It is never easy to make projections for what the upcoming year will bring and this year is no different. In fact, this year it is even harder to make projections because there are so many moving parts. We have federal and state elections, we have expiring moratoriums and we have more of a spotlight on property owners than ever before. The only thing I can say for sure is that there will be a continued negative portrayal of landlords in the media and resulting tenant advocates pushing for change in this area of the law.
The Center for Disease Control September 4 Eviction Moratorium provides residents with protection from eviction if they signed a declaration attesting to five facts. While a declaration can be challenged in court if a landlord believes it to contain material inaccuracies, the burden is on the landlord to prove such lies. We are taking a conservative approach to challenging declarations and only do so in extreme cases. The order is set to expire on December 31, 2020.
It is unknown at this time whether the CDC order will expire or if it will be extended. We don’t think the CDC will extend their own order, but we are of the opinion that some other moratorium may take its place. That could be done through the federal legislature or even by President-elect Biden after he is sworn in. There are simply too many moving parts to accurately know what will happen with the moratoriums.
What that means for investors and property owners is that they should plan for things to continue to change. Most importantly, this means that investors shouldn’t rely on guaranteed rental payments when writing deals for occupied units nor assume that they can easily evict someone squatting in a property that they purchase. Also, landlords should be willing to continue to accept partial payments and work with their residents. A landlord would be unwise to push forward aggressively with a resident, only to find that they have no means to recoup unpaid rent.
Finally, we think that if moratoriums are extended into next year and nonpaying residents are allowed to stay in properties and landlords are not given sufficient compensation, it will push smaller landlords out of the market. While moratoriums have been incredibly difficult for all property owners, it is unrealistic to think that an owner who relies on their rental for their retirement has the financial capability to survive another 9 months of not receiving rent. This pressure on the market may push small investors out and bring in new investors. You should start to strategize now what your move will look like.
by Mark B. Zinman, Attorney, Zona Law Group P.C.