On January 20, 2021, President Biden issued an executive order instructing the Center for Disease Control (CDC) to extend the federal eviction moratorium. Per the president’s request, the CDC announced on January 29 that the moratorium would be extended through March 31, 2021. While this likely came as good news to millions of struggling renters, it leaves many landlords saddled with financial burdens – particularly small independent landlords, who provide more than half of the nation’s rental properties.
Initially, the CDC order was slated to end in December, but it was extended through a provision in the second stimulus package. The order continues to require tenants struggling with payment to provide their landlord with a declaration of loss of income and inability to pay rent. Although renters are being assisted in the short term, the moratorium fails to address how many of them will be able to pay for owed back rent once the moratorium is lifted. In the meantime, landlords are still struggling to cover their own monthly expenses. Without the income from rent, it’s more difficult to maintain rental properties and meet other financial obligations.
There’s no question this is a complicated issue – and an ever-evolving one. Here’s a look at some of the most important things you should know about the eviction moratorium as it currently stands. Please note this is for informational purposes only and is not intended as legal advice.
How do Tenants Qualify for the Moratorium?
To qualify for the moratorium, tenants who are unable to pay rent must provide their landlords with a sworn declaration affirming the following:
- The tenant has “used best efforts to obtain all available government assistance for rental or housing.”
- The tenant earned $99,000 or less in 2020 as a single tax filer (or $198,000 or less for couples filing jointly). Tenants who weren’t required to file taxes in 2019 or who received a stimulus check also qualify.
- The tenant has been unable to make full rent payments due to loss of hours, wages, layoffs, or high out-of-pocket medical expenses exceeding 7.5% of the household’s adjusted gross income for the year
- The tenant has made every effort to make timely rent payments that are as close to the full payment as possible
- That the eviction would either cause the tenant to be homeless or force them to move into a close-quarters living situation
- The tenant understands they will still need to pay rent at the end of the moratorium
- The tenant understands that any false or misleading statements could result in criminal or civil action
Landlords are not required to notify their tenants of the CDC order. In addition, the eviction moratorium doesn’t apply to tenants living in hotels, motels, or other forms of temporary housing.
Is Back Rent Forgiven?
Although a tenant may qualify for the eviction moratorium, unpaid rent still accrues. Some states also allow landlords to apply fees, interest, or other penalties to late rent payments. If the rent is more than $1,000 a month and hasn’t been paid since August 2020, your tenant would owe $1,000 for each month that went unpaid, as well as any interest or fees that you’re legally entitled to.
Do Tenants Automatically Receive Rental Assistance?
Even though a tenant qualifies for the eviction moratorium, they may not necessarily receive rental assistance. The moratorium applies to evictions exclusively. Renters may qualify for the assistance given their income is less than 80% of the median household income in their area, they’ve been adversely affected by COVID-19, and as a result, are at risk of losing their housing. If your tenant receives rental assistance, it can be used for utilities, back rent, or future rent. The qualifications for rental assistance are separate from those of the eviction moratorium.
Does the Moratorium Include Financial Assistance for Landlords?
Unfortunately, the eviction moratorium doesn’t include financial assistance for landlords – however, qualifying property owners can take advantage of the latest COVID-19 relief bill, The American Rescue Plan. This bill is set to provide $15 billion in grants for small businesses affected by the pandemic, as well as $175 billion in funding for small business loans and $30 billion in rental relief for tenants. Additionally, the bill will include new legislation that will extend foreclosures and eviction moratoriums through September 30, 2021.
As a landlord, you’ll still be able to pursue back rent, fees, interest, and evictions once the moratorium has ended. However, it’s important to know that violating the moratorium could mean facing fines as high as $100,000, a year in prison, or both. In the event that an eviction was somehow tied to the death of a tenant, the penalty can be as high as $250,000 and a year in prison.
Does the Moratorium Prohibit All Evictions?
No; only tenants who meet the qualifications are protected from being evicted. Additionally, you can still evict any tenant who engages in criminal activity on your property, threatens other tenants, or caused damage beyond regular wear and tear. Any tenant who acts in bad faith can have the eviction protection revoked.
That being said, it’s recommended to consult with legal counsel prior to evicting a tenant to avoid any potential fines or legal issues. The CDC’s guidelines are fairly straightforward, but they can be complicated with the addition of locally-enacted eviction moratoriums. Your legal team will be able to advise you further on the best steps to take.