It’s a challenging time for all real estate professionals with rapidly changing directives due to COVID-19. One of these directives is the moratorium on evictions.
For Property Managers that need to stay up to speed on the latest updates,here’s what you need to know…
What is the COVID-19 Eviction Moratorium Directive?
In September 2020, the Centers for Disease Control and Prevention (CDC) issued a “Temporary Halt in Residential Evictions to Prevent the Spread of COVID-19” order. The order was extended to the end of January 2021 in December 2020, and it was further extended recently with some modifications. The current expiration date is March 31, 2021.
The order puts a temporary halt to all residential evictions of “covered persons” for nonpayment of rent in any United States state or territory during the effective period.
What is the purpose of the order?
The order was established to minimize the spread of COVID-19 in congregate or shared living settings and also through homelessness. It supports the response efforts of the Federal, state and local governments towards containing COVID-19, and it aims to mitigate the spread between states and territories.
Similarly to quarantine, isolation and social distancing, the moratorium on evictions is another public health strategy to prevent the spread of this highly communicable virus.
What is a “Covered Person”?
A covered person means any tenant, lessee, or resident of a residential property who provides to their landlord, the owner of the residential property, or other person with a legal right to pursue eviction or a possessory action, a declaration under penalty of perjury indicating that:
They have tried to obtain all available government assistance for rent or housing;
(i) expect to earn no more than $99,000 in annual income in 2021 (or no more than $198,000 if filing a joint tax return),
(ii) were not required to report any income in 2020 to the US Internal Revenue Service, or
(iii) received a stimulus check pursuant to Section 2201 of the CARES Act
The individual is unable to pay rent in full due to a substantial loss of household income, loss of work, a layoff, or extraordinary out-of-pocket medical expenses;
The individual is using their best efforts to make timely partial payments that are as close to the full payment as their circumstances allow (taking into account other non-discretionary expenses); and
Eviction would likely render the individual homeless or force them to move into and live in close quarters in a new congregate or shared living setting, because they have no other available housing options.
The Fine Print
The order doesn’t terminate or suspend the operations of any state or local court. So, if eviction proceedings were already underway before the order was established, they will proceed. It also doesn’t prohibit the commencement of eviction proceedings, as long as the actual eviction for non-payment of rent does not take place during the order period.
The order doesn’t preclude the charging of fees, penalties or interest as a result of the failure to pay rent on a timely basis. It also doesn’t preclude state, local, territorial, or tribal authorities from imposing additional requirements that provide a greater level of public health protection than the requirements listed within the Federal order.
Also, check out the other orders and directives in your state which may impact evictions. For example, California has some of the strongest rules in the country and has issued a moratorium on evictions which expires at the end of June 2021, three months after the current expiration date of the Federal order.
If you do communicate with your clients about what the restrictions are now, be sure to include a disclaimer that you are telling them the situation at a point in time, with the most up-to-date information available to you right now. (Follow up any verbal communication with that same information in writing to the client, and place a copy of the communication in the client’s file.) Orders and directives may change without notice, and property owners should do their own due diligence so they can make informed decisions.
As information about COVID restrictions is changing at a rapid pace, it can be useful to send your landlords/property owners links to sources of information about orders and directives. This way, they will be able to access the latest information whenever they need it.
There are harsh penalties for breaking the rules, and the last thing you want as a Property Manager is to become embroiled in an unlawful eviction. You could find yourself facing financial penalties or even criminal proceedings. What’s more, you could be slapped with a lawsuit by an unlawfully evicted tenant, even though you’re simply managing the property on behalf of the property owner.
Insurance Protection for Property Managers
Property Managers face risks in business every day, but COVID-19 has made it even more risky. Make sure you have Property Management E&O insurance to protect yourself against lawsuits. With CRES E&O + ClaimPrevent®, you’ll also have access to a team of legal professionals 7 days a week, to help you prevent legal issues before they become lawsuits.
Contact CRES at 800-880-2747 for a confidential discussion about your insurance needs today.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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