On August 8, 2020, President Trump signed an executive order directing the Secretary of Health and Human Services and the Director of the Centers for Disease Control and Prevention (CDC) to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession.” In response, the CDC issued an order pursuant to Section 361 of the Public Health Service Act (42 U.S.C. 264) temporarily halting residential evictions from September 4, 2020 through December 31, 2020 (“CDC Order”). Here are the details of the CDC Order and what it means for landlords.
Background
The CDC has determined that evictions threaten to increase the spread of COVID–19 as they force people to move, often into close quarters in new shared housing settings with friends or family, or congregate settings such as homeless shelters. The ability of these settings to adhere to best practices, such as social distancing and other infection control measures, decreases as populations increase. Unsheltered homelessness also increases the risk that individuals will experience severe illness from COVID–19. As such, the CDC has determined that eviction moratoria – like quarantine, isolation and social distancing – is an effective public health measure to prevent the spread of COVID-19.
The Order
The CDC Order states that “a landlord, owner of a residential property, or other person with a legal right to pursue eviction or possessory action, shall not evict any covered person from any residential property in any jurisdiction to which this Order applies during the effective period of the Order” as a “reasonably necessary measure…to prevent the further spread of COVID-19 throughout the United States.”
Who is a “covered person” under the Order?
The CDC Order does not protect all tenants or occupants of residential property, but only those qualifying as a “covered person”. Who qualifies as a “covered person”?
First, the person must be a tenant, lessee or resident of a residential property. Does “resident” mean that the person need not necessarily have a lease? The answer may be found in the definition of “residential property” which is “property leased for residential purposes”. (emphasis added). This seems to imply that the property has to be leased, although not all adult occupants need be on the lease. The other adult occupants would thus be “residents” of a “residential property” (that is “leased”) but are not “tenants” or “lessees”. They would therefore qualify as a “covered person”. Mortgagors of residential real estate are excluded from the CDC Order as “evict” and “eviction” “[do] not include foreclosure on a home mortgage.” Further support that mortgagors are excluded is that, again, the definition applies to only “residential property” which is “property leased for residential purposes”. (emphasis added). Mortgaged property is not leased by the mortgagor(s). By this account, the CDC Order seems to neither prohibit a mortgagee from foreclosing on a home mortgage nor prohibit the purchaser at the foreclosure sale from evicting the former mortgagor(s).
Second, to qualify as a “covered person” the person must 1) have used his or her best efforts to obtain all available government assistance, 2) expect to earn no more than $99,000 in income for 2020, was not required report income in 2019, or received a stimulus check pursuant to the CARES Act, (3) be unable to pay the full rent due to a substantial loss of income or extraordinary medical expenses, (4) use his or her best efforts to make partial rent payments that are as close to the full rent as possible, and (5) be at risk of homelessness or a shared living setting if they were evicted.
Third, the person must provide the landlord with a written declaration, made under penalty of perjury, that they meet the five qualifying requirements above. Accompanying the CDC Order is a sample declaration. The CDC Order does not impose any obligation on landlords to provide a copy of the CDC Order or a copy of the sample declaration to their tenants. Furthermore, the CDC Order does not seem to require that the landlord actually receive the declaration, only that the person “provide” the declaration, without clarification on how it is to be provided. This language has the potential to create a factual dispute if an occupant alleges he or she provided the declaration to the landlord, perhaps by mail or otherwise, but the landlord claims it did not receive it.
Even if the person otherwise qualifies as a “covered person” the landlord may still evict if that person 1) engages in criminal activity on the property, 2) threatens the health or safety of other residents, 3) damages or imposes an immediate and significant risk of damage to property, 4) violates local regulations relating to health and safety, or 5) breaches any non-monetary provision of the lease.
Note, that the CDC Order does not relieve a tenant of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar contract. Further, the CDC Order does not prohibit the landlord from charging or collecting fees, penalties, or interest as a result of the tenant’s failure to pay rent or other housing payment on a timely basis, under the terms of any applicable contract.
What is considered “residential property”?
The CDC Order covers any property leased for residential purposes, including any house, building, mobile home or land in a mobile home park, but does not include any hotel, motel, or other guest house rented to a temporary guest. Again, mortgaged real estate which is occupied solely by the mortgagor(s) would seem to be exempt.
What if my state or jurisdiction has its own eviction moratorium in place?
The CDC Order does not apply in any State, local, territorial, or tribal area with a moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements listed in the CDC Order. By way of example, Illinois Governor J.B. Pritzker has issued several Executive Orders prohibiting both the commencement of residential eviction actions and the enforcement of residential eviction orders across the state of Illinois, with only a narrow exception for tenants who pose a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any application building code, health ordinance, or similar regulation, which are the same carve-outs in the CDC Order. Since Illinois’ Executive Orders provide a broader restriction on evictions, and therefore, arguably a greater level of public-health protection, the CDC Order does not apply in Illinois. However, the Governor’s eviction moratoria currently expires on October 17, 2020. The CDC Order will apply in Illinois if the Governor’s eviction moratoria is not extended.
