On August 8, 2020, President Donald Trump issued an executive order directing the Centers for Disease Control (“CDC”) 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 …”. On September 1, 2020, the CDC, using its quarantine authority, has opined that evictions would lead to homelessness and spread of COVID-19 because evictions would lead to individuals going to homeless shelters or living with extended family. In the opinion of the CDC, those close living quarters would lead to more spread of COVID-19. Based upon the CDC’s advice, President Trump is expected to issue an executive order issuing a nationwide moratorium to prohibit evictions of qualified tenants.
The Executive Order would set forth four criteria that a tenant must meet in order to be eligible for the moratorium relief. A tenant must:
- Have an income of $198,000 or less for couples filing jointly, or $99,000 for single filers;
- Demonstrate they have sought government assistance to make their rental payments (the one-time stimulus payment issued early this year satisfies this criteria);
- Affirmatively declare they are unable to pay rent because of COVID-19 hardships; and
- Affirm that they are likely to become homeless if they are evicted.
This moratorium would provide tenants with temporary relief through December 31, 2020. However, the moratorium does not forgive the obligation to pay the rent. If the tenant was laid off in March, it could owe nine months of accrued rent by the time the moratorium ends.
Absent a Federal financial aid package, many tenants will not be able to pay the accrued rent. An impecunious tenant makes the odds of recovering that accrued rent from the tenant pretty low. The tenant could be evicted upon the expiration of the moratorium, but are there going to be any tenants in the market to occupy that unit? Lease amendments could be a solution – if properly drafted, a lease amendment could address payment of the accrued rent over time with acceleration of the accrued rent in the event that the tenant receives any financial aid or rental assistance, and other terms to address this unprecedented pandemic and economic uncertainty. The collaboration of the landlord and tenant could benefit both parties by giving the tenant an opportunity to get back on his/her feet, and giving the landlord better odds of collecting the accrued rent and keeping its apartment units occupied.
