CARES Act Eviction Moratorium Explained

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CARES Act Eviction Moratorium Explained

Background

In the spring of 2020, the CARES Act placed a limited moratorium on evictions nationwide. Many states – including North Carolina – employed their own stricter eviction bans, preventing landlords from beginning the eviction process. As a result, existing lease agreements effectively became one-sided contracts, limiting homeowners’ and property managers’ ability to enforce them.

We had to continue providing our management services to the tenants, despite those same tenants being permitted to break their contractual obligations without penalty. We acknowledge that this left many homeowners with reduced income, delayed home sales, etc. We have felt your pain and appreciate your patience as we have navigated these unprecedented circumstances!

What the Moratorium Entails

The original CARES Act eviction moratorium technically expired in July of last year but was replaced by a far more far-reaching eviction ban by the CDC at that time. The current guidelines prohibit landlords from filing for eviction against any tenants who meet the following criteria:

  • The tenant “used best efforts to obtain all available government assistance for rent or housing,”
  • They earned less than $99,000 in income for 2020-2021, were not required to report any income in 2019 to the IRS, or received a stimulus check from the CARES Act.
  • They can’t pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses.
  • The renter is “using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other non-discretionary expenses,” and
  • Eviction would likely render the individual homeless—or force the individual to move into and live-in close quarters in a new congregate or shared living setting—because the individual has no other available housing options.

Timeline

Originally set to expire at midnight on December 31, 2020, the second stimulus package passed by Congress extended the moratorium on evictions through January 31, 2021. The second stimulus package also includes $25 billion in rental assistance for households facing income drops due to the pandemic, an addition welcomed by landlords and tenants alike.

As one of its first acts on Inauguration Day, the Biden Administration extended the ban once more through March 31, 2021.

Contesting the Moratorium in Court

In late February, U.S. District Court Judge J. Campbell Barker ruled the eviction ban unconstitutional. However, he stopped short of issuing a preliminary injunction, expecting the CDC to lift the ban. The Biden Administration (via the CDC) did not lift the moratorium, but two days before it expired, they extended it again, this time through June 30.

Light at the End of the Tunnel

With the moratorium set to expire at the end of the month again, we may finally see a return to normalcy regarding handling collections and evictions. Your Henderson Properties team is prepared to effectively address outstanding rental balances and take the appropriate action to remove non-paying tenants whose evictions have been significantly delayed by the CDC moratorium.