Federal Judge Dabney Friedrich Vacates CDC Nationwide Eviction Moratorium

On May 5, 2021, Federal District Court Judge Dabney Friedrich in Alabama Association of Realtors, et al.  v. United States Department of Health and Human Services, et al., determined the Federal Public Health Service Act, which governs the federal government’s response to infectious diseases such as COVID-19, does not provide legal authority for the Centers for Disease Control (CDC) to impose a nationwide eviction moratorium. Originally set to lapse on December 31, 2020, the eviction moratorium is set to lapse on June 30, 2021. Judge Friedrich reasoned the Public Health Service Act unambiguously forecloses the nationwide eviction moratorium and issued an Order advising that the current CDC nationwide eviction moratorium issued is vacated.

The nationwide eviction moratorium was initially put in place in September 2020 under the Trump Administration and has been extended three times. Judge Friedrich indicated there was “no doubt” Congress intended to empower the CDC to combat COVID-19 through different measures, such as quarantines, but not a moratorium on landlord evictions.  Other federal courts have been divided over the CDC landlord eviction moratorium, with some also finding the CDC exceeded its authority, though none formally blocked its enforcement. The March 25, 2021 blog post “CDC Eviction Moratorium Declared Unconstitutional by Texas Court” discussed other recent rulings in Ohio and Texas: Continue reading »

2021 Missouri Real Estate Taxes – And Appeals

The COVID-19 pandemic has caused an extreme financial hardship on most, if not all, Missouri families. As such, many owners of real estate are investigating how best to reduce their outstanding financial obligations and save resources wherever possible.

Given this crisis, one obvious area to investigate is real estate tax liability. Missouri reassesses all real estate every odd-numbered year (e.g., 2019, 2021, etc.). In even-numbered years, local Missouri assessors normally allow values to remain unchanged from the prior odd-numbered year. 2021 is a reassessment year for all Missouri local assessors.

Real Estate Assessment

Real estate assessment is the process of local county assessors placing a fair market valuation and classification on all real estate. Missouri properties are divided into three classifications: commercial, residential, and agricultural. If the assessed valuation changes during the reassessment, the assessor sends out a Notice of Assessment to the taxpayer.

Appeal of Real Estate Valuation

Valuations are typically available in late spring to early summer. If you disagree with the county assessor’s valuation, you can appeal the property tax.  Appeals must be filed on or before the second Monday of July. In 2021, all appeals must be filed on or before Monday, July 12, 2021.

To file an appeal, obtain the proper real estate tax appeal forms (generally found on the local Board of Equalization (BOE) website). File the forms and submit evidence to support your opinion of the fair market value on your property to the local BOE.

Assessed Valuation

Once the fair market value of the property has been determined, the assessor must apply the appropriate percentage to the fair market value. In Missouri, commercial property is assessed at 32% of the fair market value as January 1 of the reassessment year. Residential property is assessed at 19% of the fair market value. Finally, agricultural property is assessed at 12% of the fair market value.

Real Estate Taxes 

The tax on real property is determined by the assessed valuation of the property multiplied by the actual tax rate set by the local government where the property is located.  Tax bills are generally mailed out annually in late fall with payment due on or before December 31. If real estate taxes are not paid when due, the taxes become a lien on the property with interest and penalties possibly added after January 1 of the following year.

Real Estate Tax Appeals: The Local BOE and Beyond Continue reading »

CDC Eviction Moratorium Declared Unconstitutional by Texas Court

On February 25, 2021 the U.S. District Court for the Eastern District of Texas granted plaintiffs’ (landlords’ and property managers’) Motion for Summary Judgment, ruling that decisions to enact eviction moratoriums rest with the states. In Lauren Terkel, et al. v. Centers for Disease Control and Prevention, et al., the court ruled that the federal government’s Article I power under the U.S. Constitution to regulate interstate commerce and enact necessary and proper laws (Necessary and Proper Clause) “does not include the power” to order all evictions be stopped during the Covid-19 pandemic.

The Centers for Disease Control and Prevention (CDC) issued an eviction moratorium order in September 2020 which was set to expire on December 31, 2020. Initially extended to January 31, 2021, the Order was then extended to March 31, 2021.  The CDC Order “generally makes it a crime for a landlord or property owner to evict a ‘covered person’ from a residence” provided certain criteria are met. Under the CDC Order, the tenant(s) must submit a Declaration, signed by the tenant(s) and served on the landlord, and requires the tenant(s) to make their best efforts to obtain governmental assistance before they can obtain status as a covered person to avoid an eviction. The landlord is not required to notify the tenant that they can execute a CDC Declaration to obtain status as a covered person.  The CDC’s Order also grants the Department of Justice (DOJ) authority to initiate criminal proceedings and allows the imposition of fines up to $500,000 against landlords who violate the Order after receiving a CDC Declaration from all tenants on the premises. Continue reading »

