In a last-ditch effort, President Biden implemented another eviction moratorium until October 3rd. What does this mean for real estate property owners? Will this ban hold up in court? Could this moratorium be a good thing for property owners?
What is in the new eviction order/ eviction moratorium?
Days after a national eviction moratorium expired, the Biden administration on Tuesday issued a new, more limited freeze that remains in effect through Oct. 3. Like the previous order, the two-month moratorium issued Tuesday comes from the Centers for Disease Control and Prevention. The new ban on evictions covers parts of the United States that are experiencing what the CDC calls “substantial” and “high” spread of the coronavirus.
The U.S. Centers for Disease and Control (CDC) is issuing a new order temporarily halting
evictions in counties with heightened levels of community transmission in order to respond to
recent, unexpected developments in the trajectory of the COVID-19 pandemic, including the rise
of the Delta variant. It is intended to target specific areas of the country where cases are rapidly
increasing, which likely would be exacerbated by mass evictions. Accordingly, subject to the
limitations under “Applicability,” a landlord, owner of a residential property, or other person1
with a legal right to pursue eviction or possessory action, shall not evict any covered person from any residential property in any county or U.S. territory while the county or territory is
experiencing substantial or high levels of community transmission of SARS-CoV-2.
Will the eviction moratorium hold up in court?
In June, the Supreme Court voted 5-4 to allow the moratorium to remain in place through the end of July, even though one justice in the majority, Brett Kavanaugh, wrote that he believed CDC lacked authority to order it. Extending the moratorium any further, Kavanaugh wrote, would be possible only with “clear and specific congressional authorization (via new legislation).”
Landlords have already filed suits calling for an injunction to the new moratorium. In the landlords’ new court filing, lawyer Brett Shumate wrote that “the CDC caved to the political pressure by extending the moratorium, without providing any legal basis.” The administration has until early Friday to respond.
President Joe Biden may have averted a flood of evictions and solved a growing political problem when his administration reinstated a temporary ban on evictions because of the COVID-19 crisis. But he left his lawyers with legal arguments that even he acknowledges might not stand up in court.
In various states/counties there is already a disregard for the recent moratorium. For example, the 6th U.S. Circuit Court of Appeals, which encompasses Tennessee, Kentucky, Michigan and Ohio, ruled in late July in a separate lawsuit that CDC lacks the authority to issue pauses on eviction. And the CDC order itself says it does not apply “to the extent its application is prohibited by federal court order.”
As a result, Barbara Peck, a spokeswoman for the Tennessee state court system, said Wednesday that lawyers for courts in her state had “advised that it is not applicable in Tennessee.”
It is doubtful that the new moratorium will pass muster with the courts as the supreme court has already thrown water on the previous moratorium without congressional approval. Furthermore, various other federal courts have already ruled against the prior moratorium. The question is how quickly the courts will issue an injunction to halt the moratorium and/or how many counties/states will choose not to adhere to the new order.
Could this moratorium be a good thing for property owners?
Although property owners are not happy about the new moratorium, it could be a blessing over the long term. The new moratorium could bring to a head at a federal level the issue of property rights during a pandemic. The question that must be answered is when is it “taking” by the government when they ban the enforcement of private legal contracts with two willing parties.
Currently, the government is essentially nullifying leases throughout the country by banning property owners from collecting rents and yet the government is not compensating owners. When does it ever end that property owners can evict nonpaying tenants and collect unpaid rents? The courts must address this urgent question before it is too late. I’m hopeful the supreme court will take up this argument to establish precedent for future pandemics as we are going down a slippery slope.
Summary
The new moratorium is on flimsy legal ground at best. Even the President has acknowledged in prior statements that he didn’t have the legal authority to issue a such a measure. Although it is extremely unlikely this new eviction moratorium will be in place for long, it could be a blessing for property owners.
As a country we are heading down a slippery slope with executive branch power. In the case of the current moratorium, when does it ever end? Could the president extent the moratorium another year? Another two years? Federal courts must now wrestle with the question of government taking along with just compensation for property owners unable to collect rent. The Supreme court has already hinted at this with their prior ruling limiting the last moratorium. It will be critical for property owners to watch how this unfolds.
Additional Reading/Resources:
- https://www.wsj.com/articles/the-eviction-ban-has-to-end-sometime-tenants-landlords-joe-biden-nancy-pelosi-11628029263?mod=mhp
- https://www.bloomberg.com/news/articles/2021-08-05/are-landlords-filing-evictions-to-speed-rent-relief?srnd=citylab
- https://apnews.com/article/joe-biden-health-coronavirus-pandemic-us-supreme-court-8d397f378c01c369f0d8618a4d9b3a83
- https://www.npr.org/2021/08/03/1024345276/the-biden-administration-plans-a-new-eviction-moratorium-after-a-federal-ban-lap
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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