On August 26, the Supreme Court struck down the nationwide eviction moratorium established by the Centers for Disease Control and Prevention (CDC). Some rental property owners see the ruling as a green light to begin pursuing evictions against tenants who have sought shelter under the CDC rule. But state and local protections for tenants, along with other practical considerations, mean a rush to evict is not necessarily the right answer.
The Supreme Court’s decision can be found by clicking here.
There are two important points for property owners to keep in mind. First, the CDC’s moratorium was not the only restriction affecting California landlords. Second, eviction may not be the most cost-effective or humane strategy even in cases where it can be used.
California’s eviction moratorium remains in effect
California’s eviction moratorium has been in place for much of the pandemic. The latest extension, signed by Governor Newsom on June 25, shields qualified tenants from eviction through September 30.
The California rule, sometimes referred to as AB 3088, is not a blanket ban on evictions. Tenants need to take steps to qualify. First, they need to submit to the landlord a written declaration that their ability to pay rent has been affected by events related to COVID-19. Second, the tenants must still make minimum payments of at least 25 percent of the rent due each month, with the balance due at the end of the moratorium period. Additional income thresholds also apply.
Click here to read a more detailed explanation of how AB 3088 works, including important obligations for landlords.
Eviction often is not the best remedy
Following the Supreme Court’s ruling, media coverage focused attention on the expected “tsunami” of evictions. In our opinion, landlords should be slow to use the eviction remedy when tenants have claimed hardship due to COVID-19—even after the moratoriums end. Here’s why.
- Care for the community. Eviction is an especially harsh remedy to pursue against a family struggling to make ends meet due to COVID-19. Tenants may be facing more than a lost job: a death in the immediate family, severe long-term effects of the disease, or childcare challenges could all disrupt a person’s ability to work. The rest of the community will notice how the landlord responds to cases such as these.
- Rent support programs. We encourage landlords to offer struggling tenants support with applications for local, state, and federal rental assistance programs. These programs have not been without problems, but when they work, they provide a win-win solution where the tenant can stay while also abating the landlord’s cashflow concerns.
- Unpaid rent may still be available. Bear in mind that California’s eviction moratorium does not wipe away unpaid rent. Instead, it converts it to consumer debt. The landlord may still pursue payment of unpaid rent if the tenant does not pay the amount owed.
- Eviction courts are going to be crowded. Evictions only happen if a court approves them. If the expected tsunami hits, courts will have an enormous backlog to work through. Landlords pursuing eviction may wait many months to receive a ruling. In the meantime, a hostile tenant will continue to be in the unit.
- Eviction is expensive. Landlords should take full stock of the cost of filing for eviction, removing the evicted tenant, fixing up the vacated unit, and finding a new tenant.
This is not to say that evictions are never the right answer. There are many situations where pursuing eviction is the only remedy available to a property owner. We try to avoid these situations by thoroughly screening rental applicants before a lease is signed.
Call Pan American for more information
At Pan American Properties our goal is to find solutions that sustain healthy and happy communities while preserving the investments our clients have made in their properties. The pandemic has raised unprecedented challenges, but we have found ways to keep occupancies high and revenues steady using creativity and good communication.
Our team is here to answer your questions. Call us at (888) 754-9700 or send us an email to speak with one of our experts.