“Housing is a necessary of life.”

United States Supreme Court

Block v. Hirsch, 256 U.S. 135, 156 (1921)

(per Justice Oliver Wendell Holmes, Jr.)

 

Covid-related eviction concerns increase as courts reopen

 

Tens of millions of American renters and homeowners—including many of the nearly 40 million newly-unemployed workers and their families (as of late May 2020)—predictably will be unable to afford full rent and mortgage payments for months, or even years, after the Covid-19 pandemic ends. Those workers must also strive to meet other crucial needs, such as keeping sufficient food on the table and providing health care protection for their families.

The 120-day federal eviction moratorium, which is in effect until July 25, covers only about 28 percent of America’s 43 million renters. The federal foreclosure moratorium has been extended through at least June 30. However, it covers only 37.5 million of the nation’s 80+ million homeowners. Thus, those federal moratoriums apply to less than 40% of the nation’s housing units.

Renters, and homeowners with mortgages, who are not protected by those moratoriums must seek protection through other laws, including state and local laws. It is important for renters to understand the eviction rules of their state and local government and the status of their courts (many of which are reopening or never closed).

For a preliminary report on Covid-related eviction and foreclosure moratoriums, tenant protections, and courts’ current status, please click on AS COURTS REOPEN, EVICTION CONCERNS INCREASE.

 

To see if your building qualifies for the federal moratorium, you may visit

the list of Multifamily Properties Subject to Federal Eviction Moratoriums

created by the National Low-Income Housing Coalition (NLIHC).

 

For a comprehensive summary of tenant protections by state (including protections

during each step of the eviction process) you may visit

the Eviction Lab at Princeton University’s Housing Policy Scorecard.

 

For a comprehensive list of Covid-related eviction protections enacted by cities,

towns, and villages in the United States, you may visit:

National League of Cities’ COVID-19: Local Action Tracker.

 

For an up-to-date list of what each state’s court system has decided about reopening

(that is, allowing in-person hearing and trials), you may visit:

National Center for State Courts, Coronavirus and the courts, which provides an interactive look at current state court restrictions and plans to resume operations; or

Ballotopedia, Court closures by state webpage, which includes a chronological account of court closure decisions by state.

 

Please note that the information found in all databases linked to this article

may not be fully up to date, as the situation changes regularly.

 

 

Federal and state governments have authority to prohibit evictions and foreclosures temporarily, and to mandate temporary reductions to rent and mortgage payments of affected tenants and homeowners, during Covid-19 emergency

Courts can protect affected tenants and homeowners by upholding legal defenses to the effect that full payments have become unduly burdensome for them, and thus impracticable

Forgivable government loans also may help tenants and homeowners through emergency

 

The national emergency due to the Covid-19 coronavirus pandemic has led to extraordinary federal, state and local actions. Among them are unprecedented, temporary measures to prevent tenants and homeowners being evicted or suffering foreclosure due to the sudden, massive economic dislocations caused by the pandemic.

Those measures are temporary and incomplete, however. Many Americans predictably will be unable, for a much longer time, to afford full rent and mortgage payments and still meet other crucial needs, such as sufficient food and health care for their families.

Such economic concerns are a major factor behind calls to reopen non-essential businesses and loosen other restrictions that have been ordered by federal and state governments. By mid-May, partial reopening was proceeding in many states, although many health officials continue to warn that reopening too soon may cause a new spike in Covid-19 infections and deaths and delay full economic recovery.

The financial concerns of those who have lost jobs and/or other basic income sources could be reduced a great deal, if federal and state officials exercised their well-established authority to enact emergency, debtor-relief legislation. For example, legislation could permit tenants and homeowners to pay only what they are reasonably able to pay, for as long as their ability to pay is seriously impaired due to the pandemic.

That kind of legislation would be consistent with principles of modern contract law, and it could ensure that tenants, homeowners and their advisors are aware of their legal rights. In fact, debtor relief legislation could protect landlords and lenders in the same way, where their ability to pay their own creditors is seriously impaired by the pandemic.

A similar result could be achieved through forgivable government loans to individual and business debtors, as noted by nationally-recognized housing economics expert William A. Fischel (who is a member of EHI’s Advisory Committee). That approach would enable debtors to refinance their contract obligations (including leases, mortgages, and other real estate-related loans) at very low interest rates for the duration of the pandemic. Furthermore, such government aid could promote the nation’s general economic stability and recovery.

