The Consumer Financial Protection Bureau has announced that, effective May 3, 2021, as part of the CDC eviction moratorium, a “debt collector” must serve a certain disclosure to residents with the non-payment notice. It is unclear whether this applies to property managers. However, the CFPB is abundantly clear that this information must be served with the termination of tenancy notice, and not just with the eviction lawsuit. The sample language of two alternatives is written at the bottom of this article.

Important questions:

WHO DOES THIS APPLY TO?

The order says that it only applies to “debt collectors.” It says that this “generally” does not include owners and landlords dealing with amounts owed to them. It does not specifically address property managers. The order says it applies to attorneys. Without going into a full analysis of the FDCPA, a debt collector does not include the original creditor to whom the money is owed. If an individual owner serves a notice for
amounts he/she is owed, they are not a debt collector and this rule does not apply(unless they use differing names which make it appear a third party is collecting the amounts). It becomes more grey when managers are involved, and it may depend if the amounts were previously owed to the management company (tenant advocates may argue that a manager works for a management company that is different from the owner and thus the FDCPA would apply). There is little downside, but significant risk if you fail to include the language and it is later determined that you are a debt collector.

WHICH SAMPLE DISCLOSURE LANGUAGE (SEE BELOW) SHOULD BE USED?

The sample language below, has two versions people can use: (1) language that only refers to the federal moratorium, and (2) more broad language that refers to the federal moratorium, as well as any state, local or tribal moratorium. While there currently is no additional moratorium in Arizona, it may still be advisable to use the more broad language, but such discussion should be had with counsel.

WHICH NOTICES SHOULD INCLUDE THIS NEW DISCLOSURE LANGUAGE?

It says debt collectors must have this language in non payment notices, and if a notice that is not for non-payment is being served, the language is not necessarily required. Regardless, it would be wise to include such language in all notices to avoid problems. For example, since the Arizona Supreme Court says that non-renewals may be covered by the CDC, such non-renewal notices should include the proposed language. Partial payment agreements must have this new language. Noncompliance notices or immediates do not have to have the language per the CFPB, but again, it cannot hurt to include such language to be safe especially when amounts are being sought. For example, while noncompliances are not demands for payment, they could be treated as such, if the manager is asking for payment of items such as deposits, damage to the property or pest control. Its easier to require all notices to have the CFPB language so a manager does not inadvertently use the wrong notice. Further, the CFPB stated that if an eviction is filed for both the noncompliance and non payment, then the court filings must have the disclosure language. Since eviction judgments in Arizona usually include an amount of rent, all eviction actions must have such language.

We will be updating all of our forms for May 3, 2021. We suggest managers change their forms as well. Owners and managers should be very careful as to how they proceed with notices and evictions and consult with an attorney when setting forth new policies on these matters. There are significant financial penalties for violating the FDCPA including but not limited to class action lawsuits.

Here is the sample language:

(#1)

Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under Federal law.

Learn the steps you should take now:
– Visit www.cfpb.gov/eviction
– Or call a housing counselor at 800-569-4287

OR

(#2)

Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under the laws of your State, territory, locality, or tribal area, or under Federal law.

Learn the steps you should take now:
– Visit www.cfpb.gov/eviction
– Or call a housing counselor at 800-569-4287

 

by Mark B. Zinman, Attorney, Zona Law Group