Supreme Court Sides with the Real Estate Industry
The Supreme Court has ruled against the federal eviction moratorium issued by the Centers for Disease Control and Prevention (CDC), siding with real estate industry advocates and ending a long controversial policy.
In the 6-3 decision on Aug. 26, the country’s highest court remarked that the order was unlawful and the CDC had exceeded its authority.
The latest CDC eviction moratorium was issued on Aug. 3 and was intended to be in effect until Oct. 3 for all residential properties in counties experiencing a substantial and high level of COVID-19 transmissions. This covered most of the country as the Delta variant had already began spreading. The prior CDC eviction ban had expired on July 31.
Real estate industry organizations and advocates have been staunchly opposed to the federal eviction moratorium since last year, and instead urged the federal government to focus on alternate solutions, such as rental assistance, to help tenants struggling from the effects of the virus.
Between the second and third COVID-19 stimulus packages, more than $50 billion has been allocated to states and local government agencies for rental assistance, rental arrears and homeless services. However, there have been issues with the distribution of the funds from the Emergency Rental Assistance Program in many states.
Multifamily Real Estate After the Ruling Against the Federal Eviction Ban
Congress ordered the first federal eviction ban for the COVID-19 pandemic as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. That first ban was in effect for 120 days, and after it expired, the CDC created its own eviction ban under a statute that allows the agency to implement certain regulations to prevent the introduction, transmission, or spread of diseases.
The CDC’s ban has been extended a number of times afterward, but only once by Congress as part of the second COVID-19 stimulus package. Other times, the director of the CDC issued the extensions. Real estate advocates asserted that the statute shouldn’t allow such authority and the Supreme Court agreed in June to keep the eviction ban in place until July. However, Justice Brett Kavanaugh, who cast the deciding vote, stated that Congress would need to pass legislation to extend the ban past July. The Supreme Court reaffirmed this position in its latest judgement lifting the current CDC-issued eviction ban. Now that the ban has ended, there’s a possibility that Congress may create a new eviction moratorium.
While the CDC’s federal eviction ban has been ruled out, some individual states, such as New York and California, and some localities, like Washington D.C., still have active local eviction moratoriums in place — although a majority of states currently do not have eviction bans in effect.
Additionally, multifamily property owners with Fannie Mae or Freddie Mac-backed mortgages who elect to receive mortgage forbearance must agree to not evict tenants solely for the nonpayment of rent, not charge late fees or penalties for nonpayment, and allow flexible repayment options instead of requiring a lump sum. This policy was extended in June and is in effect until Sept. 30, 2021.
Whether Congress creates a new federal eviction ban is impossible to know at this point. Either way, emergency rental funds from the stimulus packages are still being doled out to aid renters, and the economy is still improving from the effects of the COVID-19 pandemic as businesses have reopened and more people are going back to work, both of which are tailwinds for the multifamily real estate industry.