COVID-19: CDC Issues New, Tailored Residential Eviction Moratorium (Updated)

Practical Law Legal Update w-032-1743 (Approx. 8 pages)

COVID-19: CDC Issues New, Tailored Residential Eviction Moratorium (Updated)

by Practical Law Real Estate

Background

The widespread economic fallout from the COVID-19 pandemic created severe economic hardships for broad swaths of the American public. Job losses coupled with depleted personal financial reserves put millions of tenants at imminent risk of eviction.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) (PL 116-136), which, among other things, included a four-month eviction moratorium for qualifying tenants. The CARES ACT eviction moratorium expired on July 24, 2020 but landlords were prohibited from requiring tenants to vacate the leased premises until August 27, 2020. For more information on tenant protections under the CARES ACT, see Legal Update, COVID-19: Federal CARES Act Stimulus Provides Relief for Federally Backed Residential and Multifamily Mortgage Loans: Tenant Protections.

On August 8, 2020, President Trump signed an Executive Order requiring the Secretary of Health and Human Services and the Director of the CDC to determine whether a temporary moratorium on residential evictions was necessary to prevent the further spread of COVID-19.

On September 1, 2020, the CDC announced the issuance of a temporary eviction moratorium under Section 361 of the Public Health Service Act (42 U.S. Code § 264; 42 CFR § 70.2).

On March 28, 2021, the CDC issued an order extending its moratorium on residential evictions. Effective April 1, 2021, the Order prohibited residential evictions of qualifying tenants through June 30, 2021.

On June 24, 2021, the CDC issued a further order extending its moratorium on residential evictions. Effective July 1, 2021, the Order prohibited residential evictions of qualifying tenants through July 31, 2021.

On June 29, 2021, in Alabama Ass'n of Realtors v. Department of Health & Human Services, (U.S. June 29, 2021), the United States Supreme Court rejected an emergency petition to vacate the stay of a district court ruling that had invalidated the CDC moratorium. As a result, the moratorium, as extended, remained in effect until July 31, 2021, when it was allowed to expire.

On August 3, 2021, the CDC issued the new, targeted Order for a two-month moratorium on residential evictions in counties with substantial or high rates of community transmission of COVID-19.

For more information on federal, state, and private lending foreclosure and payment relief programs related to the COVID-19 pandemic, see Practice Note, COVID-19: Residential Mortgage Foreclosure and Payment Relief Programs (Federal, State, and Select Private Lenders).

The Order

Rationale

The Order asserts that "the Delta variant is the predominant SARS-CoV-2 strain circulating in the United States," that it has "demonstrated increased levels of transmissibility compared to other variants," and that it "has led to accelerated community transmission in the United States." The CDC Order further notes that while COVID-19 vaccines are now widely available in the United States and over 163,000 million people have been fully vaccinated, there has been a rise in COVID-19 cases "primarily and disproportionately affecting the unvaccinated population" and the vaccination effort "has a slower rate of penetration among the populations most likely to experience eviction."

The Order justifies the imposition of the moratorium on the need to maximize self-quarantining, isolation, and social distancing in jurisdictions with substantial or high rates of community transmission of COVID-19. The Order notes that eviction moratoria:

Facilitate self-isolation for people who may be:
- exposed to COVID-19;
- ill with COVID-19; or
- high-risk individuals.
Allow state and local authorities to better implement directives designed to prevent community spread of the disease.
Protect public health by preventing increased homelessness which increases:
- the risk of infection; and
- the severity of the disease for infected individuals.
Prevent overcrowding in homeless shelters impairing the ability of the shelters to employ infection control measures.

The Order notes that while a historic amount of assistance for renters and landlords has been appropriated, much of it has not yet been disbursed. The Order will provide renters additional time to access this government assistance and help to avoid unnecessary evictions during this time of surging COVID-19 cases.

Authority

The CDC bases its authority to issue the Order on Section 361 of the Public Health Service Act (42 U.S.C. Ch. 6A) and on 42 CFR § 70.2 which reads:

"§ 70.2 Measures in the event of inadequate local control. Whenever the Director of the Centers for Disease Control and Prevention determines that the measures taken by health authorities of any State or possession (including political subdivisions thereof) are insufficient to prevent the spread of any of the communicable diseases from such State or possession to any other State or possession, he/she may take such measures to prevent such spread of the diseases as he/she deems reasonably necessary, including inspection, fumigation, disinfection, sanitation, pest extermination, and destruction of animals or articles believed to be sources of infection."

Application

The Order prohibits residential evictions of qualified tenants in covered jurisdictions from August 3, 2021 through October 3, 2021. Residential foreclosure is specifically excluded from the moratorium.

Qualified Tenants

The Order applies to residential tenants who provide their landlord with a declaration (Declaration) under penalty of perjury indicating that the tenant:

Has used best efforts to obtain all available government assistance for rent or housing.
Satisfies one of the following income qualifications because the tenant:
- earned no more than $99,000 in annual income for calendar year 2020 (or no more than $198,000 if filing jointly);
- expects to earn no more than $99,000 in annual income for calendar year 2021 (or no more than $198,000 if filing jointly);
- was not required to report any income to the Internal Revenue Service for calendar year 2020; or
- received a stimulus check under the CARES ACT.
Is unable to pay the full amount of its rent due to:
- a substantial loss of household income;
- a reduction in work hours or wages;
- a lay-off; or
- extraordinary out-of-pocket medical expenses.
Is using best efforts to pay as much of its rental obligation as possible, after considering other nondiscretionary expenses.
Would be rendered homeless or forced to move into a shared-living setting as the result of an eviction.
Lives in a county experiencing substantial or high rates of community transmission of COVID-19 as defined by the CDC.