Federal authorities such as the U.S. Treasury and the Federal Reserve Board are the best institutions to do this, according to Prof. Fischel, “not least because this spreads out the cost of the bailout to taxpayers generally. Saving the economy and preventing hardship are everybody's business. . . . A loan whose repayment terms are contingent on need would give immediate relief and allow determination of need to be figured out later.”

This update will summarize three considerations:

1. Governmental authority to enact emergency relief legislation for tenants and homeowners in particular
2. Emergency actions already taken in response to the Covid-19 pandemic—and the limitations of those actions, and 
3. The contract defense of Impracticability (or Impossibility) of Performance, which can excuse failure to pay the full amount when due under a contract—if the debtor’s ability to pay has been impaired by a reasonably unforeseeable event occurring after the contract was made (such as the Covid-19 pandemic).

Emergency authority to modify rent and mortgage payment requirements

The federal and state governments have ample legal authority to shield renters and homeowners from adverse actions based on their failure to make full rent and mortgage payments, where those payments become unduly burdensome due to a public emergency such as the Covid-19 pandemic.

For example, the U.S. Supreme Court has upheld the constitutionality of a state’s emergency housing statute that prohibited eviction of tenants for two years, in numerous cities of the state, provided that the tenant paid “a reasonable rental, to be determined by the courts[.]” Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242, 243 (1922). The Court found an adequate basis for the New York legislature’s declaration of a “social emergency” which constituted a serious threat to the public welfare in those cities.

In that case, the Court relied on its previous decisions that in such a temporary emergency, housing may be “clothed . . . with a public interest sufficient to justify restricting property rights” of the buildings’ owners, to the extent done in the statute. Id. at 247, citing Block v. Hirsh, 256 U.S. 135 (1921); Marcus Brown Holding Co. v. Feldman, 256 U.S. 170 (1921). The same rationale has been applied to mortgage-related regulations of building-and-loan associations. Veix v. Sixth Ward Bldg. & Loan Ass'n, 310 U.S. 32 (1940). See also, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 440 (1982) (summarizing those and other relevant Supreme Court decisions).

The National Emergencies Act, 50 U.S.C. §§ 1601-1651, sets forth procedural requirements for the President’s exercise of temporary, emergency powers. Since enactment of that statute in 1976, Presidents have declared a national emergency 56 times. The latest is President Trump’s declaration regarding the Covid-19 outbreak, issued on March 13, 2020 (85 Fed. Reg. 15337).

The emergency powers that Congress has authorized the President to use include imposing temporary wage and price controls—including rent controls—nationwide (President Nixon, in 1970; President F. D. Roosevelt, 1942). State governments have comparable authority to protect their state’s citizens.

Recent governmental actions to provide relief to tenants and homeowners—and limitations of those actions

The key federal action so far is the CARES Act, enacted on March 27. It aims to ease the burden of rent and mortgage payments for people adversely affected by the Covid-19 emergency. Among the CARES Act provisions:

• Every American adult with an income of $75,000 or less is to receive $1,200 in direct, financial relief as soon as possible—plus $500 for each child;
• Unemployment insurance coverage and time limits have been greatly expanded; and  
• There is a 120-day moratorium on evictions and foreclosures involving any property that is covered by federal housing programs generally, or that has a federally-backed mortgage loan.

However, that CARES Act help is limited and temporary. For example:

• Many residential mortgages are not federally backed, and thus are not subject to the CARES Act moratorium. It often will be difficult for tenants to determine whether rental properties other than public housing or housing voucher properties are covered by the CARES Act.
• That Act does not affect the amounts that are due under the terms of rental and mortgage contracts. As things stand, after 120 days—even as to homes covered under the CARES Act:
  • Landlords would be permitted to pursue evictions against tenants who are not fully caught up in rent payments by then; and
  • Mortgage lenders would be permitted to pursue foreclosures against homeowners and landlords who are not fully caught up in their mortgage payments by then.

Many states and cities also have paused evictions and foreclosures, even as to properties not covered by the CARES Act. Local codes or orders may provide additional remedies.

However, those actions generally have not affected the payment requirements in the underlying rental and mortgage contracts. Also, many of the state and local actions are set to end when the courts reopen. To bring order out of the current chaos regarding tenants’ and homeowners’ payment obligations, EHI urges the drafting of legislation clarifying their rights to reasonable limitations on their payment obligations, in light of the pandemic.

