Trump Administration Wades into Residential Real Estate Evictions with Moratorium

Ruder Ware

On September 1, 2020, the Centers for Disease Control and Prevention released a yet-to-be published Emergency Order (Order) prohibiting residential evictions.  The Order will take effect on its legal publication date (expected to be Friday, September 4, 2020) through December 31, 2020.  Specifically, the Order prohibits any action by a landlord or similar owner of residential property or other person with a legal right to pursue the remedy of eviction or possessory action, or to remove or cause to be removed a “covered person” from residential property.

The basis given as to why the CDC has authority to implement this Order is to restrain the spread of COVID-19, which the Order recognizes as a global pandemic and historic threat to public health.  It notes the value of quarantine and housing stability as ways to fight the spread of the pandemic.  It discusses in detail the possible spread of the pandemic through increased homelessness.

The applicability of the Order is limited and the benefit of the Order is not automatic.  The Order does not apply to commercial leases.  The Order does not apply to evictions that are being undertaken based on a tenant engaging in criminal activity, threatening the health or safety of other tenants, damaging or posing an immediate and significant risk of damage to property, violating building or health codes, breaching any other provision of a lease (other than rent payment).  It does not apply to hotel guests, or guest houses rented to temporary or “seasonal” tenants.

The Order does not impose any rent payment relief, it just suspends eviction actions.  Essentially, tenants are still obligated to pay whatever amounts are due under their leases.

To be eligible for the benefit of the Order, every adult residing in the unit subject to the eviction must provide a declaration, made under penalty of perjury, to the landlord stating certain facts.  These include (a) that the individual has used best efforts to obtain all government assistance for rent or housing, (b) that the individual does not expect to earn more than $99,000 in 2020 (or if part of a married couple, to earn no more than $198,000 in 2020), or did not earn enough to file taxes or received a stimulus check under the CARES Act; (c) the individual is unable to pay full rent due to substantial loss of income, loss of work hours, a layoff, or extraordinary medical expenses; and (d) the individual is using best efforts to make partial payments; and (e) the eviction would render the person homeless.  A sample declaration form for this use was included with the Order.

Violations of this Order carry serious criminal penalties.  A person found to be violating this Order may be subject to substantial fines of $100,000 per violation or possible jail time depending on the results of the violation.  Organizations violating the Order may be subject to fines of to $200,000 -$500,000 per violation.  Enforcement is delegated to the United States Department of Justice.

This Order raises many unanswered questions.

It is yet to be seen how each of the Wisconsin County Court Systems are going to deal with this Order.  It is not clear what happens to eviction actions that have already been commenced prior to the effective date of this Order, but presumably, these will be temporarily stayed assuming the court receives the appropriate declaration and makes a finding of its acceptability.  It is also not clear what happens to landlords who have declared leases terminated as part of commencing an action for eviction.  If they have already indicated the tenant no longer has the legal obligation to pay rent (since the lease is terminated), are landlord’s unable to collect rents for the time the tenant is allowed to remain in the premises pending the expiration of this moratorium?  Should landlord’s now seek an eviction for failure to pay rent, but not otherwise declare the lease is terminated?  We expect the path to be taken will depend on the facts of each situation.

Such sweeping and somewhat novel action by the CDC may also be subject to legal challenge.

Time will tell if this proposed relief package provides any benefit to renters at the expense of beleaguered landlords.

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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