Further, the CDC Order does not preclude State, local, territorial, and tribal authorities from imposing additional requirements that provide greater public-health protection and are more restrictive than the requirements imposed by the CDC. Therefore, the CDC Order basically supplements any State or local restrictions on evictions and/or additional obligations placed on landlords.
Practical application of the CDC Order.
Under a fair reading of the CDC Order, landlords may not evict any covered person for non-payment of rent, which means they may not evict a person who resides at the residential property, meets the five criteria for qualification and has provided the landlord a declaration that they have met the five criteria. Because a person is not a “covered person” until he or she provides the landlord with a declaration, presumably a landlord may commence and continue evictions until the tenant does so without violating the CDC Order.
People have raised the question of whether a landlord can challenge the veracity of the declaration, and if so, how and when? If the landlord receives a declaration prior to the commencement of an eviction, as impractical as it may sound the landlord’s only remedy would appear to be to file suit for a declaratory finding that the individual does not meet one or more of the qualifying factors. A finding in the landlord’s favor would conclusively establish that the individual is not a “covered person” and the landlord would be free to evict. If the person provides a declaration after an eviction is commenced, the judge overseeing the eviction should hold a hearing on the truth of the declaration and thus whether the defendant is a “covered person”. The CDC Order expressly authorizes “cooperating State and local authorities” to enforce the CDC Order so state court judges appear to be empowered to rule on these questions. Of course, nothing in the CDC Order compels a judge to hear an objection to a latterly produced declaration. The court may just as easily suspend the eviction until the moratorium expires.
Penalties for violating the CDC Order.
The penalties for violating the Order are severe. A person violating the CDC Order may be subject to a fine of up to $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of up to $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law. Further, an organization violating the CDC Order may be subject to a fine of up to $200,000 per event if the violation does not result in a death or $500,000 per event if the violation results in a death or as otherwise provided by law. Furthermore, the U.S. Department of Justice may initiate court proceedings to impose these criminal penalties.
The CDC Order does not say whether an aggrieved person may bring a private cause of action for violations of the Order. Where a penal statute does not expressly confer a private right of action on individuals pursuing civil relief, a civil right of action generally will not be implied in the absence of a clear implication that the legislature intended the statute to create one. Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080 (1975). We can discern no clear implication from the text of the CDC Order.
Are there any protections for landlords in the Order?
No. While the CDC Order provides protection for certain persons against the threat of eviction for non-payment of rent, the federal government has not set aside any funds to assist landlords who are struggling to pay their own mortgages while their renters fail to pay.
Does the CDC have the authority to impose the Moratorium?
The CDC Order cites a federal regulation, 42 C.F.R. § 70.2, that empowers the CDC Director to take “measures to prevent [the] spread of … diseases as [he] deems reasonably necessary” if the Director “determines that the measures taken by health authorities of any State … are insufficient to prevent the spread of … communicable diseases from such State … to any other State.” The CDC Order also cites section 361 of the Public Health Service Act (42 U.S.C. § 264), which authorizes the Department of Health and Human Services to “make and enforce such regulations as in [its] judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one.”
The legal question is whether courts would defer to the agency’s interpretation of its authority to impose the moratorium. Admittedly, section 361 allows a broad grant of rulemaking authority to the CDC, but it is not absolute. Congress may not delegate too much discretionary power to an agency. Congress must, instead, provide agencies with clear instructions on how to regulate which it had not done when it allowed the CDC to make public health regulations.
The CDC may have exceeded its authority under the law. It is empowered to draft rules to prevent diseases from spreading across state borders. But the CDC Order goes much further than that. It applies to intra-state as well as inter-state conduct, even where there is no likelihood that an evicted tenant will spread the disease across state lines. Moreover, the eviction moratorium is completely unlike the examples of public health measures listed in the statute (“inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings”), suggesting that the CDC may have over-reached.
Of course, this needs to be balanced by the undisputable fact that we are in the midst of a pandemic and there are good reasons why public health agencies should have broad regulatory power. Public health emergencies are unpredictable, and it would be impractical for Congress to pass legislation on how a public health agency should control the public health crisis. This militates in favor of allowing the CDC broad authority. See, Block v. Hirsh, 256 U.S. 135, 41 S. Ct. 458, 65 L. Ed. 865 (1921).
Author
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Jill has extensive experience representing creditors and financial institutions in both state and federal court. Jill concentrates her practice on protecting creditors’ rights in bankruptcy, prosecuting evictions, defending junior liens, and collecting on judgments. In addition, Jill represents creditors, servicers and real estate investors in financial services and real estate litigation.
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Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.
