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Biden Moves to Extend CDC Eviction Ban: What Investors Can Do As Protections Broaden

Jan 21, 2021 by Aly J. Yale
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President Joe R. Biden was officially inaugurated yesterday, and the 46th commander in chief wasted no time getting started. By the end of day one, President Biden had issued a whopping 17 executive orders, many of them in response to the continuing COVID-19 pandemic.

One of those orders should be of particular interest to landlords.

In it, Biden asked the Centers for Disease Control (CDC) to extend their existing ban on evictions. The ban was already extended as part of last month's new stimulus package, but only through January 31.

The new order aims to extend the measure even further, this time through the end of March.

Did it pass?

CDC Director Rochelle P. Walensky responded to the executive order quickly, announcing on Twitter (NYSE: TWTR) late Wednesday night that the eviction ban would indeed be extended.

"I will extend the order halting residential evictions until at least 3/31/21," she tweeted. "The #COVID19 pandemic has presented a historic threat to our nation's health & has also triggered a housing affordability crisis that disproportionately affects some communities."

The CDC also issued a statement on the matter, saying, "COVID-19 continues to spread in America at a concerning pace. We must act to get cases down and keep people in their homes and out of congregate settings -- like shelters -- where COVID-19 can take an even stronger foothold."

The long and short of it? The measure passed, and tenants are now protected at least through March 31 (unless it gets extended again).

Who the ban protects

Essentially, the order says that landlords can't evict a tenant due to nonpayment of rent during the pandemic. Unlike the eviction bans set out by the Department of Housing and Urban Development and the Federal Housing Finance Agency, this one isn't loan-specific. It applies to all rental properties, regardless of how they're financed or who guarantees the mortgage.

There is a catch, though: Not all tenants qualify.

Renters first need to make less than $99,000 (for a single tax filer) or $198,000 (for a couple filing jointly). They also must exhaust all options for government housing assistance, be making their best efforts to pay rent on time, and have no other options for housing -- meaning eviction would force them into some sort of shelter or shared living setting where infection risk would rise.

Finally, their nonpayment needs to be due to "substantial loss of household income, loss of compensable hours of work or wages, a layoff, or extraordinary out-of-pocket medical expenses."

What it means for landlords

It sounds like a lot of requirements, but all a tenant has to do is fill out a quick declaration form asserting all the items above and hand it to their landlord, and they're technically protected. This makes it pretty easy for tenants to avoid both rent and eviction.

Or at least it would seem that way. According to the CDC's order, the agency can't actually do anything to enforce the measure, and tenants whose landlords initiate eviction proceedings despite the ban will need to get legal assistance if they want to stop proceedings.

Even that won't work sometimes, though, and reports of judges ignoring the directive -- and evictions proceeding anyway -- have been cropping up all over.

Suffice it to say the order offers some protection for tenants, but full immunity? That largely depends on their access to legal aid and the local judicial system.

What you can do

As you can see, it's probably still possible to evict a tenant if you really want to. But that's not guaranteed -- nor quick. If you're facing a nonpaying tenant who's hurting your cash flow, taking a more lenient, flexible approach is probably going to be more successful.

This might mean:

  • Offering digital or credit card payments so your tenant can settle up even if income is tight.
  • Filing for mortgage forbearance to lighten your financial load in the short-term.
  • Steering clear of new investments that broaden your risk more.
  • Negotiating a payment plan or temporarily reducing rent for your tenants.

Taking one of these approaches will likely come out less expensive than an eviction would, and it could help reduce vacancies and ensure better tenant retention in the long run.

The bottom line

Despite the ban on evictions, you still have options if a tenant isn't paying up. Start with offering credit card payments or negotiating a payment plan, and if that doesn't work, speak to a real estate attorney about eviction proceedings in your area. They can point you in the right direction.

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Aly Yale has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter. The Motley Fool has a disclosure policy.