The last two weeks have been like a bar fight for landlords. Sucker punch from the Governor, jab from the Kentucky Supreme Court, and now a right hook from the President. It’s all enough to make rental owners want to throw in the towel and sell their properties. For those of you hanging in there, here’s the latest:
On Tuesday the Center for Disease Control issued an administrative regulation, which has the effect of law, banning certain evictions for the remainder of 2020. The stated purpose for the order is to prevent the spread of COVID-19, and it’s based on a law created in 1944 that gives the executive branch broad discretion to take steps to prevent communicable disease. You can read the Order here. Here are the details:
- The law prohibits any landlord from evicting a “covered person” for nonpayment of rent or other similar housing-related payments, including late fees, penalties, and interest. “Evict” is defined as “any action by a landlord . . . to remove or cause the removal of a covered person from residential premises.”
- A “covered person” is a tenant or resident who provides a declaration, under penalty of perjury, indicating that:
- The individual has used best efforts to obtain all available government assistance for rent or housing;
- The individual either (i) expects to earn no more than $99,000 in income for 2020 (or $198,000 if filing a joint tax return), (ii) was not required to report any income in 2019 to IRS, or (iii) received a stimulus payment;
- 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 extraordinary out-of-pocket medical expenses;
- 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
- 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.
The CDC has created a Declaration Form that tenants may use to make this declaration.
- The order does not relieve tenants of their obligation to pay rent or other payments due under their lease, including late fees, penalties, or interest. It also does not prevent a landlord from attempting to collect these amounts.
- You may still evict tenants for:
- engaging in criminal activity while on the premises;
- threatening the health or safety of other residents;
- damaging or posing an immediate and significant risk of damage to property;
- violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or
- violating any other lease obligation, other than the timely payment of rent or similar housing-related payment (including non-payment or late payment of fees, penalties, or interest).
- This regulation is scheduled to take effect on Friday, September 4.
So, where do we go from here? Here’s the God’s-honest truth: No one knows. I’m telling you this as an attorney who likes to be clear and honest and give actual answers. No one knows. I’ve been to court all week, and each day is different from the last. The judges are trying to figure out how to deal with the most recent orders from the Governor and Supreme Court, and every tenant is claiming a COVID-related emergency.
So that’s where we are right now. I can tell you which eviction cases should theoretically go forward and prevail, but I cannot tell you in practice how any particular case will be ruled upon if challenged. And if someone else tells you they can predict it, it’s simply because they don’t know what they don’t know.
That said, the Kentucky Supreme Court is working on a new order in response to the CDC regulation. I expect that order to be out by the end of the week. It should give us some sense of how our state courts are going to implement the CDC order. I’ll share that as soon as it’s available.
Until then, I wanted to address one question that I keep seeing asked:
Should I change my leases to month-to-month so that I can just non-renew the leases of tenants who don’t pay and get around the eviction moratorium that way?
There’s no doubt that month-to-month leases give you much greater flexibility to remove problem tenants, but that flexibility is not absolute. Contrary to popular belief, you still need a legitimate business reason to remove a tenant. For covered tenants, that reason cannot be nonpayment of rent. So, it will have to be some other legitimate reason, such as rules violations or your intent to sell the property (and then you must actually try to sell it). Here’s an article I wrote about non-renewing leases and tenancies that gives you more information on the issue.
In summary, I don’t think you’ll be allowed to evict based on non-renewals unless the reason for the non-renewal was a legitimate reason that is not related to the tenant’s failure to pay rent.
So, that’s a lot to process, and we still have more questions than answers. But that’s what I know for now. I’ll update you as things develop.
As always, this too shall pass. Hang in there. Be stronger than what life throws at you. Because you can. Have a great day.