A New Eviction Process, Questions about Late Fees, and Two Lawsuits to Watch

So, the hits just keep on coming. After the Governor signed a new Executive Order on evictions on eviction on August 24, we got news on Friday that the Kentucky Supreme Court had issued a new order on evictions as well. You can read the order here. The section on eviction begins on Page Five.

The Supreme Court’s Order does two very important things:

1. It makes clear that CARES Act properties must continue to give 30-day notices to pay or vacate. Prior to the Governor’s Order last week, most within the legal community assumed that the 30-day notice requirement for CARES Act properties had expired. This new Supreme Court Order re-institutes it. Regardless of what the Governor has said about notices, the Kentucky Supreme Court is requiring all CARES Act properties to issue 30-day notices to pay or vacate before filing evictions.

2. Effective September 21, it changes the court process for non-payment of rent eviction cases. It basically expands the Jefferson County Eviction Diversion Program throughout the entire state, with an even greater delay in the process. Here is the new process:

• The landlord files an eviction complaint and Verification Form with the court as usual.
• The Court will schedule a hearing date, as usual.
• At the hearing, both the landlord and the tenant will be informed verbally that local funding agencies may be able to provide rental assistance to cover the unpaid rent.
• Here’s the new part: Unless the tenant fails to appear, the case is dismissed by the landlord, or the parties reach a settlement, the matter is then postponed for 14 days and another hearing is scheduled.
• The matter will be heard and judgment considered at the second hearing, unless a jury trial is requested by the tenant.
• The tenant may request a jury trial at any point during the 14 days.

Two things to keep in mind on this new process:

1. It only applies to cases where non-payment of rent is the only basis for the eviction. This process does not apply to other kinds of evictions (rules violations, non-renewals of leases, etc.). Those cases will proceed at the initial hearing.

2. It does not start until September 21. Now, the question becomes whether it applies to all cases on September 21, or for cases filed on or after September 21. From what I can tell after talking to a few people, it will begin in all cases on September 21. So, when you show up to eviction court on September 21, expect the new process to be in effect.

Questions on Notices and Late Fees

So, with that being said, let me address a few questions that have been popping up after the Governor’s Order last week.

1. “I issued my usual notice on August 16. It was not a 30-day notice and did not request to meet with the tenant about the case. Do I need to issue a new notice?”

No, unless you’re a CARES Act property. The Governor’s office has confirmed that his Order does not affect cases filed or notices given prior to August 25. So, if you are a non-CARES Act property and you gave your usual notice prior to August 25, you should be fine, even if it was not a 30-day notice or contain the “meet and confer” language. If you’re a CARES Act property, the Supreme Court’s new order requires a 30-day notice effective August 28.

2. “I’ve been charging and collecting late fees. My tenant is requesting that I credit those fees to the next month’s rent. What should I do?”

As the law currently stands under the Governor’s Order, late fees may not be charged from March 6, 2020 through December 31, 2020. That seems to indicate that such fees must be reversed if charged and credited if they’ve been collected. Whether you do that is an internal decision, but the legal answer is to reverse the charges and credit the funds collected.

This last issue is really a mess. As Chris Wiest explained last week, the Governor’s Order on late fees basically made criminals out of landlords who have collected late fees. Violating the Governor’s Order is a Class A misdemeanor, punishable by 90 days to one year in jail.

Two Lawsuits to Watch

However, there are two lawsuits that could address the Governor’s Executive Order from last week.  

1. The Northern KY federal court lawsuit. As we’ve discussed repeatedly, several landlords in Northern KY and the Northern KY Apartment Association have filed a lawsuit against the Governor in federal court to overturn the eviction moratorium. The landlords were allowed to amend their complaint to address the Governor’s new order on 30-day notices and late fees. A hearing in this matter is scheduled for Wednesday, September 2.

2. The Boone County Supreme Court case. As you may recall, the Florence Speedway, along with a day-care center and a café, sued the Governor in Boone County, alleging that his Executive Orders are not lawful. They are seeking to have all of his Executive Orders overturned and to require the Governor to follow certain current legal parameters before issuing any new ones. The Plaintiffs won at trial on the merits and won on a procedural issues at the Court of Appeals. Now the Supreme Court will hear the case.

The Plaintiffs and the Attorney General filed excellent briefs in that case recently, which you can read here and here. That case is set to be heard by the Kentucky Supreme Court on September 17. 

That case should be watched very closely. The Justices of the Supreme Court are elected officials on a non-partisan basis. For future purposes, you may want to pay attention to how the Justice in your district votes in that case.

I hope to be able to tell you that you the late fee aspect of the Governor’s Order has been struck down, but it stands for now.

Until then, as far as notices go, my advice is for all properties to give 30-day notices to pay or vacate right now. Those notices should include the “meet and confer” language that has been ordered by the Governor. If you’d like to purchase a 30-day notice that complies with the Governor’s order, just shoot me an e-mail at smarshall@tripleslaw.com. Hope you’re doing well. We’ll talk soon.