A New Consumer Protection Rule on Evictions

I just have a brief update today, but potentially an important one.

The Bureau of Consumer Financial Protection has issued a new rule that puts a new obligation on landlords, attorneys, and collection agencies seeking to evict or collect debts from tenants. The rule amends the Fair Debt Collection Practices Act, which applies to “debt collectors”. You can read the new rule and all the commentary on it here and can find a fact sheet on it here.

DEFINITIONS OF “DEBT” AND “DEBT COLLECTOR”

Under the FDCPA, “debt” is defined as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily used for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” So, if someone owes you money from a rental transaction where the property was used primarily for personal, family, or household purposes, that debt is covered by the FDCPA.

A “debt collector” is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to owed or due another.” This means that property managers could qualify as debt collectors if they regularly attempt to collect debts for their owner.

THE NEW RULE

The new rule takes effect on May 3, 2021, and runs until the end of the CDC Eviction Moratorium, whenever that may be has two parts:

1. The rule requires that debt collectors covered by the FDCPA must disclose to their tenant, conspicuously and in writing, that the tenant may be eligible for temporary protection from eviction under the CDC Order. The new rule includes sample language that may be used:

“Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under State and/or Federal law. Learn the steps you should take now: visit www.cfpb.gov/eviction or call a housing counselor at 800-569-4287.”

This disclosure must be made on the date that the tenant is given the first eviction notice. If no notice is required, the disclosure must be made on the date the eviction is filed.

The term “eviction notice” is defined as the earliest written notice that the law requires to be given before an eviction may be filed. So, that’s typically going to be the notice to pay or vacate. 

Note: This notice should be delivered to the tenant as a hard copy. It may not be only delivered electronically, whether via e-mail or text. 

2. The second part of the rule is that you may not “falsely represent or imply” to a tenant that they are not eligible for temporary protection from eviction under the CDC Order. 

MY ADVICE

So, here’s my advice:

1. Assume you are a “debt collector” under the FDCPA;
2. Include the sample language on each notice you give your tenant that could result in an eviction;
3. Include the sample language on every eviction that you file.

Does the new rule absolutely require this for every landlord and tenant eviction? No. You may not qualify under the law as a debt collector. And your particular type of eviction may not be covered under the CDC Order. But you don’t want to defend a lawsuit to find out. Adding this simple statement on your notices is a simple way to make sure you’re compliant and avoid being the test case on these issues. 

If you have questions, please consult with your friendly neighborhood attorney. You can reach me at (859) 685-0035 or via e-mail at smarshall@tripleslaw.com.

Have a great rest of your week.