Client Alert

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Scott L. Laes
310.284.2117

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Alicia N. Vaz
310.284.2273

Real Estate

Centers for Disease Control Orders Temporary Moratorium On Residential Evictions For Lower Income Tenants Through the End of 2020

Within weeks of the coronavirus being dubbed a pandemic and in response to rising unemployment rates that threatened to leave many Americans unable to meet their rental obligations, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included a 120-day moratorium on residential evictions for certain rental properties with federal assistance or federally related financing.  Confronted with mounting pressure after the moratorium expired on July 24, 2020, and millions of families facing the probability of eviction, President Trump issued an executive order authorizing the Centers for Disease Control (CDC) and other agencies to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19” and could be enacted in accordance with existing law.

Recognizing the continuing threat posed by the COVID-19 pandemic, the benefits of eviction moratoriums on preventing community spread of the virus, and the many insufficient (and sometimes nonexistent) moratoriums throughout the country, on September 1, 2020, the CDC issued an Order temporarily halting residential evictions in the United States for lower-income tenants who are unable to pay rent because of the financial impacts of COVID-19.  The Order was enacted pursuant to existing authority granting the CDC the ability to implement reasonable measures to prevent the spread of disease in the event of inadequate local action.  The moratorium is expected to be in effect between September 4, 2020 and December 31, 2020. 

To invoke the protections of the Order, the tenant must meet the following criteria:

(i)  have an annual income that does not exceed the income limitations in 2020 of $99,000 or $198,000 if filing jointly, have received a stimulus check pursuant to the CARES Act or have not been required to report income to the IRS in 2019;

(ii)  have used best efforts to make partial payments to the extent feasible under the tenant’s circumstances;

(iii)  be unable to pay rent due to the COVID-19 pandemic despite best efforts to obtain all available government assistance;

(iv)  be likely to become homeless and forced to move into a shared residence or homeless shelter if evicted;

(v)  understand he or she is still required to pay rent and agree that fees, penalties and interest may be charged or collected based on failure to pay; and

(vi)  understand and agree that at the end of the temporary moratorium on December 31, 2020, he or she may be required to pay in full all payments not made to that point in time and failure to do so may result in eviction.

To prevent eviction prior to December 31, 2020, a tenant must provide the landlord with a declaration in the form attached to the Order and signed under penalty of perjury affirming that the tenant meets these criteria.

As with all other eviction moratoriums enacted as a result of COVID-19, nothing in the CDC Order absolves the tenant of the obligation to pay rent under the lease, and the CDC Order allows a landlord to charge fees, penalties and/or interest for missed payments.  The CDC Order does not prevent a tenant from being evicted for reasons other than financial hardship caused by COVID-19.  Any individual violating the Order may be subject to a fine up to $100,000 ($250,00 if the violation results in a death) and/or jail time.  Organizations violating the Order may similarly be subject to a fine up to $200,000 per violation ($500,000 if the violation results in a death) and/or jail time.

Critically, the Order does not apply to any State or local area with a moratorium that “provides the same or greater level of public-health protection” as the Order and does not preclude the future enactment of more stringent moratoriums.  Therefore, it is not likely to apply in California, given the California Legislature’s recent passage of the COVID-19 Tenant Relief Act of 2020 that precludes residential evictions of tenants unable to pay rent as a result of a financial difficulty due to COVID-19 prior to February 1, 2021, which we discussed here.  The Order also does not apply to commercial tenants.  As we have noted in prior Client Alerts, it remains important to check the applicable eviction rules of your specific locality to determine if there are any stricter protections for residential tenants, and, for commercial properties, if there are any local laws that extend protections commercial tenants.

Cox Castle has created a Task Force to monitor, analyze and advise on a wide array of business and legal challenges arising from the COVID-19 pandemic, including the matters discussed in this alert.  Coordinating across multiple practice groups and industries, the Task Force is keeping track of the latest developments with COVID-19 and working to provide the best advice possible to our clients in the real estate industry and beyond.  If you have any questions about these matters or responding to the COVID-19 pandemic more generally, please reach out to any Cox Castle professional or member of the Task Force.

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