Landlords and the Eviction Moratorium: What You Need to Know

Sep 10, 2021

As the COVID-19 pandemic swept across the nation, everything closed — leading to record high unemployment and economic turmoil. Many faced widespread job losses and an alarming number of tenants couldn't pay their rent. But, having renters out on the streets or in homeless shelters could accelerate the already rapid spread of the COVID-19 virus. Because of this, Congress, and later the Centers for Disease Control and Prevention (CDC), decided evictions posed too large of a health risk and shouldn't continue.

More than a year later, the CDC has attempted to extend the eviction moratorium through October 3, 2021 for counties with high community transmission rates. Although the Supreme Court has ended the CDC moratorium, individual states have their own eviction protections still in place.

If you’re wondering what that means for you and your property, you’re in the right place. In this post, we’ll explain what a moratorium is, what you need to know about it, and what options you have if you’re struggling due to tenants not paying rent.

What Is the eviction moratorium?

The eviction moratorium is a COVID-19 pandemic measure put into place in March 2020 by the CARES Act. It prevents landlords from evicting tenants due to nonpayment of rent. While the original moratorium expired on July 24, 2020, it has been extended several times since by the CDC.

While the eviction moratorium protects many tenants from eviction for not paying rent, tenants must meet the following criteria to qualify for protection:

      • Earn less than $99,000 as a single person or $198,000 if married and filing jointly.

      • Have attempted to get rental assistance to pay their rent.

      • Are experiencing a large loss of household income due to things like losing a job, having work hours reduced, or having high medical expenses.

      • Must be paying as much rent as they can.

      • Need to show that they would be homeless if evicted or that they would have to move in with family or friends.

If a tenant can meet all those requirements, landlords cannot legally evict them under the moratorium. This stay on evictions is intended to give tenants time to recover financially. However, the eviction moratorium does not erase back rent. Tenants are still obligated to repay all missed rent once they cover financially.

Where does the eviction moratorium stand now?

Although the CDC attempted to prolong the national eviction moratorium in counties with high community transmission rates, the Supreme Court effectively ended this mandated moratorium as of August 26, 2021.

However, eviction moratoriums do still exist in some states with high transmission rates. States such as California, Illinois, Minnesota, New Jersey, New Mexico, and New York are a few states who have protections in place for tenants. See an updated list of state eviction protections to view all states.

How does the eviction moratorium impact landlords?

While the eviction moratorium was designed with renters in mind, it significantly impacts landlords. During the eviction moratorium in 2020, renters fell behind an estimated $30-$70 billion in unpaid rent. As that figure is only for 2020, tenants are expected to be behind even further in 2021. Over six million households are currently struggling to pay rent.

This lack of rental income has caused several problems for landlords, especially small, mom-and-pop landlords. Without rental income, landlords may struggle to pay their mortgages and/or their property taxes. Plus, no rental income can make it impossible for landlords to maintain their property, leading to long-term property issues.

Although the eviction moratorium protects tenants from being homeless, it creates problems for landlords who are dependent on monthly rent.

What if landlords go against the eviction moratorium?

Landlords who evict qualified tenants can face fines as high as $100,000. If the eviction results in a tenant's death, the maximum fine can jump to $250,000. Along with fines, landlords can also spend up to a year in jail for violating the moratorium.

Although the eviction moratorium prevents evictions for nonpayment of rent, it does allow landlords to evict tenants in certain situations. With a court order, landlords can evict tenants for any of the following reasons:

      • Conducting criminal activity on the property.

      • Endangering the health and safety of other tenants.

      • Damaging or posing an immediate risk of damage to the property.

      • Violating health and safety codes.

      • Breaking the lease in ways other than nonpayment of rent or late fees.

What can landlords do about missed rent?

If you're struggling due to tenants not paying rent, certain programs can help. The Consolidated Appropriations Act of 2021 created a $25 billion rental assistance relief fund. And, the American Rescue Plan Act of 2021 allotted a further $21.55 billion in emergency rental assistance for both landlords and tenants.

As a landlord, you can apply to this program to get 80% of the rent you're owed covered. In exchange for this rental assistance, you have to forgive the other 20% of what tenants owe. While this won't make up for all the rent owed, it can go a long way to help you pay for your mortgage, taxes, and other property expenses.

Tenants can also apply for rental assistance directly for up to 12 months. With this assistance, tenants can pay missed rent and utilities. By default, this rental assistance is paid directly to the person owed payment (such as the landlord). In the case that the landlord or utility providers don't want to accept direct payments, the assistance can be paid to the tenant.

Wrapping up

At the beginning of the pandemic, Congress enacted an eviction moratorium, which was later extended by the CDC and then on a state-by-state basis. This eviction moratorium prevents landlords from evicting tenants due to nonpayment of rent if tenants qualify for protection. If you are a landlord or tenant struggling due to missed rent, rental assistance established by two congressional acts can help.

With eviction moratoriums still in place in a few states, the last thing you need to worry about is how to pay for damages to your property. Whether it's a natural disaster, an accidental fire, or other damages, you need the peace of mind and protection the right landlord insurance coverage can provide.

Get your landlord insurance quote today to protect your property.