The CDC's Second Eviction Moratorium Didn't Resolve The Chaos In Housing Courts

When the U.S. government allowed the Centers for Disease Control and Prevention’s eviction moratorium to expire on July 31, the next 48 hours were chaotic. The CDC’s second moratorium went into effect on Aug. 3, but even before it was overturned by the Supreme Court Thursday night, its execution was uneven and confusing.

Between Philadelphia and its suburban counties in Pennsylvania, the federal eviction moratorium was inconsistently applied in local courts, leaving landlords frustrated and tenants vulnerable. A similar story was playing out in jurisdictions across the country.

The Department of the Treasury’s new guidance on distribution of Emergency Rental Assistance issued Wednesday addresses some concerns, but every change in implementation at any level creates another potential source of confusion.

“It’s a full-time job staying on top of these changes that are essentially made in the middle of the night,” said Benjamin Oller, chairman of rental property management firm TCS Management, which he said mainly serves landlords of single-family rental properties that largely rent to working-class tenants. “It’s bureaucracy at its best.”

The now-defunct second CDC moratorium was all that stood between at-risk tenants and a wave of evictions, as Philadelphia and its suburbs don’t have any local ordinances in place that prevent eviction, Oller and Legal Aid of Southeastern Pennsylvania staff attorney Michelle Dempsky told Bisnow. The fact that the latest moratorium was technically a new action rather than a continuation of the previous one was being interpreted differently across judges and jurisdictions.

“Some judges are requiring tenants to fill out the new CDC declaration, so attorneys like me were scrambling to get those declarations in so we weren’t going to have a hearing in mid-August,” Dempsky said. “We’ve seen some attempts to streamline the process, but it’s hit-or-miss, and because it’s different among counties and judges, you have to learn the nuances of each judge. And the clerks are good at being helpful, but you’ve kind of got to be a lawyer to know who to call.”

Because both of the CDC’s moratoriums allowed for landlords to submit eviction filings even though they would not be heard during those periods, an enormous backlog of filings has been building, especially in Philadelphia, where some filings that were entered before the coronavirus pandemic struck have not had their hearings, said Oller and Daniel Harvey, president of multifamily landlord DMH Investments. 

Philadelphia’s courts have largely not heard any eviction cases, even ones that weren’t covered by the moratorium, Oller and Harvey said. That has also been the case in some suburban counties, but not all, Dempsky said.

Philadelphia's chaotic legal situation wasn't unique. A similarly inconsistent interpretation has plagued courts in Florida, said attorney Jessica Bober of professional advice site JustAnswer, who practices in the Tampa Bay area.

“It’s all just a casserole of nonsense,” Dempsky said.

Philly, for example, requires landlords to first file for Emergency Rental Assistance money, enroll in the city’s eviction diversion program, then wait at least 45 days before filing for eviction. The program has been lauded by housing advocates as a potential model to be emulated by other cities, but requires faith on the part of landlords that tenants will not just use that 45-day window to leave their unit so they don’t have to pay their back rent, Oller said. Though some on the Philadelphia City Council want to make the mandatory diversion program permanent, it is set to expire on Aug. 31.

If the inconsistency comes across as nonsense to an attorney focusing on landlord-tenant law, then remaining up to date on what protections the law affords seems to many low-income tenants like a hopeless endeavor — especially for those who don’t have computers or smartphones, Dempsky and Bober said.

“Evictions that should have been prevented under the moratorium went through because tenants were not aware [of the current rules],” Bober said, adding that many Florida tenants have self-evicted to risk housing insecurity rather than carry the black mark that an eviction filing leaves on a housing application’s record.

“Even if the CDC had [extended the moratorium] a week before it expired, or 48 hours before, instead of 48 hours after, I believe a lot of tenants would have been made aware of the moratorium being extended,” she said. “So some landlords kind of took advantage of tenants not being aware of what was happening.”

The latest moratorium had two crucial limitations that were not present in the original order: It only applied to counties with what the CDC labels substantial or high levels of coronavirus transmission, and it only applied to evictions based on nonpayment of rent due to loss of income. The new Treasury guidance shores up a crucial weakness in the moratorium by allowing tenants to self-attest their income loss and get around non-cooperative landlords, but it still leaves tenants exposed to eviction if their lease runs out and landlords decline to renew it, Dempsky said.

“It’s an enormous loophole,” she said. “Now that Covid has been raging for well over a year, a lot of leases are coming up for renewal, and landlords are looking at those leases very critically.”

Landlords who decide to evict tenants over lease violations or expirations have to weigh the benefit of freeing up the unit for a potential paying tenant against the fact that they would be essentially precluded from collecting the months of back rent they are owed. 

“In my opinion, we’ve been turned into de facto shelters with no compensation, and I don’t think the government really thought through how we keep landlords whole while keeping people in their homes,” Harvey said. 

At the end of July, Pennsylvania had distributed around $86M of the nearly $850M in ERA funds it was awarded as part of the $900M infrastructure bill passed in December, according to Treasury data. The city of Philadelphia has spent about $20M of the $47M in federal funding it received from the first ERA package, though before April, it had attempted to circumvent the issue of absentee or unwilling landlords by sending money directly to tenants. No data is yet available on how much of the $21B in additional rental assistance allocated by the American Rescue Plan in April has been spent by states and municipalities. 

Anecdotally, relief applications are being processed fairly quickly in Philly’s suburban counties, giving cause for optimism that the program could resolve a fair number of cases before the end of the current moratorium, Dempsky said.

In Philadelphia, the picture is not as clear. Oller said that application status updates are coming more consistently and that the pace of payouts has increased, while Harvey has been waiting four months and counting for 12 of the 13 applications his tenants have filed to even be processed, while receiving money for only one.

“At this point, I’m not very optimistic,” Harvey said when asked if he believes the ERA funds will arrive before the current moratorium expires — something that came true when the moratorium was negated Thursday night. “Maybe I’m next in line, but it’s been four months and there’s no way to know what’s going on, because if you call to check, you’re on hold for a lifetime.”

The 48 hours before the new moratorium was implemented suggest that there will be another flood of evictions in Philadelphia now that it is over. Some judges may still order landlords to wait until outstanding applications are processed on the grounds that the financial hardship is being addressed, Dempsky and Bober said. That would come down to interpretation, since it isn’t explicitly stated in the CDC’s order, and if a judge takes the harsher view, there is little reason to believe an appeal would hold up, Bober said. Landlords have become resigned to the fact that they don’t know what will happen next week, let alone on Oct. 3, Oller said.

“Landlords understand now that the goal posts will keep getting moved,” Oller said. “Implementation of [Philadelphia] city rules, between the court system and city council, keeps changing. A lot of landlords are trying to figure out what’s right and what’s wrong, and I don’t know who knows.”

If a new moratorium is enacted or if a judge forces landlords to wait for rent relief to arrive, it will mean more time where landlords are forced to pay bills and taxes on properties that don’t produce any income. That will disproportionately affect smaller landlords, who are more likely to own naturally occurring affordable housing. Until more rent relief arrives, there are no answers for landlords who own a handful of properties or fewer.

“I don't think the landlords are villains here, especially not the smaller landlords,” Dempsky said. “I’ve had landlords I faced in court breaking down in tears because their few properties are their source of income, and they’re at risk of losing their own homes. And there’s no recourse for them.”