Emergency Rental Assistance Program (ERAP) and Extension of the CDC Halt to Temporary Evictions to Prevent Further COVID-19 Spread

Updated 4/1/2021

On September 4, 2020, the Centers for Disease Control and Prevention (CDC), issued an Order under Section 361 of the Public Health Service Act (PHSA) to temporarily halt residential evictions to prevent the further spread of COVID-19. The CDC Order was deemed to terminate by December 31, 2021; however, the December 27, 2020 Coronavirus Relief & Omnibus Agreement extended the moratorium until January 31, 2021. After an extension in January until March 31, the eviction moratorium is now extended until June 30, 2021. However, In Terkel v. CDC, a Texas District Court determined the CDC Order was unconstitutional. The Department of Justice field an appeal in Terkel. Since the DOJ appealed the Texas case, it would be wise for landlords to continue to operate as if the CDC Order is constitutional and in effect, especially outside of Texas. However, this does not prevent landlords from requesting an evidentiary hearing and contesting whether the tenant(s) met all the criteria in the CDC Declaration to obtain status as a covered person. If not, or if the tenant(s) did not serve a CDC Declaration on the landlord, then it appears the landlord can proceed with the eviction.

To invoke protection from the CDC Order, all tenants on the lease, rental agreement, or housing contract must execute the CDC Declaration and give notice to their landlord. The landlord is not required to notify the tenant(s) about the CDC Declaration.

Failure to execute the CDC Declaration by all tenants prohibits any potentially covered person from being protected from an eviction through the CDC Order if  solely for failure to pay rent.  A landlord can still evict a tenant for any other breach of the residential lease while the CDC order is in effect. Continue reading »

Illinois Legislature Passes Bill Allowing for Prejudgment Interest on Personal Injury Claims

Illinois law traditionally has not allowed for prejudgment interest on personal injury claims, but that rule is about to change. On January 13, 2021, the Illinois legislature passed House Bill 3360. The original purpose of the bill was to amend Illinois law relating to mortgage foreclosures and abandoned residential property. However, Senate Floor Amendment No. 1 modified the bill to introduce prejudgment interest for personal injury claims in Illinois.

Prejudgment interest on personal injury actions was not available under the common law, so generally it is only allowed when authorized by a statute. Illinois HB 3360 provides that in all actions for personal injury or wrongful death, the plaintiff shall recover prejudgment interest on all damages set forth in a subsequent judgment at the interest rate of 9% per annum.

Of note is when prejudgment interest begins to accrue under the bill. Among the jurisdictions allowing prejudgment interest on personal injury claims, a plethora of approaches has emerged for determining the starting point. Some states require the rejection of a formal demand with specific requirements (such as Missouri, § 408.040 RSMo.), others from the date of the loss (such as Florida, Fla. Stat. § 687.01), or still others from the date of the filing of the complaint (such as Michigan, Mich. Comp. Laws § 600.6013). Continue reading »

Financial Relief for Your Troubled Small Business Clients

It’s no secret that many small businesses are facing financial troubles these days, not only because of the COVID-19 pandemic, but also because of the rapid and unpredictable twists and turns of the current economy. This article will discuss, in two parts, the various ways in which a financially troubled business can seek financial relief, ranging from informal negotiations and state statutory remedies to filing a Chapter 11 reorganization bankruptcy case, so that attorneys can provide general assistance to their small business clients, or refer them to an insolvency attorney if appropriate.

Part I: Negotiations and State Statutory Remedies

Informal Workouts

If a debtor is on good terms with its creditors, especially its primary lenders, it may be able to earn itself out of its financial troubles. The secured creditors, of course, must be treated with full respect for their security interests in the assets of the debtor. Unsecured suppliers of critical goods and services also must be treated with care, as their cooperation may be needed at some point in the future.

It is often useful for a debtor to obtain an appraisal of its assets, both real and personal, from well-respected appraisers experienced in their fields. The appraisal should value the assets at three levels: forced liquidation value, orderly liquidation value, and fair market value. These values will enable the debtor to intelligently discuss the likelihood of collection in different situations.

Another useful action would be to hire a consultant. Sometimes business owners cannot see opportunities for improvement which are right in front of them, simply because they think that the current practice works well. The consultant can help the owner review the company’s operating procedures, cash flow procedures and pricing structure to look for opportunities to increase profitability.

The consultant also could prepare projections of future profitability for the company, based upon the opportunities which are discovered. Armed with the collateral valuations and projections, the owner can show the company’s creditors a plan for solving its problems.^[1] That is much more effective than simply asking for more time or engaging in stalling tactics.

