By: Nick Mertens
At Atlas AZ, we have been receiving many calls concerning the CDC Order issued on September 1st surrounding the “Temporary Halt in Residential Evictions to Prevent Further Spread of COVID-19.” While there are still unanswered questions to this order that we will find answers to over time, here is what we currently know.
Summary of the Order:
The Order prohibits landlords from evicting covered residents for non-payment of rent from any residential property (both covered and non-covered) beginning September 4th, 2020 through December 31, 2020. The resident will have to provide the Landlord with a Declaration of Hardship. Landlords can charge tenants late fees, penalties or interest for nonpayment of rent. Residents are still obligated to pay rent and comply with their leases. You can still evict for non-payment related issues. Several key aspects of the Order are not clear including what constitutes an eviction. Because it is not clear what constitutes an eviction, what constitutes a violation of the Order is also not clear. These aspects of the Order will have to be clarified through the judicial process. The Order does not supersede state or local eviction moratoriums that are stricter than the Order.
Key Points of the Order:
• The current effective dates of the Order are September 4th, 2020-December 31st, 2020
• Residents ARE still required to pay rent
• A resident must provide a Declaration to stop an eviction and eviction proceedings. The resident must declare ALL of the below in writing:
• The individual has used best efforts to obtain all available government assistance for rent or housing;
• The individual either (i) expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return), (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;
• The individual 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 lay-off, or extraordinary out-of-pocket medical expenses;
• The individual 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 non-discretionary expenses;
• Eviction would likely render the individual homeless— or force the individual to move into and live in close quarters in a new congregate or shared living setting— because the individual has no other available housing options.
• Penalties range from $200,000-500,000 if Landlords move ahead with evictions after receiving the Declaration
• Landlords may still serve Demands for Rent if the resident has not provided a Declaration and proceed with eviction hearings
• Landlords may still serve notices for non-monetary violations such as Demands for Compliance, Notice to quit for Repeat Violations, Notice to Quit for Substantial Violations, and Notice of Non-Renewal
• Reasons to serve the above include, but are not limited to:
• Engaging in criminal activity while on the premises;
• Threatening the health or safety of other residents;
• Damaging or posing an immediate and significant risk of damage to property;
• Violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or
• Violating any other contractual obligation, other than the timely payment of rent or similar housing-related payment (including non-payment or late payment of fees, penalties, or interest)
• A Declaration can stop current eviction proceedings even if you already have a writ
• Landlord may charge late fees
• The Order includes ALL rental properties, both covered and non-covered properties under the CARES Act
Unanswered Questions About the Order:
• Can a Landlord challenge a resident’s Declaration and ask for proof?
• What actions constitute a violation of the Order under which “taking action contrary to the Order or the prohibitions set forth in the Order” would trigger a violation?
Unanswered Questions at Large:
• How will the government protect the finances and investments of the Owner/Landlord?
• What will this look like after December 31st?
So, What Now?
As we learn more about the CDC Order, we will be providing updates. It’s important to note that we believe that the vast majority of residents will still continue to pay their rent. In August, of the 3,200 units we manage, 95.7% (our 10-year average has been 98.5%), so only 2.8% lower than normal. Overall collections since COVID has begun have been much better than expected. We are continuing to recommend that property owners work with residents on payment plans when necessary.