Information provided by Zona Law Group PC


As our readers are well aware, the AMA and MHCA, in conjunction with several private landlords, filed suit challenging the Governor’s Executive Order on evictions. The order allowed tenants to delay writs of restitution by providing limited documentation and attestations to their landlord.

Yesterday, on October 7, the Arizona Supreme Court denied to hear the case, holding that it should have first been filed in a lower court and then appealed to the Supreme Court. This was not done because the issue is a single, legal issue to be determined and no evidence is needed for the Supreme Court to make their determination. Further, had the case originally been filed in the lower court and then followed the regular appellate process, it would have taken months, if not years to get a ruling. Despite this, the Supreme Court elected not to address the legal issue, and refused to take the case on procedural grounds.

We believe the ruling was in error, and that the Supreme Court should have heard the case and given their opinion on the extent of the Governor’s power. When the Governor exercises incredible powers, it is necessary for the courts to step in on an expedited basis to determine whether such power is granted by the constitution. The Supreme Court’s ruling leaves both landlords and tenants without information as to the extent of such powers. It also leaves uncertainty as to what may come in the future.

I know the ruling is disappointing to all readers of this newsletter. While the government does need to step in, when there is a pandemic, to help citizens, in this case it should be in the form of rental assistance, not the abrogation of a property owner’s rights.


AZ SUPREME COURT CREATES HURDLES FOR LANDLORDS UNDER THE CDC ORDER

As for an update on the other moratorium…

SHORT SUMMARY

Supreme Court came out with an order that states:

  1. In a non-payment of rent case, landlords are required to serve tenants with a form advising them of their rights under the CDC (we will handle this for clients);
  2. If a CDC declaration is provided by the resident, the case has to be continued or dismissed without prejudice. Landlords are NOT allowed to get judgments.
  3. Landlords are allowed to challenge the declaration and show that a statement is materially inaccurate (this will likely be a high standard to meet).
  4. If a case is for non-renewal and the tenant is delinquent in rent, the law now presumes that the non-renewal case is actually for the non-payment and the CDC order applies. In such an instance, a landlord would have to prove that another reason was the justification/motivation for the non-renewal to overcome the presumption.

LONGER ANALYSIS

On September 4, 2020, the CDC entered an eviction moratorium across the entire country. It prohibited landlords from taking any legal action to remove a resident who has signed a declaration avowing to five facts.

Because the CDC order was written with vague terms and lacked any specificity as to what right’s a landlord had to challenge the declaration or proceed through judgment, it was interpreted to mean that if a resident signed the declaration, a landlord had to immediately stop all actions – if they hadn’t filed an eviction yet, they were barred from proceeding; if they had filed but hadn’t gotten a judgment, they were to dismiss the case. Basically, a landlord had to immediately stop any action for non-payment once the CDC declaration was received from the resident.

At least two lawsuits were filed in the country challenging the CDC’s order. Those lawsuits challenged the authority of the CDC to enter a moratorium. The plaintiffs in the case sought an injunction to stop enforcement of the lawsuit. When this happens, the plaintiff is effectively asking the court to have a hearing at the beginning of a lawsuit to address this one issue, and then the rest of the case would proceed on the normal, slower process.

In response to those lawsuits, the Department of Justice filed a responsive brief. They argued that the CDC did have authority to enter the moratorium (no surprise). The good news is that the DOJ said that the CDC order does not prevent landlords from filing evictions or getting judgments, it simply prevents the removal of the resident. Further, the DOJ implied that landlords have the right to challenge the validity and truthfulness of any CDC declaration filed by a resident. In other words, the DOJ opened the door for landlord’s to ask the court for a hearing to determine if the resident is telling the truth in their CDC declaration.

As soon as the DOJ submitted this brief, our firm, in conjunction with others and the AMA, contacted the Supreme Court to adopt such a position. Unfortunately, the Supreme Court has taken the position that the DOJ’s brief is not conclusive and that all actions must stop and not get a judgment when a valid CDC declaration is signed. The case has to be dismissed without prejudice or continued until after the CDC order expires. Thankfully, the Supreme Court does allow landlords to challenge declarations if statements in the declaration are materially inaccurate.

Also, the AZ Supreme Court published a new administrative order which requires landlords filing non-payment of rent eviction to attach and serve a new sheet telling residents about their rights under the CDC Order.

In this same order, the Supreme Court answered another question and said that if you do a non-renewal, when the tenant owes rent, your action is presumed to be because of the non-payment and thus covered by the CDC order. Therefore, a landlord would have to prove that the non-payment is not the reason for the non-renewal or challenge the declaration from the tenant.


CARES PROPERTY – 30 day or 5 Day Notice

For properties that were governed by the CARES Act, almost daily we are asked whether they can serve a 5-day notice or 30-day. To be honest, there is no clear answer in the CARES Act itself. However, the Maricopa County judges have opined that only a 5-day notice is needed when the landlord is only seeking amounts due after 7/26/2020.

The Maricopa County Justices of the Peace published a Memorandum saying that as long as the property is not seeking rent or charges from before July 26, then the property was only required to serve a 5-day notice and not a 30-day for non-payment of rent. This language is in writing from the courts, but it is not from the CARES Act itself.

If you recall, the CARES Act had an eviction moratorium though July 25. Under a separate section, the Act then provided a 30-day notice was required after the expiration of the eviction moratorium. That provision of the Act, however, did not have a time for it to sunset. Therefore, its not clear what our congress intended – does the 30-day continue indefinitely or was it only for a short time? Since it is not in the law, there is no clear answer. On a national level, this is being discussed and the NAA is seeking clarification from Congress. However, no answer has been received.

Since the Maricopa JP’s came out with their memorandum, it would appear that a landlord can use a 5-day notice as long as its not seeking rent from prior to July 26, and provided the landlord understands that there is some risk in not using a 30-day. That will be an operational decision for any property/company since there isn’t clarity in the act itself. However, we do expect most companies to use 5-day notices.


by Zona Law Group