New rules for landlords and tenants
As a result of new COVID-19 laws, landlords may have a major problem. These new laws could be devastating for many landlords.
If you are a landlord, you may need to prepare for the effects of these new rules. These changes may not allow you to evict tenants who aren’t paying their rent.
A new nationwide federal moratorium on evictions applies for non-payment of rent through the end of 2020.
Due to unemployment benefits expiring soon there may be millions of tenants who are not able to pay their rent. However, if you are a landlord you remain responsible for paying your bills even though you may not be entitled to collect your rental income.
The Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services created the latest federal moratorium on evictions.
The CDC order is effective September 4, 2020, through December 31, 2020. It replaces an eviction moratorium put in place on March 27, 2020, by the CARES Act that expired July 24, 2020.
The CDC order generally bars residential landlords from evicting tenants for not paying rent if a tenant’s estimated 2020 income is no more than $99,000 (single) or $198,000 (married, filing jointly).
Unlike the Cares Act, the CDC order applies to all types of residential rentals: houses, duplexes, apartment buildings, mobile homes, and mobile home spaces.
The CDC order does not apply to commercial properties, including motels and hotels.
A tenant can simply prevent an eviction by giving the landlord a declaration signed under penalty of perjury with certain required information. They can do this any time before or after receiving a termination notice.
Some states, cities and counties have created their own eviction moratoriums. These rules will apply instead of the federal moratorium if they provide equivalent or greater protection from evictions.
The CDC has created a form for tenants to use for their declaration to avoid eviction.
The CDC order allows evictions if a tenant is involved in criminal activity while on the premises; threatens the health or safety of other tenants; is damaging the property or poses an immediate risk of damaging the property; is violating any applicable building code, health ordinance, or similar health and safety regulation; or is violating any other contractual obligation other than timely payment of rent.
You can challenge a tenant’s declaration in court if you believe they do not meet the requirements for protection under the CDC order.
You may be able to sue your tenants for unpaid rent. The new law prevents you from evicting a tenant for not paying rent. However, the law does not prevent you from suing a tenant for unpaid rent.
If you are a landlord, you may need to make financial plans in the event you are unable to collect from your renters.
David Zubler is a tax accountant and Enrolled Agent representing clients before the IRS with over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can also be contacted by email at email@example.com