Last Thursday, U.S. District Judge John Barker of Texas ruled that the Centers for Disease Control and Prevention’s temporary moratorium on evictions is unconstitutional. The judge said he wants the CDC to respect his ruling and withdraw its moratorium, but he stopped short of issuing a preliminary injunction.
The CDC’s eviction moratorium, established during the Trump administration, was set to expire at the end of 2020. But, it was extended in January as part of the Covid-19 relief bill that was passed in December. President Biden extended the eviction moratorium through March 2021.
A tenant can get out of paying rent by showing their landlord a signed declaration stating income loss. To qualify under the moratorium, the tenant’s income needs to be less than $100k. Landlords are not mandated to forgive the owed rent. However, when a tenant is behind on their rent, the landlord cannot evict. The tenant could be evicted if they violate other rules in the lease. Some cities have stricter regulations about how landlords are allowed to evict tenants than the CDC’s eviction moratorium.
This recent ruling out of Texas could potentially ease the pain of struggling landlords. Many of these landlords may still be willing to work with tenants during these trying times.
Although Biden set the new deadline to last through March, it is unclear where he will stand under Barker’s order.
As of January 2021, there were 10 million renters who owed their landlord money and risked being evicted, according to a Census Bureau survey. They found that nearly 16 million renters were uncertain about their ability to pay rent for the month of February 2021.
We’ll put this into perspective. Many economists are saying that, by this year, we will be back to pre-recession levels in terms of employment and economic prosperity. But, this recent survey paints a very different picture.
But now, there may be hope for mom-and-pop landlords who need relief.
What the ‘unconstitutional’ eviction ban ruling means for property owners & real estate professionals
It’s true that many rental properties are owned by large companies who have the means to offer tenants a break during the Covid-19 pandemic. However, it’s estimated that 60% of single-family households in the US are owned by mom-and-pop landlords. These landlords are small business owners who own one or two buildings. And, they are the primary businesses who have been hurt by long-standing eviction bans.
When rent is not paid, the landlord cannot generate income. Landlords have the option to put their mortgage payments on hold (forbearance), but there are limits as to how long they can do this. Still, this might not much with ongoing expenses like property taxes and maintenance. But now, there may be hope for the small-scale landlords.
So what does this mean for property owners and real estate professionals in general?
For starters, it means property owners and real estate professionals should be prepared for a potential increase in evictions and tenant turnover. It also likely means that they’ll have to work extra-hard to find qualified renters in order to fill the units.
It’s important for landlords to make sure they have sufficient financial reserves set aside so that if a move-out becomes necessary. They can cover any additional expenses incurred or last until their next payment cycle. It’s also important for landlords to consider working with their mortgage company to allow them to make a small concession. They can cover their bills and have access to a steady stream of income.
As far as the data collection goes, all eyes are on the Census Bureau and the CDC. We’ll need more comprehensive data in order to get a better idea of who is currently affected and how widespread this problem is.
For property owners looking for assistance on keeping track of important projects and getting back to profiting, real estate virtual assistants are key. These virtual assistants can help landlords save time, be more productive, deliver higher value and service to clients, and manage their workloads.
To learn more about how a virtual assistant can help landlords manage their properties, property management tips, and more, click here.
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