New CDC Eviction Guidelines
A lot of ink has been spilled over the new CDC moratorium on evictions entered into the Federal Register on Sept 2. News sources have been saying that “most evictions in the U.S.” are now prohibited. As for property owners — our mouths have emitted about as much foam as they are going to emit. We are drained dry, but we continue to croak our death-rattle. The news has received a fair amount of attention on both sides of the ideological divide.
But here’s the thing. Salience is not importance. A fact that is salient is prominent and front-of-mind. A fact that is important is, well, important — it has relevant and crucial value. Not all salient things are important, and not all important things are salient. The CDC guidance has plenty of salience, but it is not as important as one would think.
Here’s what you need to know about the guidance:
· The CDC probably does have jurisdiction to issue it;
· The guidelines do not expand the existing moratorium on evictions in New York State (and, likely, in certain other states); and,
· It is surprisingly well-written. But that is because it was written by a public health expert, rather than by a regulatory lawyer or a tax lawyer. Admittedly, this causes a bit of ambiguity when the author makes reference to certain federal income tax law concepts.
Jurisdiction
My first reaction when I heard that the CDC had issued eviction guidelines was, “Whaaa? The CDC regulates public health, not housing policy.” But there is a jurisdictional hook. Under 42 CFR 70.2, if the director of the CDC determines that measures taken by health authorities of any State or possession are insufficient to prevent the interstate spread of any communicable disease, he or she may take such measure to prevent the spread of the disease as he or she deems reasonably necessary. A moratorium on evictions is not within the short list of enumerated powers in the statute (these include, inter alia, inspection, fumigation, disinfection, sanitation and the like), but the statute grants the director broad powers, and a rule that lessens the chance of a near-term spike in homelessness clearly could fall within its scope. Much of the preamble and background discussion deal with the public health consequences of a wave of evictions. People who are suddenly unhoused tend to move in with family members, to move into homeless shelters, or to sleep on the street. Social distancing and proper use of PPE are usually not feasible in these situations, and lack thereof can, and does, lead to the spread of the coronavirus. Any spread could cause interstate transmission. So — a jurisdictional challenge on constitutional grounds is probably not a winner.
Guidelines
Prohibition The guidance provides that no landlord shall evict a “covered person” in any American state, federal district or territory (other than American Samoa) until December 31, 2020. A covered person is a tenant who provides to his or her landlord a declaration signed under penalty of perjury that,
· The tenant has used best efforts to obtain all governmental assistance for rent or housing;
· The tenant either (i) expects to earn no more than $99,000 in annual income for calendar year 2020 (or no more than $198,000, if filing a joint tax return)[1], (ii) was not required to report any income in 2019 to the Internal Revenue Service,[2] or (iii) received an Economic Impact Payment stimulus check pursuant to Section 2201 of the CARES Act;
· The tenant is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses;
· The tenant is using best efforts to make timely partial payments that are as close to the full payment as the tenant’s circumstances may permit, taking into account other nondiscretionary expenses; and,
· Eviction would likely render the tenant homeless or force the tenant to move in and live in close quarters in a new congregate or shared living steeling — because the individual has no other available housing options.
The prohibition is less than it seems because the exceptions eat the rule.
Carve-Outs Exceptions to the rule in the CDC guidance narrow its scope to a point where it is no more restrictive than existing local law in New York State. These exceptions include the following:[3]
· It only applies to people who have (i) suffered economically (ii) due to the pandemic In order to avail him or herself of the protections of the law, a tenant must be a covered person. This means, inter alia, that the tenant needs to have suffered an economic hit due to the COVID pandemic in order to be protected by the guidance. No layoff, no loss of income, no extraordinary out-of-pocket medical expenses — no protection. Tenants on, say, SSI prior to and during the pandemic can not qualify for protection.
o Local Law This is similar to substantive New York law. Executive Order 202.28 extended the eviction moratorium initially created by Executive Order 202.8 for tenants who are “eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic”. This was codified by the New York State Assembly in what is now referred to as Chapter 127.
· It does not prohibit money judgments Per the CDC guidance: “This Order does not relieve any individual 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” Notably, the CDC guidance does not prohibit charging late fees: “Nothing in this Order precludes the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent or other housing payment in a timely basis, under the terms of the applicable contract.”
o Local Law Chapter 127 explicitly allows suits for money judgments. Note that local law is more restrictive than the CDC guidance in this case, because Executive Order 202.28 prohibits charging late fees during the pandemic.