An individual who previously filed a Declaration under the CDC's prior order and its various extensions does not need to file an additional Declaration if they live in a county experiencing substantial or high rates of community transmission of COVID-19 and otherwise qualify.

Covered Jurisdictions

The Order applies in any county experiencing substantial (defined as 50.99 to 99.99 cases per 100,000 people or 8.00 to 9.99% positive tests in the past seven days) or high (defined as 100 or more cases per 100,000 people or 10% or more positive tests in the past seven days) rates of community transmission of COVID-19 during the time the Order is in effect. If a county's rate of transmission drops out of the substantial or high range for fourteen days, the county is no longer covered by the Order unless its transmission rate climbs back into the substantial or high range. The CDC maintains a COVID-19 Data Tracker showing current rates of community transmission that is searchable by state and county.

The Order does not apply in any state, local, territorial, or tribal jurisdiction that has an existing eviction moratorium providing equal or greater public health protections than are set out in the Order. Further, the Order does not prohibit any jurisdiction from imposing stricter or additional public health protections than those set out in the Order.

For more information on state and local eviction moratoriums, see Practice Note, COVID-19: Commercial and Residential Tenant Eviction Moratoriums Select State and Local Laws Tracker (US).

Definition of Residential Property

Residential property subject to the Order is broadly defined as any property leased for residential purposes, including any:

House.
Building.
Mobile home or land in a mobile home park.
Similar dwelling.

The Order is not applicable to any:

Hotel.
Motel.
Guest house rented on a temporary or seasonal basis.

Limited Scope of Moratorium

The Order prohibits eviction resulting from nonpayment of rent. A tenant's other obligations under the lease or other occupancy agreement remain in effect and subject to enforcement by the landlord, including eviction of the tenant for:

Engaging in criminal activity on the premises (with the caveat that this exception does not apply to a covered individual alleged solely to have committed criminal trespass where the underlying activity is remaining in the premises without paying rent).
Threatening the health or safety of other residents (with the caveat that individuals who may have COVID-19 should not be evicted on this ground if they take reasonable precautions to not spread the disease).
Damaging or posing an imminent risk of significant damage to the premises.
Violating any codes, ordinances, or regulations related to health and safety.
Breaching any contractual obligation of the tenant regarding the premises, other than the non-payment of rent or penalties.

Continuing Rent and Other Lease Obligations

The moratorium is a temporary measure in which the tenant's rent obligations are deferred, not waived. On the expiration of the moratorium, landlords shall have the right to:

Collect the full amount of tenant's unpaid rent.
Charge any fees, penalties, or interest due for the failure to timely pay rent, to the extent provided in the lease or other occupancy agreement.
Pursue all remedies available to the landlord under the occupancy contract or available under applicable law.

Penalties

The Order imposes steep penalties for its violation by a landlord. An individual who evicts a tenant in violation of the Order is subject to:

A fine not exceeding $100,000 or one year in jail or both, if the eviction does not result in a death.
A fine not exceeding $250,000 or one year in jail or both, if the eviction results in a death.

An entity that evicts a tenant in violation of the Order is subject to:

A fine not exceeding $200,000 per eviction, if the eviction does not result in a death.
A fine not exceeding $500,000 per eviction, if the eviction results in a death.

Practical Implications

It remains unclear whether the CDC has the authority to issue the Order under the Public Health Service Act and more specifically under 42 CFR § 70.2. The CDC has adopted an aggressive interpretation of 42 CFR § 70.2.

The initial CDC nationwide eviction moratorium was challenged in a number of jurisdictions and repeatedly found to be unconstitutional (see Legal Updates, Ohio Federal Judge Declares US CDC Residential Eviction Moratorium Unconstitutional and Federal District Court Judge Rules that the CDC Lacks Authority to Impose Nationwide Eviction Moratorium (with update on reversal by S. Ct.)). Whether the CDC's narrower targeting in this new Order will withstand judicial scrutiny remains to be seen. The Alabama Association of Realtors and other landlord groups filed an immediate challenge to the new moratorium in the D.C. District Court, which was later denied. However, the plaintiff group is likely to seek relief before the D.C. Circuit Court. (Ala. Ass'n of Realtors, , at *6-7.)

While the Order may achieve its goal of temporarily keeping many at-risk tenants in their homes, its economic ramifications are unknown. With historic amounts of funds appropriated for rental assistance, the new moratorium will allow time for more tenants to access appropriated funds and prevent at least a portion of the anticipated surge in evictions that will otherwise occur when the moratorium expires (see Legal Update, COVID-19: CFPB Releases Rental Assistance Finder Tool).

It also remains unclear how courts will address the mechanism laid out for jurisdictions that drop in and out of covered status as a particular county's community transmission rates fluctuate. Given the significant penalties for violating the Order, it is unclear whether the onus will be on the courts or the lawyers to monitor community transmission rates to ensure that landlords do not run afoul of the new moratorium.

For updated information on commercial and residential eviction moratoriums, see COVID-19: Commercial and Residential Tenant Eviction Moratoriums Select State and Local Laws Tracker (US). For more information on available rental assistance, see Legal Update, The American Rescue Plan Act of 2021 Provides Continued Rental and Other Housing Assistance.

For a continuously updated collection of resources addressing COVID-19, see Practical Law's Real Estate Global Coronavirus Toolkit.

COVID-19: CDC Issues New, Tailored Residential Eviction Moratorium (Updated) | Practical Law