Prohibition on Evictions - Moratorium at the Federal and State Levels
Under “Coronavirus Aid, Relief, and Economic Security Act,” the “CARES Act, Congress passed legislation that is now well known. It influences many areas, many individuals and many entities. The area of focus in this Tip relates to the issue of moratoriums on evictions from real estate.
Under Section 4024 of CARES, the Act provides for a “Temporary Moratorium on Eviction Filings.”
This Section states in part:
“(1) COVERED DWELLING.—The term “covered dwelling” means a dwelling that—
(A) is occupied by a tenant—
(i) pursuant to a residential lease; or
(ii) without a lease or with a lease terminable under State law; and
(B) is on or in a covered property.
(2) COVERED PROPERTY.—The term “covered property” means any property that—
(B) has a—
(i) Federally backed mortgage loan; or
(ii) Federally backed multifamily mortgage loan.
The Act further stated:
“(b) Moratorium.—During the 120-day period beginning on the date of enactment of this Act (March 27, 2020), the lessor of a covered dwelling may not—
(1) make, or cause to be made, any filing with the court of jurisdiction to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges; or
(2) charge fees, penalties, or other charges to the tenant related to such nonpayment of rent.
(c) Notice.—The lessor of a covered dwelling unit—
(1) may not require the tenant to vacate the covered dwelling unit before the date that is 30 days after the date on which the lessor provides the tenant with a notice to vacate; and
(2) may not issue a notice to vacate under paragraph (1) until after the expiration of the period described in subsection (b).”
Thus, the Act applies to situations involving Federally backed mortgage loans and Federally backed multifamily mortgage loans. It does not address many situations that do not involve these Federally backed loans.
However, there are other laws that cover eviction moratorium issues. Most recently, under state law, some legislative bodies have passed moratoriums that prevent eviction of tenants.
Many state laws have now provided for limits on the ability of a property owner to evict a tenant for non-payment of rent. This includes commercial and residential settings in some states.
One example of a recently passed state law on this issue is from the state of Massachusetts.
There, the legislature passed HB 4647, which prevents some evictions for tenants that have not paid their rent. The new law states:
“…a landlord or owner of a
property shall not, for the purposes of a non-essential eviction for a residential dwelling unit: (i) terminate a tenancy; or (ii) send any notice, including a notice to quit, requesting or demanding that a tenant of a residential dwelling unit vacate the premises.
(b) Notwithstanding … General Laws or any general or special
law, rule, regulation or order to the contrary, a court having jurisdiction over an action for summary process … shall not, in a non-essential eviction for a residential dwelling unit or a small business premises unit:
(i) accept for filing a writ, summons or complaint;
(ii) enter a judgment or default judgment for a plaintiff for possession of a residential dwelling unit or small business premises unit;
(iii) issue an execution for possession of a residential dwelling unit or small business premises unit;
(iv) deny, upon the request of a defendant, a stay of execution, or upon the request by a party, a continuance of a summary process case or
(v) schedule a court event, including a summary process trial….”
This law also prohibits the landlord from imposing a late fee for non-payment of rent on the residential dwelling unit or on a small business premise. Further, the property owner cannot report this non-payment to a consumer reporting agency.
This position generally applies, where applicable for 120 days after the effective date of the Act or 45 days after the COVID-19 Emergency declaration is lifted, whichever is sooner. (Even this limit is subject to the Governor extending the same.)
Other states are also in the process of providing such moratoriums as to rent payments. For a good collection listing states and cities that have established some limit on the collection of rents and evictions, see https://www.fool.com/millionacres/real-estate-market/articles/cities-and-states-that-have-paused-evictions-due-to-covid-19/
Such actions by state legislators have already been questioned as being unconstitutional. There is also no question that such actions can cause huge financial damage to the landlords of properties impacted by these moratoriums. What will happen on the constitutional issue remains to be seen when these laws are challenged in the courts.
Dr. Mark Lee Levine,
Professor, University of Denver