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Moratorium on Evictions: Not the Disaster Some Landlords Expected

As several of my clients are also fellow landlords, I thought it might be helpful to discuss the moratoriums on evictions that were in place and still are in some states. In the first quarter of 2020, the Federal government issued moratoriums on evictions.  This had a fairly limited effect because it only had jurisdiction over housing that receives federal government payments or federal government loans. The laws that had the most impact were the state laws, as those could govern all leases within the state’s boundaries.

In Arizona, Governor Ducey issued an executive order on March 24, 2020 directing constables to postpone enforcing Writs of Restitution after an eviction judgment – if the tenant had been impacted by COVID-19 and was being evicted for non-payment of rent. The moratorium does not cover evictions for breaching other lease terms or causing a public safety issue.  Arizona’s position was more favorable to landlords than some states, but it was still challenged by landlords in May and August of 2020. The challenges were unsuccessful. While to the layperson, one might think that this means the tenant can stay rent free and in fact, I heard people mistakenly saying that.  The eviction by the constable is the last step of the eviction process and the tenant will suffer significant consequences before being physically evicted.

The eviction process begins when a tenant does not pay rent in violation of their lease agreement (whether oral or written). A demand for rent is served upon the tenant once they are late with the rent, notifying the tenant that they have a certain number of days to pay in full all back rents and late fees or a lawsuit will be filed. When the time for that demand has expired (Arizona 7 days) and the monies have not all been paid, the landlord can file a lawsuit for failure to pay all monies due and breaching the lease. Now the tenant will also be liable for court costs.  Once the lawsuit is filed, it is a matter of public record and available to the credit reporting agencies.  This is a big deterrent to most tenants, as they will have a difficult time renting from a new landlord. The moratorium also did not impact the court’s ability to hear the matter and render a judgment. In fact, more than 30,000 evictions were filed in Maricopa County alone, during the pandemic.  Now the tenant has a judgment against them of public record which will impact their credit report and interest is accruing on that judgment. The landlord can now seek to collect the judgment against any assets of the tenant.  The tenant could not be evicted, but substantial and long-lasting negative consequences have occurred to the tenant.

Additionally, in August of 2020 Governor Ducey’s Executive Order extended the moratorium to October 31, 2020, but it also required the tenant to now prove they were willing to participate in a payment plan and had applied for rental assistance. Several states had similar conditions after the CARES Act was passed by the US Congress providing for rental assistance to tenants. If the tenants had not applied and could not prove their impact from COVID-19, the moratorium did not apply.

While the CARES Act was not renewed in late 2020, the CDC issued an order that extended the moratorium on evictions, but there were a few more conditions placed on the tenant: they could not make more than $99,000 per annum; they agreed to a payment plan that demonstrated they were financially impacted by the pandemic; they could not make full rent payments; and they had applied for rental assistance. This order recently expired on June 30, 2021, and there are no serious discussions of extending it at this time.

In California, new legislation, AB832, recently passed on June 28, 2021, to extend the eviction moratorium until September 30, 2021. It also increased cash assistance to tenants and small landlords, up to 100% of past due, and prospective rents, with $5.2 Billion of funding. However, evictions have been occurring throughout 2021 at a significant rate in California and the conditions, while more favorable to the tenant, are similar to the examples discussed above.

I suspect many landlords and tenants worked out an equitable solution between them, as is done in non-pandemic times.  The moratorium could not stop the financial tsunami that would hit a tenant for non-payment of rent. Once a tenant understood this, they had every reason to find a compromise with the landlord. In the meantime, rents have been rising at historic rates throughout much of the country.  As a landlord, reaching a compromise means that you released the house or apartment to receive a new tenant at a higher rate or sell in a booming housing market.

Disclaimer – This article is for information purposes only. It is not intended to provide legal advice to anyone. If you require advice, you should reach out to our firm or another lawfirm to discuss your facts and circumstances to obtain legal advice.​

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Meet Margaret Tritch Buonocore

Margaret Tritch Buonocore began her legal career in Los Angeles as a litigator. She then moved to London where, after completing her LLM, she worked in international business and finance for almost a decade structuring corporate finance transactions, equity offerings, debt, and derivative instruments focusing on contract and securities law issues. Learn More…

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