Deep dive into the Federal Eviction Moratorium

As readers of this blog are aware, the Federal government has gotten into the landlord-tenant business.  This past Tuesday, the Centers for Disease Control and Prevention issued an unpublished order that is expected to be published in the Federal Register on September 4, 2020 purporting to put a moratorium on certain residential evictions until December 31, 2020.  The order is not a rule but is to be considered an emergency action taken by the CDC.  As promised, here’s a deeper dive into the order.

The moratorium

The general rule is this:

Under this Order, a landlord, owner of a residential property, or other person with a legal right to pursue eviction or possessory action, shall not evict any covered person  from any residential property in any jurisdiction to which this Order  applies during the effective period of the Order.

The order and the moratorium, which become effective immediately upon publication, is currently expected to be published on September 4, 2020 and will be in place until and including December 31, 2020.  During the moratorium, the order creates a nationwide prohibition on the eviction of qualifying residential tenants which it refers to as “covered persons”. Note that this law does not apply to commercial property.

What is a “covered person”?

The order defines a “covered persons” as “any tenants, lessees, or residents of residential properties 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:

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

2) The individual either expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return) or (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received a 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.

The order provides a sample of a sworn declaration tenants may use to notify their landlord that they are a “covered person”.  What if they don’t do that?  What if they lie?  Are tenants who lie subject to the penalties under the Order?  It would seem so.

The Order does not indicate how or if a landlord is able to determine whether or not their tenant is, in fact, a covered person.  Can a landlord question the tenant?  Can they scrutinize the declaration?  Will that happen if/once we get to court?  Before then?  It would, however, seem that everything is status quo until the tenant serves a landlord a declaration that they are a covered person.

Evictions for Other Causes

The Order provides that nothing contained in it stops a landlord from bringing an eviction based on a tenant who (1) engages in criminal activity; (2) threatens the health and safety of other resident; (3) damages or poses an immediate and significant risk of damage to property; (4) violating building codes, health ordinances, or similar health and safety regulations; or (5) violating another contractual obligation other than payment of rent or similar housing related payment.  Illinois landlords will see some similar verbiage to the State eviction moratorium that allows exceptions permitting evictions in certain circumstances.

While we are at it, let’s look at the definition of “Evict” and “Eviction” from the Order.

“Evict” and “Eviction” means any action by a landlord, owner of a residential property, or other person with a legal right to pursue eviction or a possessory action, to remove or cause the removal of a covered person from a residential property. This does not include foreclosure on a home mortgage.

So, let’s break it down.  Any action.  By a landlord.  To remove or cause the removal of a covered person.  From a residential property.

Is the service of a 5 day notice considered “any action to remove or cause the removal of a covered person”?  I really don’t know.  I’m going to have to think on it, but I don’t think I would serve a notice for nonpayment of rent on a tenant who delivered a declaration that they are a covered person.

What about an eviction when a lease expires?  It seems like that wouldn’t have anything to do with non-payment of rent and would instead be a tenant “violating another contractual obligation other than payment of rent”, even if that tenant were a covered person.

Penalties for Violation

This Order is to be enforced by “Federal authorities and cooperating State and local authorities” and the penalties for violation of the order are criminal.

The law provides that a person violating the Order can be subject to a fine of not more than $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of not more than $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law.

Further, an organization violating this Order may be subject to a fine of no more than $200,000 per event if the violation does not result in a death or $500,000 per event if the violation results in a death or as otherwise provided by law. The U.S. Department of Justice may initiate court proceedings as appropriate seeking imposition of these criminal penalties.

Woah, the Justice Department?  One year in jail?  Fines as high as a half-million dollars?  Is Doctor Evil in the room?  One half-million dollars?  What the heck?

Where is this thing effective?

The order does not apply in any state, local or other area with a “moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements” of the order.  Is it effective in Illinois?  So, for now, it would seem that the Governor’s order prohibiting almost all residential evictions and not just those for non-payment of rent (making the Illinois moratorium more broad than the federal moratorium) would still apply until its expiration.  After the Illinois order expires in mid-September (unless extended by the Governor), the Federal rule would take over.  I suspect  that our Governor will use the CDC Order as political cover to extend his own State moratorium until the end of 2020, but that’s just speculation by me.  That probably won’t stop smart tenants from serving their landlord with the notice that they are “covered persons”.

Interestingly, the Order does not apply to American Samoa (where there have been no reported COVID-19 cases) but will be effective there once cases are reported.  Those darn lucky Samoan landlords!

Throwing landlords a bone?

Throughout the Covid-19 landlord-tenant jurisprudence, almost as a slap in the face to landlords, governmental entities from the City of Chicago and State of Illinois all the way up to the federal government pay silly lip-service to the concept of tenants paying rent.  This Order is no different.  It indicates that the Order shall have “no effect on the contractual obligations of renters to pay rent and shall not preclude charging or collecting fees, penalties, or interest as a result of the failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.”

So there you have it folks.  The Order doesn’t stop you, Mr. Landlord, from getting rent.  In fact, Uncle Sam encourages your tenants to pay their rent.  I’m sure they will.  Aren’t you?  All your good Uncle Sam is doing is removing your remedy in the case the tenant doesn’t pay rent… until 2021.

Summing up

Landlords can’t evict until 2021.  What about evictions already in progress?  If they are for non-payment of rent, I’m guessing they will pause as well.  Can a landlord serve a 5 day notice?  I’m not sure if the tenant has delivered a notice that they are a covered person.  I’m also not sure yet that I want to test the theory of whether or not serving a 5 day notice equates to “evicting” a tenant.  Who wants to be a “up to one year in jail” guinea pig to find out?

Let’s be honest here, tenants who stop paying rent now will not have rent int he future and won’t be good prospects for collection.  There is no effective enforcement arm.  Landlords have had grace forced upon them.  The federal government (along with the State and City of Chicago) has made your tenant your problem (will they share their lottery proceeds with you if they win? or the proceeds of the sale of their business when they hit it big?).  You are your brother’s keeper.  Without some form of “bailout” from the federal government compensating landlords, this is a one-sided solution that places a public burden on a private landlord.  You landlords will need to figure it out on your own.  The Contracts Clause of the U.S. Constitution apparently means nothing… because Covid.

Might I remind you of this service our firm provides?

About Richard Magnone

Co-founding member of Reda | Ciprian | Magnone, LLC, attorney at law and Illinois licensed lawyer since 1996.
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