Statutory Remedies

1. Assignments for the Benefit of Creditors

Continue reading »

CDC Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.  This law provided different types of relief to Americans and business entities as a result of financial damage caused COVID-19.  The CARES Act prohibits the filing of eviction lawsuits by a landlord against a tenant to recover possession for nonpayment of rent if the dwelling is a “covered property” as that term is defined in the CARES Act.  Covered properties include a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994), the rural housing voucher program under section 542 of the Housing Act of 1949, federally backed mortgage loans and federally backed multifamily mortgage loans.  After the CARES Act was signed into law, this meant landlords who owned residential properties that were not covered by the two Acts mentioned and were not backed by federal mortgages could proceed with filing eviction lawsuits to evict tenants solely for not paying rent, which typically requires the landlord to state under oath through an affidavit or verified petition that the property they own is not a covered property under the CARES Act.

On September 4, 2020, the Centers for Disease Control and Prevention (CDC), which is part of the Department of Health and Human Services (HHS), announced the issuance of a CDC Order under Section 361 of the Public Health Service Act (PHSA) to temporarily halt residential evictions to prevent the further spread of COVID-19.  Continue reading »

Temporary Residential Eviction Moratorium Order from the CDC and HHS Announced

The Centers for Disease Control and Prevention (CDC) and Department of Health and Human Services (HHS) issued an Agency Order effective September 4, 2020 announcing a temporary moratorium on residential evictions in attempts to limit the spread of COVID-19. The agency order was issued shortly after the White House announced an order barring evictions for renters would likely be issued as negotiations in Congress for renewal of CARES Act provisions have stalled.

The order is effective through December 31, 2020 and goes further than previous moratorium measures outlined in the CARES Act based on the number of citizens who could seek help if circumstances so require. In support of this measure, the CDC and HHS cited that eviction moratorium-like measures enable members of the public to have shelter in which to quarantine, isolate, and practice social distancing resulting in an effective and beneficial public health measure to prevent the rampant spread of COVID-19.

Under the order, a landlord, owner of residential property, or ‘other person’ with legal rights to pursue evictions or a possessory action (“landlord”) is not permitted to evict a ‘covered person’ (“tenant”) from a residential property^[1] until the order expires at the end of the year. Therefore, almost any person or entity who leases a residential property to another must comply with the order. (Note: ‘Covered person’ includes any tenant, lessee, or resident of residential property. ‘Other person’ includes corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.) Continue reading »

August 2020 Federal and State Extensions of Foreclosures and Eviction Moratoriums

The Federal Housing Administration (“FHA”) announced another extension of its foreclosure and eviction moratorium through December 31, 2020 for homeowners with an FHA-insured single-family mortgage covered under the CARES Act.

This extension means the FHA has now provided more than nine months of foreclosure and eviction relief to FHA-insured homeowners. As this is a continuation of the moratorium put in place in March of this year, the protections continue to apply to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (“reverse”) mortgages.

As a refresher, the moratorium requires mortgage servicers to:

1. Halt all new foreclosure actions and suspend all foreclosure actions currently in process for FHA-insured single-family properties, excluding legally vacant or abandoned properties; and
2. Cease all evictions of persons from FHA-insured single-family properties, excluding actions to evict occupants of legally vacant or abandoned properties.

According to HUD, “homeowners with FHA-insured mortgages should continue to make their mortgage payments during the foreclosure and eviction moratorium if they are able to do so, or seek mortgage payment forbearance pursuant to the CARES Act from their mortgage servicer, if needed.”

Under the CARES Act: Continue reading »

Can You Appeal Your Real Estate Taxes in 2020?

The COVID-19 pandemic has caused an extreme financial hardship on most, if not all, Missouri families. As such, many owners of real estate are investigating how best to reduce outstanding financial obligations and save resources wherever possible.

Given this crisis, one obvious area to investigate would be outstanding tax liability. The Internal Revenue Service has extended the filing deadline for federal income taxes from April 15, 2020 to July 15, 2020. However, what about real estate taxes, which are generally due on December 31 of each year? This is another area to investigate and quite possibly take timely and appropriate action.

Missouri reassesses all real estate every odd-numbered year (e.g. 2019, 2021, etc.).  In even- numbered years, such as 2020, local Missouri assessors normally allow their values to remain unchanged from the prior odd-numbered year (2019).

If you failed to file an appeal in 2019 on a timely basis, can you now appeal in 2020? The general answer is yes, you can appeal your real estate taxes in an even-numbered year (e.g., 2020). However, the assessor takes the position that the valuation for your property in 2020 will be based upon the fair market value of the property as of January 1, 2019.

The local assessor determines both the fair market value and the subclassification of all real property. Real property is assessed under a two-year cycle. The value placed on a property for an odd-numbered year is placed on the property for the next even-numbered year. However, the assessor has the right to increase the value in an even-numbered year due to recent construction. Continue reading »