The Federal Eviction Moratorium Extension: What Landlords Need to Know

What does the eviction moratorium extension mean for landlords, and what can landlords do to mitigate the increased financial strain?

The moratorium on evictions has helped keep millions of people safe and in housing who otherwise might have been evicted since the start of the pandemic. However, the moratorium has significant shortcomings that fail to address the disproportionate amount of financial burden placed on real estate investors. Despite this, the CDC has announced a further extension of the eviction moratorium through June 2021.

This means that landlords cannot evict tenants who have been impacted by the pandemic for non-payment of rent until July 2021 (unless extended again).

With millions of Americans behind on rent, the eviction moratorium has been a contentious policy – challenged in the courts in several states. However, whether or not it’s deemed unconstitutional is, at a practical level, irrelevant.

The reality is that landlords need to work within the confines of this eviction moratorium right now. They need to communicate and work with tenants to ensure that rent payments keep coming in either from rental relief programs or through other strategies so that they can continue to pay their bills and ensure the security of their rental investments.

Why Have They Extended the Eviction Moratorium?

Despite the rollout of the vaccine, and a distinct drop in cases since the new administration new variants of the virus paired with a growing attitude of resignation by many Americans means there continues to be a steady infection rate and thousands of new deaths every day.

“The COVID-19 pandemic has presented a historic threat to the nation’s public health. Keeping people in their homes and out of crowded or congregate settings — like homeless shelters — by preventing evictions is a key step in helping to stop the spread of Covid-19,” said Rochelle P. Walensky, director of the CDC.

One of the unusual things about the pandemic that differs from other economic challenges faced in the past is that job loss has been concentrated in lower-paying jobs. People with the least who are the most vulnerable have been hit the hardest.

This puts a huge number of lower-income individuals and families at the highest risk. With the death toll in the US already unacceptably high, the CDC has seen fit to extend the eviction moratorium again in an attempt to prevent further spread of the virus and unnecessary deaths.

“Eviction moratoria facilitate self-isolation by people who become ill or who are at risk for severe illness from COVID-19 due to an underlying medical condition. They also allow state and local authorities to more easily implement stay-at-home and social distancing directives to mitigate the community spread of COVID-19.”

How the American Rescue Plan Stimulus Bill Can Help Landlords During this Extended Moratorium

This extension of the eviction moratorium comes shortly after the Biden administration announced further stimulus action in the form of the $1.9 trillion American Rescue Plan. There are several policies in this that extend or develop financial support for homeowners and renters.

This includes the $1400 stimulus check which should help many tenants get back on track with their rent. Plus, the additional $300 unemployment has been extended until September 2021.

Additionally, the stimulus bill addresses three key areas of housing:

Emergency Housing Vouchers eg. section 8 vouchers

  • An additional $5 billion has been available for emergency housing vouchers.
  • These funds will be going to those individuals that are homeless, or at risk of being homeless.
  • Funds will be distributed to local housing authorities to be distributed.

Homeowners Assistance Funds

  • Approximately $9 billion in funds has been made available for assisting homeowners.
  • Qualifying individuals can use these funds can be used to help pay mortgages, back taxes on properties, HOA fees, etc.
  • More details will be released over the coming weeks on how to determine if you qualify and how these funds will be distributed by the federal government.

Additional Emergency Rental Assistance

  • The American Rescue Plan includes $21.55 billion in Emergency Rental Assistance to augment funds provided to states, localities, and territories in December
  • These funds can be used by renters and families to pay the rent and utilities so that they can stay in their homes.
  • Landlords should assist tenants that are struggling to help them get the appropriate rental assistance and catch up with their rent.

Important Resources:

Who is Covered by the Eviction Moratorium?

There are a few qualifying factors for tenants to be protected by the eviction moratorium. Tenants who wish for this protection must submit to their landlords a declaration under penalty of perjury indicating that at least one of the following applies to them:

(1) The individual has used best efforts to obtain all available government assistance for rent or housing;

(2) The individual either (i) expects to earn no more than $99,000 in annual income for Calendar Year 2021 (or no more than $198,000 if filing a joint tax return),(ii) was not required to report any income in 2020 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;

(3) 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;

(4) 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 nondiscretionary expenses; and

(5) 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.

Other Key Things for Landlords to Note

This eviction moratorium only affects non-payment of rent. Landlords can still legally evict tenants for other offenses such as;

  • (1) engaging in criminal activity;
  • (2) threatening the health and safety of other residents;
  • (3) damaging or posing an immediate and significant risk of damage to property;
  • (4) violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or
  • (5) violating any other contractual obligation, other than the timely payment of rent or similar housing-related payment.

The moratorium only postpones evictions in the interest of public safety. Additionally, it does not change the fact that money is owed and must be eventually paid by the tenant.

To receive protection from eviction under this eviction moratorium tenants must make a declaration under penalty of perjury that they are covered under the conditions of the eviction moratorium listed above.

Important Resource: CDC Order for the Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19

What Should you Do if Your Tenants Are Behind on Rent?

The first step to take is to ensure you have systems in place to track and record everything. Every missed payment, every communication needs are recorded as proof of missed payments. Rent arrears need to be carefully tracked so that the correct amount can be reclaimed from the tenant down the line. This will be vital if you need to work out a payment plan with your tenant as well as if you do eventually have to go to court for eviction once the moratorium is over.

Secondly, if your tenants are behind on rent you need to establish why. If they have been affected by the pandemic then there’s a good chance that they can get assistance paying their rent through a local rental relief program. As such communication is key.

If your tenants do qualify for assistance it is in your best interest to make sure they are aware of how and where they apply for it and offer them what help you can give if required.

If they do not qualify for assistance then they may also not qualify for the moratorium. As such, it’s recommended to seek legal counsel to determine the appropriate next action.

The below links can help you find and apply for rental assistance in your area.

Final Words

The death toll from the pandemic is high and still climbing. Government action such as the stimulus bills and the extended moratorium on evictions is designed to help prevent the further spread of the pandemic and the subsequent deaths that would occur.

However, it’s important to be aware that “this order does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract.”

As such, you need to use the appropriate tools like Landlord Studio to make sure you are keeping accurate records of any missed, late, or partial payments. If you do have tenants falling behind on rent it’s recommended to communicate and work with your tenants to create payment plans that work for both parties and ensure your tenants are getting the full amount of rental relief they are entitled to.