Eviction moratorium and unpaid rents, are people doomed?

In general, I think the eviction freeze was a bad idea, although well intended. Most people will have dig themselves a hole that they just won’t be able to get out of. Unlike a car payment or mortgage, you can’t just push the payments forward and take longer to pay off the car or mortgage. If someone owes over a year of back rent, it’s going to be almost impossible for them to pay it all back unless their financial situation changes drastically for the better.

Someone with a rent of $1000 per month will end up owing at least $15,000 depending on when they stopped paying rent. I hope there aren’t many people in this situation, but I fear that there are.

While there are feel good stories about emergency aid to help pay back rent, I don’t think it’s going to be nearly enough and will probably be heavily slanted towards blue states.

I also have a feeling that many landlords are not going to be willing or able to even work with payment plans for unpaid back rent once the moratorium is over, the rental market is completely skewed right now and they can quickly re rent the units. Also, I’d think the banks would be breathing down their backs if it’s a new property that the landlord still owes on.

Is there any solution? Or are a bunch of people going to find themselves not only evicted by the end of the year, but also in court for payment of back rent.

Suppose the landlord is owed $15,000. If he evicts the tenant then I think we can assume this $15,000 is totally gone. But if he makes a deal with the tenant to pay $1200/month (instead of the usual $1,000) he will gradually get the money back. So your scenario won’t always happen.

I think it’s going to be a huge problem. I think that a lot of people think, pretend to think or are treating this time as if the rent is being waived.
Near the beginning of this I suggested that if the government was going to put a moratorium on evictions due to unpaid rent, they should waive the rent altogether, but at the same time, be paying the landlords the lost income. Or, at the very least, forced the banks to defer their mortgage payments (without accruing interest) during that time.
This proposal could be tweaked such that it would only waive rent (and reimburse the landlord) for certain tenants, for example, those that had a loss of income.

I think that will be the case for a lot of people that get/got their jobs back and can now cover the current and back rent. Though keep in mind, at $200/mo, it’s going to take over 6 years to get their money back. But I know that was just an example number.
However, a lot of people, I think, are going to see that $15,000 debt and just ignore it, walk away from the lease and hope it doesn’t follow them. Though they’ll almost certainly end up with an eviction on their record and possibly debt collectors hounding them for the next few years.

And, to make things worse, someone with a $1000+/mo apartment, IMO, is a lot more likely to do what they can to work with the landlord to chip away at that $15,000 debt than someone in a $500/mo apartment with a $7500 debt. An ex-employee of mine was (is?) living in run down apartment for $125/week. I’d be surprised if he’s ever had more than a thousand dollars in his bank account (and he’s over 50 years old). I don’t know what he spends his money on, but he lives paycheck to paycheck. When presented with a $7500 back rent, he’d just move out, ignore the consequences and blame someone else.

In fact, this is the very reason myself and most other employers opted not to defer collecting and paying the employee’s portion of certain payroll taxes. Our fear was that a lot of employees wouldn’t understand why those same taxes roughly doubled the following year as we, the employers, were now collecting two years worth of taxes in one year.
Furthermore, the way the IRS set it up, even though it was the employee’s portion of the taxes and even though the employer was the one the one that was supposed to be collecting it, it was ultimately the employer’s debt. If an employee were to quit before it could be repaid, the employer would owe that money back.
I never did figure out why they set it up that way. I would have been happy to not collect the taxes if it just meant the employee had to pay it back when they filed their return and leave me out of it.

Maybe. Depends on how financially stretched the tenant is. If they make a month or two of the extra rent and then the car makes a funny noise and now they’re late even trying to pay the regular rent…

So, if the landlord has discretion, they might be able to work with some tenants. The correct business decision for other tenants might be to evict and go to court for the back rent, using the threat of wage garnishment if necessary.

The landlord will always have the discretion to do whatever they want, right? But I still think a lot of people are going to be out on their asses real soon. I think that if an applicant walks in to the office, is making more money than their average tenant, didn’t lose their job during the pandemic and otherwise seems reliable, many landlords will choose to evict someone that owes 15 months of back rent (and maybe has otherwise been a thorn in their side) to sign a lease with someone that is considerably less likely to miss a payment.

