurs as a result of the violation. Although some have questioned the validity of this law, to date we are not aware of any legal challenges. The CDC’s stated authority to issue the Order is based on 42 U.S.C. sec. 264, which reads:
The Surgeon General, with the approval of the Secretary, is authorized to make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession. For purposes of carrying out and enforcing such regulations, the Surgeon General may provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.
Pursuant to the Order, residential landlords cannot evict eligible tenants for nonpayment of rent or housing payments (defined to include late fees, penalties, and interest).Notably, the Order does not prohibit evictions for other reasons, such as evictions for engaging in criminal activity; threatening the health and safety of other residents; damaging, or posing a significant risk of damaging, property; violating applicable building codes or similar regulations related to health and safety; or violating any other contractual obligation other than the timely payment of rent or housing payments.
Unlike the CARES Act eviction protections, the property need not be federally related to qualify. The Order is effective through December 31, 2020 (unless modified or extended), and applies in all states unless a state has an eviction moratorium in place that provides the same or greater protections. When that is the case, the state’s eviction moratorium supersedes the Order.
While the Order prevents eviction actions for non-payment of rent, it does not relieve the tenant from the obligation to pay rent or to comply with any other obligation the tenant has under a lease agreement. In addition, the Order does not preclude charging fees, penalties, or interest due (to the extent otherwise permitted by the lease and applicable law) for failure to pay rent on a timely basis. The Order also does not dictate a timeframe for repaying past-due rent after expiration of the moratorium.
In order to be eligible, a tenant must provide a Declaration form or equivalent to the landlord attesting, under penalties of perjury, to the following:
- The tenant has used best efforts to obtain all available government assistance for rent or housing;
- The tenant either (a) expects to earn no more than $99,000 a year ($198,000 for joint filers) for 2020, (b) is not required to report any income in 2019, or (c) received a CARES Act Economic Impact Payment;
- The tenant is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a layoff, or extraordinary out-of-pocket medical expenses;
- The tenant is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other nondiscretionary expenses; and
- Eviction would likely render the tenant homeless, or force the tenant to move into and live in close quarters in a new congregate or shared living setting, because the tenant has no other available housing options.
There are a number of questions/issues not addressed by the Order. Landlords need to proceed cautiously because they too are subject to criminal penalties for not complying with the Order. Here are some questions and possible answers, based on information known to date.
Q. May a landlord request verification of any of the information required by the Declaration?
A. Our best read of this at this time is that the landlord may reasonably request that the tenant provide supporting information, when appropriate. But the landlord may not require that the tenant do so. And if the tenant refuses to do so, that would not be grounds for the landlord to pursue eviction.
Q. May a landlord advise the tenant of the potential criminal penalties for making a false or misleading statement in the Declaration?
A. Criminal penalties are serious consequences, and merely advising tenants of this in an informative manner does not appear to be prohibited.
Q. If a tenant makes false or misleading statements in the Declaration, is that grounds for eviction or just grounds for prosecution for perjury?
A. There is no clear answer to this, and the lease may govern. In addition, by the time the landlord proves the false or misleading statements, the Order may have lapsed.
Q. May a landlord report non-payment or partial payments to credit agencies?
A. Possibly, if this is what the landlord would otherwise do in its normal course of business.
Q. May a landlord pursue a collection (vs eviction) action against a tenant?
A. Possibly, if this is what the landlord would otherwise do in its normal course of business. The stated goal of the Order is to reduce the spread of COVID-19 by allowing the tenant to remain in the rental housing and a civil action seeking a judgment for money otherwise due is not contrary to this goal.
Q. If a lease is month-to-month or expires prior to December 31, 2020, may a landlord seek to recover possession (in the same manner permitted as if the rent was current)?
A. Possibly, if this is what the landlord would otherwise do in its normal course of business. The prudent course of action here would be to treat paying and non-paying tenants equally in this regard.
Ballard Spahr Real Estate lawyers will continue to monitor implementation and responses to the Order and provide updates when appropriate. The team is advising clients on compliance with the Order.
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