Moving target of eviction ban is a ‘boost’ for homeowners
Since the start of the pandemic, real estate owner Matthew Haines has said he has lost a quarter of a million dollars in rental income from tenants who have not paid him rent.
“I’ve never woken up with panic attacks before this year,” said Haines, 53, who owns and manages 253 rental units in the Dallas area through his company Tangent Group. “This is all because we cannot control and manage our business. “
He worries about supporting his family, keeping his employees and whether he has to sell the buildings and single-family homes he owns, which have been his livelihood for 27 years, he said.
Like many landlords with tenants who have not paid rent during all or part of the pandemic, Haines eagerly awaited the end of the federal moratorium on evictions put in place by the Centers for Disease Control and Prevention to help prevent the spread of the coronavirus. But after it expired in late July, the CDC issued a new moratorium on evictions focused on areas with high spread of the coronavirus, which covers around 90% of tenants, including the area where Haines properties are located.
The CDC said deporting people could be damaging to public health and would interfere with efforts to slow the pandemic.
“I am completely disgusted with it,” he said of the new moratorium, in effect until October 3. “It is an infringement of my rights as an owner.”
Haines said he is not seeking to evict all of his non-paying tenants. But he makes a distinction between those who can’t pay and those who won’t. It is only the latter, he says, that he wants to leave his buildings.
“We are not expelling people who cannot pay,” he said. “We are removing people who refuse to pay.”
He said he currently has about eight out of 253 units refusing to pay. Haines said he believed those tenants could afford to pay or could receive rent assistance, but did not apply. “They haven’t paid for six months to a year. We would finally be able to do something about it.”
Haines said landlords like him have done their job, shoulder the burden of housing millions of people who lost income during the pandemic and fell behind on rent.
“But every time we think maybe we can get to the other side, they move the goalposts and change the rules,” he said. “I want to run my business. I want to feed my family. I can only do it for a very long time under these conditions before we find ourselves in a situation where we fail financially.”
Boost for owners
When Dawn Pfaff, owner of properties in New York and Florida, learned that a federal eviction ban was coming back after it expired last month, she said it filled her with “terror.”
Pfaff said she believes that allowing a person to live in someone else’s property for six months to a year for free, while someone else has to pay taxes, insurance and l maintenance, is a violation of the law and unconstitutional.
The idea that the moratorium is not legal is hotly contested. Court cases have been decided both for and against the moratorium and other cases have not yet been decided. In addition, the moratorium does not erase the rent due.
But most homeowners in the United States are like her, so-called “mom and pop” owners with a handful of properties that rely on rent for their income or to fund retirement.
“I haven’t bought any stocks and I don’t have a lot of retirement in reserve,” said Pfaff, who also works as a real estate agent and runs other real estate-related businesses. “Our plan is to pay off our mortgages and live off the rental as retirement income.”
While she said most of her tenants paid their rent during the pandemic, she said she sold a 65-unit mobile home park in upstate New York last December, in part because it had become so difficult to evict tenants with recent changes in state tenant laws before the pandemic.
“There are so many people like me who have tenants who can’t pay,” Pfaff said. “And their hands are tied.”
News of the latest eviction moratorium just days after the previous one expired was a “boost” for homeowners, according to Greg Brown, senior vice president of government affairs at the National Apartment Association, an industrial group in real estate owners.
“We were disappointed that we were going back after agreeing it was ending,” he said. “Now we have a whole new measure and the owners are asking how they are monitoring this and trying to figure out how to comply with it.”
Unlike the previous ban, the new protection is more limited, targeting the areas hardest hit by the coronavirus. It protects tenants in areas with “high” or “substantial” transmission of Covid-19 based on CDC tracking of the virus.
But even though legal challenges to the new moratorium are filed, Brown said his association told landlords they must stop evictions for non-payment of rent and they must work with tenants to get rent relief.
There are, he said, some places where judges interpret the moratorium differently. In Franklin County, Ohio, for example, judges announced that they would not apply the new rule banning evictions.
Following the renewal of the eviction moratorium, the Franklin County Municipal Court, which includes Columbus, announced that it would “not follow the eviction moratorium order issued by the CDC”, due to an earlier appeals court ruling that found the CDC lacked the power to issue the national moratorium, a statement said. The court is “legally bound to follow the decision of this court and will accept and process deportation requests,” the statement said.
But, Brown said, there are substantial penalties for violating the order. “The owners are not going to risk having to deal with it.”
With the moratorium on evictions updated, many landowners, Brown said, are likely to calculate the numbers on the loss of two more months of rent.
“They figure out how to cover 60 more days,” he said. “What are the new calculations to find out how much they can recover from rent assistance?” “
Unable to pay vs refusal to pay
When the pandemic hit, Haines knew it would be a blow to low-income residents of his units, where a one-bedroom apartment rents for between $ 800 and $ 900 a month, Haines said. He said he ditched the late fees and moved everyone to a month-to-month lease, seeking to ease the burden of breaking a lease if they could no longer pay the rent.
But when local moratoriums on evictions were followed by the nationwide ban, he found few people left.
He said he was doing what he could. Haines currently has 24 tenants in arrears of rent, 17 of whom owe more than $ 1,000 in total. Late fees are still waived for those working to secure rental aid, and tenants still in difficulty can stay on a month-to-month lease without the standard 10-20% premium to do so, he said. .
The majority of his tenants who are behind on rent want to pay but are unable to do so and are doing what they can to deal with their late rent, he said. He and his staff reach out to residents, make sure they are aware of the federal emergency rent assistance program, and help them apply.
One of its residents, he said, has lost an income but is working to pay what she can and has asked to receive part of the $ 46 billion in rent assistance.
“She’s overdue by about $ 6,800,” he said. “But I’m not hunting her for that. We’ll get away with her.”
The biggest problem, he said, is the tenants refusing to pay.
“We have not filed any deportation requests against anyone who works with us,” he said. But he evicted residents who violated the terms of the lease.
Like the resident who he says earns $ 80,000 a year, which is in the individual income limit of $ 99,000 to be eligible for the CDC’s eviction moratorium. But when the moratorium went into effect, Haines said the tenant sublet part of the apartment while she was living there, pulling $ 1,500 a month for herself and withholding rent from Haines. .
Since the moratorium only protects tenants from eviction for non-payment of rent, Haines was able to fire her for what he described as a breach of the terms of her lease.
There are also residents who refuse to apply for rent assistance, he said. In order to be protected by the CDC’s moratorium, tenants must sign a statement attesting that they made a good faith effort to pay and seek government assistance.
He also saw at least two residents manipulating the rent assistance program by asking for relief money from multiple addresses, with inaccurate contact information, or having checks delivered directly to them without remitting the rent to him. . And he said he still wasn’t able to kick them out.
But, compared to other independent rental owners, Haines feels lucky so far. He and his wife have been careful with their finances. Yet rent deficits interrupted their ability to save for retirement and they had to inject money to make sure they didn’t have to lay off any of their 10 employees.
This year’s losses also forced Haines to change his selection criteria for new residents by taking a closer look at the history of rent payments, which he says “hurts the very people – on low incomes -” that the government says they are trying to help. “
Haines said as long as his residents are willing to work with him, he will do everything possible to keep them housed.
“I’m not going to kick out people who are trying to do the right thing,” he said of his residents. “We can keep it going for a few more months, but we shouldn’t have to.”
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