Millions of Americans have lost their jobs or seen their income decline in the course of the coronavirus outbreak. But thanks to the eviction moratoriums that have been in place since the start of the pandemic, many renters have been spared from losing their homes.
But this week, a Texas federal judge has ruled that the federal moratorium on evictions is unconstitutional. And while that could put a large number of renters in a tough spot, it could also spell relief for struggling landlords.
Landlords need a break, too
While it's true that many rental properties are owned by large companies with the resources to cut tenants a break during the pandemic, it's estimated that nearly 60% of single-family units in the U.S. are owned by mom-and-pop landlords with one to two buildings in their name, according to the Urban Institute. And it's these landlords who have been hurt by long-standing eviction bans. Without rental income, these small landlords can't cover their own bills, and while there are protections in place, like forbearance, that allow landlords to pause their mortgage payments, that doesn't help with regard to ongoing expenses like property taxes and maintenance.
But now, there may be hope for mom-and-pop landlords who need relief. U.S. District Judge John Barker of Texas has ruled that the current eviction moratoriums violate the Constitution, and he says he expects the Centers for Disease Control and Prevention (CDC) to respect his ruling and withdraw the ongoing ban.
This ruling comes on the heels of a lawsuit initiated by a group of Texas landlords and property owners who sued the CDC and the Department of Health and Human Services in October over the moratorium. But Barker feels strongly that the federal government doesn't have the authority to stop evictions and that Congress also should not have had the authority to grant the CDC permission to halt evictions despite the health crisis at hand.
The CDC's eviction moratorium was originally set to expire in late 2020, but it was extended through January as part of the coronavirus relief bill signed into law in late December. President Biden then extended the eviction moratorium through the end of March.
Under the current ban, all a tenant needs to do is give a landlord a signed declaration stating that he or she has experienced income loss and cannot pay rent. There's also a requirement to earn less than $100,000 a year. While landlords aren't required to forgive rent under the moratorium, they also can't initiate the eviction process due to a lack of payment (though if a tenant violates other lease terms, eviction may be on the table). Furthermore, some jurisdictions have imposed their own regulations that offer tenants even more protection than what the CDC's eviction moratorium includes.
As of January, an estimated 10 million tenants were behind on their rent, according to a Census Bureau survey. And 16 million renters had little to no confidence they could pay their rent in February.
While a long-standing eviction ban may be serving the very important purpose of keeping renters in their homes and off the streets, it's hurting landlords who don't have the financial resources to keep up with their own obligations in the absence of incoming rent. This recent ruling out of Texas could potentially turn things around for struggling landlords -- many of whom may still be more than willing to work with tenants so that nobody suffers needlessly during these trying times.