What You Need to Know Before They Go! by Kerry Medel and Alyssa Mountain The federal ban on evictions is putting pressure on investors and landlords who are unable to directly access Covid-19 rental relief funds. Many impacted tenants would be surprised to find that the application process for relief must originate with themselves. However, if you are not in a jurisdiction that allows you as the property owner, to file the application(s) on behalf of your renters in an effort to get funds into their hands, you may be, or have already begun, the process of liquidating some of your properties to recoup losses or considering eviction. Robert Pinnegar, president and CEO of the National Apartment Association says, “If you’re in jurisdictions that have taken an approach that is not so customer service friendly, then it’s going to take a lot longer,” and you may find yourself diverging onto the unfortunate road to eviction. What you need to know as an investor/landlord Know the Laws in Your AreaThe federal moratorium is set to end June 30, 2021. This moratorium protects renters from being evicted due to nonpayment of rent if they have been impacted by Covid-19. When considering the impacts of the CARES Act on rental properties, the first thing any investor or landlord (or even tenant) should know is that everything related to the eviction moratorium is state- and in many cases, city-specific as well. Investors/landlords and tenants should first start with knowing what rights and available protections are applicable and available in their area. To Whom Does the Moratorium ApplyThere are many types of protected tenants, but that list has broadened significantly after March of 2020. Visiting sites like nlihc.org/federal-moratoriums can help your renters determine how they are protected, but it is also helpful for investors and landlords before initiating eviction proceedings. In late 2020, the Wall Street Journal reported on the impacts that protections in the stimulus law would have on credit scores, credit reports and debt delinquency, and the challenges around determining who is truly credit worthy. It may eventually be harder to become a tenant in a rental property as investors/landlords are forced to be more exclusive about who they put in their homes. Investors/landlords may not only make it less affordable to become a renter, but also harder to qualify as a renter under more rigorous future criterion. Pitfalls/StrategiesA large majority of cities and states do not have programs that will forgive your tenants their rental debt, however most will allow (and encourage) them time to pay the rent arrears. Nonpayment of back rent is grounds for eviction. However, landlords may not be allowed to charge late fees or other penalties, depending on the local laws. Investors/landlords should keep current with the ever-changing allowances and forgiveness plans for their city and state, as new protections and amendments are proposed daily, and implemented weekly, since March of 2020. Eviction TimelinesWhen it comes to evictions, the most important word is “timeline”. Many cities and states require the tenants to communicate to their landlord the loss of wages, wage reduction, loss of employment, or even contracting Covid-19 to ‘qualify’ for protection under the Act. Timely notification has been cited as one of the leading preventative actions to stop or even slow most evictions during the pandemic. However, notification from your renter does not mean that you are prohibited from rent releases, posting eviction notices, or sending letters of intent to evict to your renters, or that you cannot force the renters to vacate the property. Review timelines related to notices for termination (with and without cause) like Pay Rent or Quit Notices, Cure or Quit Notices or Unconditional Quit Notices. Filing the eviction with your local AHJ and court will also happen on a very specific timeline that is not generally designed to protect your interests as the landlord. Unintended ConsequencesTenants and investors/landlords equally do not want to be in this position. Landlords do not want to turn renters out any more than tenants want to be homeless. It is a difficult time for investors/landlords who still need to provide maintenance on units to ensure habitability while rent is not being paid. Consult with a state certified eviction attorney to ensure you are entirely protected and prepared and know how to take legal action with cause that will not lead to deeper financial or legal burden by not following local jurisdictional rules. An unfortunate by-product of investors/landlords being forced to evict tenants and sell their properties, is the reduction in affordable rental property inventory. With Covid-19 driving suburban migration, these homes will likely become owner-occupied thus reducing the stock of desperately needed rental housing. This puts a strain on the middle-, lower-middle- and working-class who historically rely on rental housing. Courts are incredibly backlogged which will cause significant delays in the eviction process and timeline. It can be anticipated that courts will not be siding as heavily with investors/landlords as in the past. An enormous humanitarian aspect has been thrust into the equation that will not be quickly discounted in future tenant/landlord cases. Knowledge is Key KNOW YOUR CITY AND STATE REGULATIONS! Landlords MUST know the complicated eviction laws inside and out, and if not, hire someone who does! They MUST not only understand the legal process but the entire eviction process. You will also need a valid (and lawful) reason to proceed with the eviction, and you will want to take all the new Covid-19 protections into account before proceeding. Ask yourself, have you tried mediating with your renters? Do I have the funds to cover the seemingly endless (and occasionally unpredictable) legal fees all while not receiving rent! Would it be less costly to pay them to vacate? If you win your case, be prepared for how you will then remove the tenants. Again, there is a set timeline in the court decision for the tenants to vacate, but you should be prepared for the need to coordinate with your local sheriff’s office