White House Bans Evictions for the Rest of 2020

Did Trump just “cancel rent” for tenants in America? Let’s talk about it.

I’m a landlord, and when I saw the news yesterday, I have to admit I was a bit alarmed. Some of the news articles out there sound like rent is canceled for the rest of the year. But that’s not actually the case.

Here’s the deal: The Trump administration announced that the CDC will halt COVID-19-related evictions through the end of 2020. The order is set to start September 4 and last through December 31.

Sounds scary, right?

But don’t panic just yet! I’ll break down what this means for you as a landlord or investor. Here are five things you need to know.

5 Things to Know About Temporary Halt on Evictions

No. 1: Only applies to tenants impacted by COVID-19

First and perhaps most importantly, despite the dramatic headlines, the eviction ban only applies to tenants who are unable to pay rent due to COVID-19. In other words, rent is not “canceled.”

According to the Wall Street Journal, unemployment is hovering around 10% right now, so 90% of your tenants will likely still have a job and be able to pay their rent.

No. 2: Tenant must provide proof

Closely related to the first point, each tenant on the lease will have to fill out a declaration form that proves they’ve tried to get government help and truly demonstrate, to a judge, that they cannot pay rent due to the impact of the pandemic. Examples of these hardships include loss of income, loss of work hours or wages, layoffs, or extraordinary out-of-pocket medical expenses.

In fact, the tenant will have to show that eviction would lead to them becoming homeless or having to move in with someone else.

No. 3: Some evictions are allowed to proceed

The draft of this order says that evictions for reasons other than not paying rent will be allowed to move forward. So if you’re a tenant and you decide that because of this you can move in 90 cats and trash your house and the landlord can’t do anything—well… just don’t do that. You’ll likely still be evicted.

No. 4: Moratorium only applies to certain tenants

The eviction moratorium only applies to tenants who were financially eligible for a stimulus check earlier this year. Those tenants are individuals who earned less than $99,000 in income or couples filing jointly who earned $198,000 or less on their most recent tax return.

No. 5: Tenants are responsible for paying back missed rent

Even if a tenant proves to a judge that they truly couldn’t pay rent due to COVID-19 and an eviction is halted, the declaration form states that fees, penalties, and interest for not paying rent on time as required by a lease agreement may still be charged or collected.

Additionally, at the end of the temporary eviction halt, the landlord may require payment in full for all payments not made prior to and during the temporary halt. Failure to pay may make tenants subject to eviction at that time. In other words, legally the tenant will still be responsible for all that missed rent if they choose not to pay.

Of course, this just creates a much bigger problem down the road and may lead a glut of evictions after the New Year. But, hey—that’s government for you. Why solve a problem today when you can kick it down the road until after the election?

Advice for Rental Property Owners

My suggestion as a landlord: follow the rules, help those tenants who truly have need, and create a win-win solution with your tenant (like the one I proposed in this video way back in March when this fear of tenants not paying rent first hit the world).

I’m going to treat tenants like real humans and talk with them about their options. And worst case, I’ll create a payment plan next year for those who truly need it.

And look, tenants—if you have the means to pay your rent, then pay your rent. This eviction halt does not mean rent is canceled. Don’t be a jerk. Your landlord needs rent to be able to pay their mortgage or else they’ll lose the property to foreclosure and you’ll be kicked out by the bank. That doesn’t help anyone.

Landlords, remember, your tenants are going through a hard and scary time, too. So, let’s treat everyone with dignity and respect and work together to emerge from this quagmire a more resilient society.

I’ll certainly be keeping you updated as this story continues to develop throughout the year.

Questions? Comments?

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.