Property Companies Argue CDC Lacks Authority To Enact New Ban
The Alabama Association of Realtors and the Georgia Associations of Realtors, along with their property management companies, submitted an emergency motion late Wednesday in federal court that challenges the CDC’s recently reinstated ban on the eviction of tenants who are unable to pay their rent. The moratorium is set to expire on Oct. 3, according to documents from the U.S. District Court for the District of Columbia.
That filing is not a new lawsuit; instead, it is an emergency motion from a 2020 lawsuit that asserts that the CDC’s most recent moratorium extension “conflicts with the Supreme Court’s ruling that the CDC could not extend the eviction moratorium beyond July 31, 2021,” according to the documents. It further claims that the CDC “caved to the political pressure by extending the moratorium, without providing any legal basis.”
Nearly a dozen organizations, including the CCIM Institute for certified commercial investment members, the National Multifamily Housing Council and the National Association of Home Builders issued a joint statement decrying the new eviction moratorium. They argue that the moratorium, though well-intended by the Biden administration, leaves landlords and property owners in a lurch and makes it extremely difficult for owners to maintain their properties without a steady flow of rent payments.
“The best way to help struggling renters is for the administration to work with Congress, states and localities to help disburse rental assistance funds to residents and housing providers in need,” the coalition’s statement reads.
The CDC did not return a request for comment from CoStar News.
These developments are the latest in the housing industry’s broad pushback against federally enacted eviction moratoriums. The ban has prevented landlords from evicting tenants for nonpayment in an effort to curb the spread of the virus via overcrowding in homeless shelters and low-income housing.
But landlords and property owners have argued that the ban left them in the impossible position of having to remain afloat despite having their steady revenue stream of rent payments slow to a trickle. Some landlords had argued that an eviction moratorium is to some degree politically motivated and not based on real-case business practices. They say that’s because most building owners aren’t going to evict tenants and risk incurring the legal costs, maintenance expenses and lost rent merely for nonpayment during a pandemic and economic crisis when those tenants would be more difficult to replace; they instead would likely opt to negotiate a more flexible payment plan.
In late July, the National Apartment Association filed a lawsuit against the CDC on behalf of individual apartment landlords, apartment owners and landlords of virtually any rental property shouldering billions in debt because of missed rent. The organization asserts that owners and landlords faced $57.3 billion in debt at the end of 2020. Another $8 billion in debt was generated in the first quarter of 2021, and roughly $8 billion in more debt was generated in the second quarter of 2021, though that figure is still being finalized.
“What continues to be ignored is the catastrophic impacts of these orders on the entire rental market, including rent prices in the long term,” Bob Pinnegar, president and CEO of the National Apartment Association, said in a statement to CoStar News. “The Administration and Congress should instead be focused on making millions of hardworking Americans and small businesses whole again.”
Industry leaders have also expressed concern that the federal government isn’t doing enough to help renters saddled with mountains of debt that have accumulated throughout the pandemic. Though Congress allocated $46 billion in emergency rental relief, only $3 billion had been dispersed to tenants and landlords as of May 31, the latest data available from the U.S. Treasury. That does not include Coronavirus Aid, Relief, and Economic Security Act funding that state and local governments may have also poured into rent relief.
The CDC’s eviction moratorium, which was originally supposed to expire on Dec. 31 of last year but was extended five times, officially expired on July 31. The new moratorium, which was enacted on Aug. 3, expires on Oct. 3 and was put in place because of the rising volume of coronavirus cases tied to the delta variant, the CDC said in a statement.
“The eviction moratorium allows additional time for rent relief to reach renters and to further increase vaccination rates,” the CDC said in a statement announcing the new moratorium. “In the context of a pandemic, eviction moratoria — like quarantine, isolation, and social distancing — can be an effective public health measure utilized to prevent the spread of communicable disease.”
The coalition of groups against the new moratorium includes:
- CCIM Institute.
- Commercial Real Estate Finance Council.
- Council for Affordable and Rural Housing.
- Institute of Real Estate Management.
- Manufactured Housing Institute.
- Mortgage Bankers Association.
- National Affordable Housing Management Association.
- National Apartment Association.
- National Association of Home Builders.
- National Association of Residential Property Managers.
- National Multifamily Housing Council.
Still, even if the CDC hadn’t issued a new ban, some states have their own bans that would’ve prevented landlords from evicting tenants. New York has a statewide moratorium that lasts until Aug. 31, California’s ban runs through Sept. 30 and New Jersey’s expires two months after the state’s health crisis declaration is officially deemed over.
The Federal Housing Finance Agency and the Federal Housing Administration on July 30 both extended their own eviction bans on borrowers of foreclosed single-family properties until Sept. 30.