CDC Order under Section 361
September 1st 2020 the U.S. Centers for Disease Control and Prevention (CDC) issued a broad nationwide Order to temporarily stop the eviction of millions of Americans in an effort to slow the spread of COVID-19 with this newest eviction moratorium.
In this article we want to highlight the key points, differences, and consequences of this new Order by the CDC and Administration over previous moratoriums.
When is this eviction moratorium in effect?
This new eviction moratorium Order is in effect as of September 4th 2020 and will be active until December 31st 2020. The unpublished Order can be found here.
Who does this eviction moratorium cover?
Unlike previous eviction moratoriums, this eviction moratorium Order is not limited to federally funded housing. The acceptance criteria for this order is explained in detail below, but generally speaking, all Americans who qualified for the Economic Impact Payment (stimulus check) will also qualify for this Order.
Why was this eviction moratorium created?
The CDC has created and issued this Order in an effort to stop the spread of COVID-19 which has affected millions of Americans and taken the life of over 185,000 Americans. A direct quote from the Order reads:
In the context of a pandemic, eviction moratoria—like quarantine, isolation, and social distancing—can be an effective public health measure utilized to prevent the spread of communicable disease. Eviction moratoria facilitate self-isolation by people who become ill or who are at risk for severe illness from COVID-19 due to an underlying medical condition. They also allow State and local authorities to more easily implement stay-at-home and social distancing directives to mitigate the community spread of COVID-19. Furthermore, housing stability helps protect public health because homelessness increases the likelihood of individuals moving into congregate settings, such as homeless shelters, which then puts individuals at higher risk to COVID-19. The ability of these settings to adhere to best practices, such as social distancing and other infection control measures, decreases as populations increase. Unsheltered homelessness also increases the risk that individuals will experience severe illness from COVID19.CDC Order: BILLING CODE: 4163-18-P
What this eviction moratorium means for renters
While this Order prevents eviction under certain circumstances it does not excuse the financial obligations of renters. All fees, interest, and penalties accrued due to failure to pay rent may still be charged to renters. So what does this mean for renters?
In general terms, what this means for renters, is that non-payment of rent creates a cascading problem that ends in an economic cliff come January 2021. When this Order expires at the end of the year, all payments not made over the last 4 months will be due, as well as all interest and late penalties for non-payment.
non-payment of rent creates a cascading problem that ends in an economic cliff come January 2021
As most renters know, financial screening is a large part of qualifying to rent a new home. It is important to consider not only the financial burden you will experience in January 2021 but also the difficulties in finding a new home to rent when all of the back owed rent hits your financial records/credit score. Finding a new home will become unnecessarily difficult or impossible.
It is also important to note that this Order does not cover any evictions for violations other that non-payment of rent. Renters can still be evicted for criminal charges, property damage, and other violations of their lease agreements.
Lastly, while this Order is broad and sweeping it is not all inclusive. The details of renter qualifications for this Order are covered below.
What this eviction moratorium means for apartments owners
“Without direct rental assistance, rents cannot be paid, and owners face a financial crisis of their own by not being able to maintain properties and pay their mortgages or property taxes,”NAA President & CEO Bob Pinnegar
A Politico article sheds some light on the other side of this coin. Owners and operators who will have to house renters without financial compensation. A further comment from NAA President and CEO Bob Pinnegar reads:
…“This action risks creating a cascade that will further harm the economy, amplify the housing affordability crisis and destroy the rental housing industry,” he added. “This global housing crisis cannot be blamed on the rental housing industry, nor can the industry bear the brunt of the pandemic alone.”
Rental Assistance vs. Eviction Moratoriums
Something to consider are alternative actions which leave both renters and owner/operators in a better spot come 2021. By passing legislation that allows for rental assistance and other financial aid efforts, both renters and owner/operators are left in a much better position.
By providing rental assistance the federal government allows renters to keep their homes and reduce the spread of COVID-19. Not only will renters stay in their homes but the irreversible damage of the looming financial cliff brought on by months of back rent and penalties is removed completely.
Financial assistance also allows owners to maintain their properties, make mortgage payments, and pay property taxes which in turn will ensure a healthy economy. Without financial assistance in place of an eviction moratorium January 2021 is looking like a bleak economic future for Americans and American real estate companies.
Who qualifies for the CDC Order?
The following criteria can be used to determine if you qualify for the eviction moratorium in accordance with the CDC Order.
1) The individual has used best efforts to obtain all available government assistance for rent or housing;
2) The individual either (i) 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),6 (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (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 extraordinary7 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.