· It allows evictions for reasons other than non-payment Money quote: “Nothing in this Order precludes evictions based on a tenant, lessee, or resident: (1) engaging in criminal activity while on the premises; (2) threatening the health or safety of other residents; (3) damaging or posing an immediate and significant risk of damage to property; (4) violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or (5) violating any other contractual obligation, other than the timely payment of rent or similar housing-related payment (including non-payment or late payment of fees, penalties, or interest).” Under the CDC guidelines, park owners can evict a tenant who harasses his neighbors, leaves garbage in her yard, opens a pitbull stud farm, or otherwise violates his or her lease, breaks the law, or makes the park a dangerous or unhealthy place to live.
o Local Law Under NYRPL 233, park owners in New York State generally need a cause of action to evict a tenant. Potential causes of action include (i) non-payment of rent, (ii) the tenant uses the applicable lot or home as a bawdy-house or place of assignation for lewd purposes, or for any illegal trade or business, (iii) the tenant violates a law that is detrimental to the safety and welfare of other park tenants, or (iv) the tenant is in violation of a lease term, and appropriate written notices to cure have been given to the tenants. Executive orders 202.8 and 202.28, and Chapter 127 took away the cause of action for non-payment in the case of tenants who have taken an economic hit due to the COVID-19 pandemic, but, as in the CDC guidance, the other causes of action remain. Yes, under applicable substantive law, you can still evict people for cooking meth or using their home to fence stolen goods — provided the court system gives you access.
I have said it before, and I will say it again: evictions suck. Property owners hate them. They are life-shattering for tenants. Using them to enforce rules is like using nuclear weapons to punish traffic tickets. In the longer term, they should be replaced by alternative remedies like a universal basic income, public rental insurance a-la Medicare for all and direct assistance for tenants who can not afford, or who are not healthy or otherwise fit to get rid of their garbage, mow their lawn, or fix their skirting. The cost for these programs should be funded through contributions by both tenants and property owners, a carbon tax, the elimination of tax expenditures for the fossil fuel industry, and an increased marginal tax rate on higher-bracket earners (if you want to impose a financial transaction tax on high frequency trading because you think that high frequency trading is naughty behavior, have at it — I don’t work on Wall Street any more, and the only parties that FTTs harm are scalpers and ETF arb traders. However, evidence from Europe indicates that FTTs do not raise much revenue). But until that happens, park owners’ only remedy to deal with tenants who prevent us from providing clean, safe and affordable housing to people who need it is eviction. So, evict we must. The CDC guidance neither helps nor hinders us in that task.
[1] The guidance does not specify whether $99,000 constitutes adjusted gross income, gross revenue, or taxable income. Ambiguity results when a public health law expert talks tax.
[2] Presumably, this is meant to mean United States tax residents who were not required to file tax returns for 2019. The literal terms of the rule would allow a UK citizen hedge fund manager who moved to New York from London in January 2020 to qualify for eviction relief. That is clearly not the intent of the law, because the hedge fund manager can move into the Ritz if he is evicted because he is on track to earn two or three million dollars in net income in 2020, but it is within the literal meaning of the law, because the hedge fund manager, as a US tax nonresident in 2019, was not required to file a United States income tax return for 2019.
[3] The CDC guidance states explicitly that it does not apply in any State, local, territorial or tribal area “with a moratorium on evictions that provides the same or greater level of public-health protections listed in [the guidance]”. It is unclear how this exception can apply in a non-vacuous way. For example — if a local law prohibits evictions in factual contexts in which evictions are allowed under the CDC guidance, local law will control (vacuous). If both the CDC guidance and local law prohibit evictions in a certain factual context, this appears to indicate that local law will control (also vacuous). However — what if there is a local law that is more restrictive than the CDC guidance in, say, 80% of all forseeable factual contexts, but which allows eviction in one certain factual context in which the CDC guidance does not? The local law appears to be, generally, “more restrictive” than the CDC guidance. Does that mean that the rule that the CDC guidance does not apply in the case of more restrictive local laws requires that eviction be allowed in this particular instance (a non-vacuous application of the rule)? I think it does, but that would be a difficult argument to make to a judge.