The Looming Housing Crisis and Limited Government Relief—An Examination of the CDC Eviction Moratorium Two Months In

Pillsbury - Gravel2Gavel Construction & Real Estate Law

Months after the Centers for Disease Control and Prevention (CDC) issued a nationwide eviction moratorium using its emergency pandemic powers under the Public Health Service Act, the efficacy of this unprecedented measure remains unclear. While the Order ostensibly protects tenants facing homelessness or housing insecurity due to the financial impacts of the COVID-19 pandemic through the end of 2020, legal challenges have been initiated in Ohio and Georgia, with additional lawsuits appearing likely. Further, even barring legal challenges, courts have not handled these cases in a uniform manner. With lawmakers unable to reach any stimulus or COVID-19 relief agreement before the election, the CDC Order appears likely to remain the only federal eviction moratorium through its expiration on December 31, 2020.

Since the Order’s enactment, the CDC has since released new guidance, answering some of the open questions not covered by the initial Order. This guidance, while non-binding, is largely more favorable to landlords and property management companies than the initial text of the Order, as it provides that landlords are not required to make tenants aware of the Order’s protections and may challenge the truthfulness of the tenants’ declarations in any state or municipal court. The guidance also clarified the potential criminal penalties for violating the Order and the criminal penalties for perjury for bad faith submissions of the requisite declaration by tenants.

The first significant challenge to the Order was initiated in the U.S. District Court for the Northern District of Georgia, where a group of residential landlords and the National Apartment Association raised numerous challenges to the Order, seeking preliminary injunctive relief. In Brown v. Azar, Judge Boulee dispensed of the challenge, holding that the plaintiffs failed to satisfy any of the necessary standards to receive a preliminary injunction. The court held that the plaintiffs are only “merely delayed in enforcing eviction orders” and are still permitted to file a breach of contract actions and begin eviction proceedings; they have not shown a clear constitutional violation. The court also rejected the idea that the plaintiffs would suffer irreparable harm, as they did not demonstrate they will never to recover lost rent and failed to meet the requisite burdens of proof. While acknowledging that the CDC’s Order has harmed the plaintiffs’ real estate businesses, Judge Boulee wrote that the demonstrated economic harm “pales in comparison to the significant loss of lives that Defendants have demonstrated could occur should the Court block the Order.” While this is the first U.S. District Court to address legal challenges to the Order, similar proceedings has also begun in Ohio, where a group of landlords has also sought to enjoin the CDC’s eviction moratorium. Even as the CDC eviction moratorium enters its final six weeks of effect, additional challenges to its constitutionality are likely to arise.

Legal challenges, however, are not the only problem with the Order’s overall effectiveness. As it was not passed through the legislative process, it has fallen solely to housing and tenancy courts to determine how to handle its provisions and enforcement. Recently, the Washington Post published an investigation into what it termed “loopholes” that have caused confusion, varying required procedures, and lack of uniform enforcement by different courts. The article highlighted disputes over what constituted the Order’s required “best efforts to make timely partial payments,” as well as tenants finding it difficult to demonstrate financial hardship. For instance, one woman told the Washington Post that she could not prove she had a job lined up that was withdrawn at the start of the pandemic, so she was not covered by the text of the Order. The article also highlighted how some judges choose to accept the required CDC declaration by tenants at face value, while others are more willing to question the tenants about their financial stations, leading to confusion and differing outcomes for tenants in similar situations. Even as the Order remains in full effect, it is clear that many tenants have not been able to fully utilize its protections, and many are still facing the threat of eviction for failure to pay rent.

As the economic impacts of the COVID-19 pandemic continue to be felt nationwide, the country faces significant housing challenges in the coming months. Regardless of whether the CDC Order is ultimately declared unconstitutional or if it remains in effect through the deadline of December 31, 2020, the Order does not relieve tenants from their rental obligations. Many tenants will be unlikely to pay their outstanding debts in full at this point and will soon be facing eviction. As Congress enters the lame-duck period after the November 3 general election, and with COVID-19 cases rising around the country, there will be a push by lawmakers for a new stimulus package. While there are significant political hurdles to finalizing this relief package in the next month, Congress needs to find solutions that both protect landlords and property owners who have lost out on many months of rent while preventing an avalanche of evictions causing homelessness and housing insecurity at the peak of a global pandemic. Without Congressional intervention, both property owners and tenants now face overwhelming challenges in the coming winter, and another limited measure by the CDC or other government agency will not be enough to stop a coming housing crisis.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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