How about this to slow down the evictions. Require landlords to allow tenants up to 5 years to repay back rent before involving the legal system or debt collectors. I have some thoughts on that, but I think it could work, especially if the gov could give the landlords a low interest loan to get over the hump. Similar to an EIDL.

I wonder if it’ll depend on if tenants were at least making partial payments and kept the landlord in the loop.

Also, if the tenant who didn’t have enough to make rent is getting Grubhub delivered 5 days a week, that might play into the decision as well.

That would be their discretion then. Surely someone that paid what they could, even if it was considerably less than the agreed upon rent would be less likely to be evicted than someone that paid nothing, all else being equal.

Same with the grubhub person. A landlord might be annoyed that the person can spend 50 or 100 dollars a week on food but still claim they can’t pay any rent. But the landlord might also not realize that a friend or relative is paying for the food or they’ve been putting on a credit card and evict them anyway.

But still, unless the government (and I’m not saying they should/shouldn’t) forces landlords to accept some type of payment plan before beginning any type of legal proceedings or debt collections, I think a lot of people are going to get evicted very quickly.
It’ll be very easy for the landlords to get rid of problem tenants that, in the past, never quite crossed the line far enough to evict. Whether they were getting noise complaints about them or getting them to pay rent was like pulling teeth or whatever. Now all the landlord has to do is show the judge 15 months of unpaid rent and out they go.

CA is shooting for paying all of it for low income tenants. But you’re right that does nothing for folks in Arkansas or just-over-low-income people who nonetheless fall down a rent debt crack.

Maybe they should make it that; you can’t evict anyone making payments toward the debt (say minimum 20% of one months rent?), AND if you choose to evict, it effectively clears their debt.

At least that way the people getting evicted get their indebtedness cleared. It’s still a bummer, but that would ease the pain a bit anyway!

Who pays it?

I can’t see how most tenants will be able to pay back the deferred rent. Any tenant who would have that much extra cash would likely move into a nicer place. One option might be for tenants to say they’ll walk away if the landlord forgets the rent to avoid the cost and hassle of eviction. I suspect that even if they are evicted, future landlords won’t treat it as a standard eviction. Pretty much everyone is going to understand that even the best tenant isn’t going to have the means to pay back 12+ months of deferred rent.

One complicating factor is the red-hot housing market. A landlord may decide to just sell the place and take the profits from the rise in the housing prices. And in some areas, the rental market is red-hot as well. The landlord may be better off with a new tenant who is paying much higher rent.

This is likely not legal. The government can’t just declare that a specific type of legal debt is invalid and sucks to be you, landlord. Presumably they could have some kind of offer where the government pays off a portion of the debt in exchange for forgiving the rest, but it would be voluntary, unless the tenant goes through with bankruptcy.

Certainly the federal government can’t. There is a constitutional clause about impairing the obligations of a contract. Maybe some states can.

NAL, but the relevant constitutional clause is the Fifth Amendment, which states “nor shall private property be taken for public use, without just compensation.” That clause was incorporated against the states in the 1890s.

The debt is private property. The government can’t just take it away without paying for it.

That clause actually starts “No State may…”, so it definitely applies to the states, but after a little reading, I think it doesn’t really have anything to do with this issue. I think it has more to do with a state not being able to pass a law outlawing a contract that it has already become a party to.

It is exactly the opposite. No state can impair the obligations of a contract. The feds have that power, which is why bankruptcy is sole province of the feds. When a debt is discharged in bankruptcy, that is the very definition of impairing the obligation of a contract.

However, it would be an interesting takings clause issue to deny a landlord all economic benefits of his real property by forgiving the tenant’s debt through law.

So exactly one month ago the Supreme Court issued a decision stating that the CDC eviction moratorium could not be extended beyond July 31 without specific Congressional action. Biden doesn’t bother to do anything until today when he asks Congress for this action:

It’s pointless to extend it now, let landlords begin the process of at least evicting the worst of the worst.

It’s almost August and in cold weather climates, there’s not as many new potential tenants from about Thanksgiving until St Patrick’s day

New potential tenants, some with evictions for non-payment, due to Covid and not simply their own fault, on their records.

As well as people who are simply moving to a new city for a job and need a place to live.