The amended eviction moratorium could detrimentally affect landlords now and renters later. But how might this health crisis law affect the economy in general?
Megan Booth, Director of Federal Housing and Policy for the National Association of Realtors, has the national view of the new CDC eviction moratorium that starts September 4 and will run to at least December 31st, 2020.
But if you are a landlord in California and your tenant stops paying rent and declares a COVID reason under the penalty of perjury for not paying rent, rental owners will not be able to evict until February, 2021, this is according to California Association of Realtors, Attorney Gov. Hutchinson.
The eviction moratorium applies to all rental properties. But if you are a landlord in California and your tenant stops paying rent and declares a COVID reason under the penalty of perjury for not paying rent, rental owners will not be able to evict until February, 2021, according to California Association of Realtors, Attorney Gov. Hutchinson.
The impact of this is or will be felt by all rental property owners across the U.S. 40% of landlords in the country are Mom and Pop, and 25% of my fellow realtors own rental property (I have been a flipper for years). They both rely heavily on the rent to pay for their underlying mortgage, insurance, taxes and maintenance on these properties.
Do you hear an eviction tsunami is building and come February, 2021 when the rent, late fees and penalties will be required to be paid back? Without rental assistance, many families could be left homeless, just like any were after the financial crisis of 2008. This present moratorium will affect, not only the real estate industry, but the whole economy.
For damage control, landlords would be wise to keep the communication portal open with their tenants. Talk to your residents and send reminder notices telling them how much they currently owe, so they can work on getting the funds together, because they still have an obligation to pay. Landlords, you can also accept partial payments.
The California courts open the first of October, 2020. But remember, if your tenants have a declared COVID reason to not pay you rent, you can’t evict them. You can, however, evict them for other reasons, but Attorney Gov Hutchinson says that you do need a reason. Do you want to sell and the buyer wants the property vacant? That’s a reason. You want to move in yourself? Well, that’s a reason. You want to get out of the rental business? That’s a reason. Your tenants are not paying rent and have not declared COVID as the reason? That’s a reason. “You need a reason to evict that’s not COVID related,” says Hutchinson.
Does your tenant have to provide you or the courts with documentation supporting a COVID related reason for not paying rent? No, but they must sign a declaration under the penalty of perjury that they really have a COVID related reason. If it can be proved the tenant did not have a COVID related reason to not pay rent, they could be looking at large fines and maybe even jail.
An high-income tenant has to prove a COVID reason. A high-income tenant makes 130% of median income in the county where the property is located.
Admittedly, these new rules are not very fair to most landlords, the only protection here is that if your is not paying due to a COVID reason and this is making it difficult for you, as a landlord, to make your mortgage payment(s), then you too have a COVID hardship as a reason for not paying your mortgage payments.
You can call your mortgage company and apply for a “forbearance agreement” with your lender and your lender has to give it to you. What does this mean? They can’t foreclose on you and they must make late payment agreement with you. This applies to conforming and jumbo loans.
A forbearance agreement still requires you to pay back mortgage amounts just as your tenants will eventually have to pay back rents.
I think I know what you’re thinking as a landlord. “The tenants are never going to pay me. I’ll sue them in February and I won’t get any money.” Well, we will have to see how all this plays out in reality.
There is a Q & A taken from the CAR website that explains this stuff further.
If you need a real estate professional who knows what they’re doing to help you through this, call Rob Salter, RE Broker, Crown Real Estate, cell (951) 310-4816.