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Landlords And Tenant Advocates Scramble To Unpack Legal, Financial Ramifications Of The CDC Eviction Moratorium

In an unprecedented move, the Centers for Disease Control and Prevention announced a national residential eviction moratorium last week, which it said is aimed at providing housing stability to vulnerable renters during a public health crisis.

City of Houston officials and tenant advocates were already debating the creation of a local eviction grace period ordinance. For now, the new eviction moratorium has interrupted that debate.

Houston City Hall in Downtown Houston.

News of the CDC eviction order emerged late in the day on Sept. 1, catching Houston landlords and tenant advocates mostly by surprise. Under federal public health law, the agency has the power to introduce measures to prevent the spread of communicable diseases in the event of inadequate local control.

The eviction order came into effect on Sept. 4, the date of its publication in the Federal Register. It will remain in effect, unless extended or modified, through Dec. 31.

Eligible tenants have to prove they have suffered a substantial loss of household income due to the pandemic and therefore cannot pay full rent. Renters must also attest that eviction would likely leave them homeless or potentially force them to live with others at close quarters.

The order does not remove the obligation to pay rent, make a housing payment or comply with any similar tenancy contracts. Landlords are also permitted to continue charging or collecting fees, penalties or interest as a result of failure to pay rent or another housing payment.

Tahirih Justice Center Policy and Advocacy Manager Guadalupe Fernández told Bisnow that for tenant advocates, the CDC eviction moratorium provides more time to work on developing a plan to more broadly combat the issue of eviction.

“[It] affords us at least a little break from working on individual cases, preventing evictions and helping individual folks in crisis, to really give us space and capacity to engage with these processes to develop a solution,” said Fernández, who is a member of the city of Houston and Harris County’s joint Housing Stability Task Force.

“A lot of us are just scrambling to see [what] it's going to look like, but also just really being proactive and communicating what this means for tenants, what their rights are in this moratorium, and being ready to defend them and connect community to the correct resources in the meantime.”

For landlords, the new eviction moratorium creates a confusing legal challenge in what has already been a difficult year.

“I think we're all still trying to figure out exactly what it means and what the practical implications are, and how the courts are going to handle everything,” Veritas Equity Management CEO John Boriack told Bisnow.

“I think every attorney in the city right now that deals with landlord-tenant issues is trying to come up with a determination of what exactly it means and what the different remedies are.”

In addition to being a multifamily landlord, Boriack is president-elect of the Houston Apartment Association, and he is also a member of the Housing Stability Task Force. Boriack said that since the CDC announcement, HAA has been trying to help its confused members navigate the situation.

“The entire membership is buzzing with questions. And we're scrambling to find out information, in particular the resources to help our members navigate this new crisis. Just when we thought we were pulling out of the first one, we have this new one hitting,” Boriack said.

Houston Mayor Sylvester Turner speaking during a COVID-19 press conference on Sept. 2, 2020.

The eviction moratorium order left many Houston landlords scrambling for another reason. The second round of the COVID-19 Rental Assistance Program was due to close on Sept. 2, one day after the CDC announcement. The city of Houston provided $20M to the program, and Harris County provided an additional $40M.

To qualify for that relief, landlords had to apply to participate and agree to hold off on or rescind any eviction proceedings, as well as waive late fees and arrange a payment plan for outstanding rent. If they didn’t choose to participate, then interested renters were not eligible to receive the money.

Boriack said that after the CDC announcement, multifamily landlords in Houston who were not already signed up rushed to lodge their application before the expiration of the program. He estimated that about 650 new landlords lodged their application on Sept. 2, bringing the total number of registered landlords to over 12,000.

“The CDC moratorium that came out definitely affected the cost-benefit equation on whether it was worth it for property owners to enroll in those programs,” Boriack said.

Prior to the CDC announcement, some Houston landlords had opted not to sign up for the rental assistance program. Depending on whether a landlord qualified for the Harris County or city of Houston funds, the rules surrounding vacate notices were, in effect, an eviction moratorium.

For landlords who qualified for the Harris County funds, no eviction notice could be served for 60 days after they received a payment from BakerRipley, the nonprofit administrator of the program.

“It required property owners to have a tremendous amount of cash reserves on hand to be able to survive and pay their bills during the first 30 to 60 or more days when [they would have to be] prepared for their rental income to be significantly reduced because of the mandatory grace period and notice to vacate language,” Boriack said.

Better World Properties Vice President of Operations Michael Knight said his company initially chose not to apply for the rental assistance program because it wanted to keep the ability to evict as a way to regain control over its multifamily properties.

“It has been amazing over the past couple of weeks, how many residents have suddenly managed to pay rent or they have voluntarily moved or gotten on with their life in some way, understanding that eviction was suddenly a very real possibility for them,” Knight said.

“We no longer have that tool, [so] we're right back where we started. And that's obviously very frustrating for us as a landlord.”

Knight said Better World Properties ended up submitting 14 of its multifamily rental properties in Houston to the program on Sept. 2.

Houston Mayor Sylvester Turner encouraged eligible landlords and tenants to apply for the city’s COVID-19 Rental Assistance Program during a press conference on Sept. 2. He also urged renters to pay as much of their rent as possible to avoid a ballooning debt in the coming months.

Turner has previously rejected suggestions for an eviction grace period ordinance, citing concerns of tenants being unable to pay back their financial obligations.

“The CDC has made its decision. My preference is to provide people with cash assistance, such that their financial obligation is not worsened,” Turner said.

Though there has not been an official announcement, the COVID-19 Rental Assistance Program appears to have been extended. The website is still accepting applications from eligible landlords and tenants, and as of Sept. 8, no new deadline has been posted. BakerRipley did not respond to a request for comment by the time of publication.

Veritas Equity Management CEO John Boriack

As the economic downturn continues and unemployment remains high, landlords are continuing to voice concerns about the ability of renters to pay back their accumulating debt.

“This order ... kicks the can down the road and creates an impossible balloon payment situation for our renters in a few months that most of them are not going to be able to survive,” Boriack said.

A new federal aid package, including proposed rental assistance funds, was initially expected to pass Congress in late July or early August. However, consensus on that package could still be weeks or months away, meaning that for now, local programs offer the only respite for both landlords and tenants.

Fernández said that even from a tenant advocate perspective, an eviction moratorium delays financial struggle. But without it, renters would be in a more precarious position.

“If we're asking tenants to really make decisions on how much debt [to take on] and how to manage their debt, we need to be asking the same of landlords,” Fernández said.