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.  The CDC’s authority for entering this Order is found under the authority of section 361 of the PHSA (42 U.S.C.§ 264) and federal regulations codified at 42 C.F.R. § 70.2. Under 42 U.S.C. § 264, the HHS Secretary is authorized to take measures to prevent the entry and spread of communicable diseases from foreign countries into the U.S. and between U.S. states and U.S. territories. The authority for carrying out these functions was delegated to the CDC Director. Under long-standing legal authority found at 42 C.F.R. § 70.2, the CDC Director can take public health measures to prevent the interstate spread of communicable diseases in the event of inadequate local control. Per the CDC, the Order is not intended to 1) terminate or suspend the operations of any state or local court or 2) prevent landlords from starting eviction proceedings, provided that the actual eviction of a covered person for non-payment of rent does not take place during the period of the CDC Order.

The CDC Order was deemed to terminate by December 31, 2021; however, the Coronavirus Relief & Omnibus Agreement, signed into law on December 27, 2020, initially extended the CDC Order until January 31, 2021 but the CDC Director has extended the moratorium until March 31. The CDC Order notes that a landlord, owner of a residential property, or other person with a legal right to pursue eviction or possession of a residential property shall not evict any covered person from any residential property in any jurisdiction where the CDC Order applies during the effective period of the Order. The CDC Order does not apply in any state, local, territorial, or tribal area with a moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements listed in this Order. The CDC Order also does not currently apply to American Samoa, which has reported no cases of COVID-19, until such time as cases are reported.

The CDC Order is a temporary eviction moratorium to prevent the further spread of COVID-19 and is effective against all residential properties even if they are not backed by federal loans or mortgages.  The CDC acknowledges the Order does not relieve any individual of their obligation to pay rent, make a housing payment, or comply with all other obligations the tenant may have under a tenancy, lease, or similar contract. Nothing in the CDC Order prohibits the landlord from charging or collecting of attorney fees pursuant to a lease, penalties for late rent, or interest resulting from the failure to pay rent on a timely basis, pursuant to a contract (lease).

Any violation of the CDC Order carries potential criminal penalties under 18 U.S.C. 3559, 3571; 42 U.S.C. 271; and 42 CFR 70.18, which note a person violating the CDC Order may be subject to a fine of no more than $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of no more than $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law. An organization violating the CDC Order may be subject to a fine of no more than $200,000 per event if the violation does not result in a death or $500,000 per event if the violation results in a death or as otherwise provided by law.

In order 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 said CDC Declaration by all tenants prohibits any potentially covered person from being protected by an eviction through the CDC Order again if the eviction is 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.

The CDC Declaration requires the tenant(s) to acknowledge under oath with penalty of criminal perjury and subjecting themselves to civil penalties several separate items.  Declarations include the tenant made their “best efforts” to obtain all available government assistance to rent or housing and that the tenant(s) are “unable to pay the full rent or make a full housing payment” because of substantial loss of income, loss of compensable work hours and wages, lay-offs, or extraordinary out-of-pocket expenses such as medical expenses likely to exceed 7.5% of the tenant’s adjusted gross income for the year when the Declaration is presented.  The CDC Order does not define “best efforts” or whether the inability to make a full rent payment means solely a current monthly rent payment or includes back rent owed.  For example, a tenant might owe a landlord $9,000 because they lost their job but now can make a full monthly rent payment because they are back to work.  If the tenant can currently make a full monthly rent payment but owes $9,000 in back rent is that the same as being “unable” to pay the “full rent?”  Regarding best efforts to seek assistance to pay rent, the CDC Order specifically is limited to tenants pursuing “government assistance” and is silent regarding private assistance, such as through a family member, friend, or financial institution.

A few lawsuits have been filed by landlords to seek guidance about the CDC Order and to obtain injunctive relief. In KBW Investment Properties v. Azar in the Southern District of Ohio, the Court noted HHS and the CDC admitted the CDC Order does not prevent a landlord from seeking judicial review of a tenant’s right to remain on his or her property, including seeking an evidentiary hearing to challenge the veracity of the tenant’s CDC Declaration, provided that no actual eviction occurs while the CDC Order remains in effect and applies to the tenant(s).  This challenge could include what efforts if any were taken by the tenant to obtain governmental rent assistance.  What this Court Order and the CDC Order do not prohibit is the landlord and tenant(s) entering a Consent Judgment where both parties agree execution, such as eviction, could be stayed pending timely payments or that the landlord can execute on a judgment through a garnishment on a tenant’s wages or a bank account once a new payment is late and as long as the tenant is not evicted while the CDC Order is in place. Garnishing wages or a bank account would not have any impact on the spread of COVID-19.

In Brown v. Azar in the Northern District of Georgia, landlords sued HHS and the CDC over the CDC’s Order to prohibit evictions for late rent.  The landlords demanded an injunction blocking the CDC Order.  The Court determined that although the pandemic adversely affected the landlords’ rental businesses, as it has much of the nation’s economy, the landlords failed to satisfy the standards necessary for obtaining a preliminary injunction as a matter of law.  The Court reasoned, in part, the landlords failed to show they were substantially likely to succeed on that claim in order to obtain an injunction. The Court noted even if landlords did show a constitutional violation, the showing would not be enough to outweigh the public interest regarding protection from the spread of COVID-19. The Court also indicated the landlords have shown an economic harm but that economic harm pales in comparison to the significant loss of lives that HHS and the CDC demonstrated could occur if the Court blocked the CDC Order. The Court found the public’s interest in controlling the spread of COVID-19 is not outweighed by landlords’ interests in preventing the constitutional violation and economic harm from unpaid rent.

In conclusion, landlords who are trying to evict tenants for failing to pay rent should file rent and possession lawsuits and consider contesting tenant CDC Declarations at an evidentiary hearing, if presented to them, and if not, proceed with the eviction proceedings.  Landlords should also consider other remedies such as entering a Consent Judgment with the tenant(s) and staying the execution of same.

Posted by Attorney Brian S. Weinstock. Weinstock concentrates on real estate and corporate transactional law, workers’ compensation, insurance defense, and other civil and commercial litigation. For businesses, he provides financial and legal analysis as well as operational strategies and ideas to manage risk.

(c) chrisdorney www.fotosearch.com