Impracticability defense to full rent and mortgage payments

Among the possible sources of help to tenants and homeowners whose ability to pay according to their contracts’ terms has been impaired due to the pandemic, is the contract defense of “Impracticability of Performance” (originally “Impossibility of Performance”). Under that doctrine, failure to pay the full amount called for by a rental agreement or mortgage, when it comes due, may be excusable—if that payment was impracticable for the tenant or homeowner, because of a reasonably unforeseeable event occurring after the contract was made.

The Covid-19 pandemic seems to be a textbook case of a reasonably unforeseeable event intervening after the creation a rental contract or mortgage—a force majeure (“superior force”)—that justifies modification of the payment terms where they have become unduly burdensome. The Impracticability of Performance defense may be invoked even if there is no provision in the contract on the subject.

See, e.g., Opera Co. of Boston, Inc. v. Wolf Trap Foundation for Performing Arts, 817 F.2d 1094, 1097-1102 (4th Cir. 1987) (discussing the history and evolution of the “impracticability” doctrine). See generally, e.g., Restatement 2d of Contracts, §§ 261, 269, and 270 (1981) (discussing effect of total, temporary, or partial impracticability of performance by a party to a contract). (The U.S. Supreme Court treated Restatement § 261 as authoritative in a case involving contract rights of federal savings and loan associations—whose function is to provide citizens with affordable housing funds. U.S. v. Winstar Corp., 518 U.S. 839, 904-910 (1996) (plurality opinion, per Souter J.). Id. at 911 (Breyer, J., concurring).) 

Of course, other means of maintaining housing stability—such as forgivable government loans (as outlined by Prof. Fischel and summarized above) to tenants, homeowners, and even landlords who are suffering financial hardship—may be at least equally effective and also may better promote the nation’s general economic stability and recovery .

The Equitable Housing Institute (EHI) believes that, in any event, tenants and homeowners adversely affected by the national emergency may not lawfully be forced to make full rent or mortgage payments, if doing so leaves them without enough money to provide for food, health care, and other necessities. (Please note that this discussion does not constitute or replace professional legal advice. EHI does not provide professional legal advice.)

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Despite the general recognition of the crucial importance of a good home to human development, tens of millions of low- and moderate-income Americans do not have the opportunity to buy or rent decent housing in wholesome neighborhoods. 

Exclusionary governmental housing practices (“regulatory barriers to housing affordability”), such as exclusionary zoning, are a major part of the problem. "State and local regulations are among the principal culprits behind the nation’s persistent affordability problems,” according to the Harvard University Joint Center for Housing Studies. For more about those regulatory barriers, please click on EXCLUSIONARY HOUSING PRACTICES.

The Equitable Housing Institute (EHI) is a charitable organization that focuses on eliminating exclusionary housing policies in the United States, in order to reduce homelessness and poverty. EHI is the only national organization focused primarily on removing those barriers for all low- and moderate-income Americans. For more, please click on ABOUT EHI.

 

MORE EHI ARTICLES

EHI issues initial recommendations for statute to ban exclusionary housing practices comprehensively

 

Major reform of land use regulations is needed, in order to combat exclusionary zoning and other economically exclusionary housing practices. There is an emerging consensus to that effect among housing policy experts, economists, and even Presidents of the United States—across the political spectrum. (For more about that virtual consensus, please click on EMERGING CONSENSUS ON REGULATORY BARRIERS TO HOUSING AFFORDABILITY.)

In response, EHI issued a report in December 2019 that contains its initial recommendations for a new statute that would ban exclusionary and discriminatory housing practices comprehensively—including economically exclusionary housing practices. Such a statute could be enacted by any state, or by the federal government (in a slightly different form). To access that report, please click on TOWARD A COMPREHENSIVE BAN ON EXCLUSIONARY HOUSING PRACTICES.

EHI’s report summarizes some major problems created by economically exclusionary housing practices. For example, they:

• Play a primary role in Americans’ mounting problems with housing affordability,
• Seriously aggravate the increasing residential isolation of Americans into “rich” and “poor” neighborhoods—cutting against efforts to reduce residential isolation of minority groups (most members of which are on the lower half of the income and wealth spectrums); and
• Interfere with interstate commerce and the nation’s economic growth because, for example, their use in wealthier states adversely affects mobility and productivity among low- and moderate-income Americans in other states as well.

The statute that EHI envisions would expand protections against housing discrimination beyond those in the Federal Fair Housing Act (42 U.S.C. §§ 3601 et seq.) which is the basic, federal housing discrimination statute. That statute does not address economic discrimination generally. It addresses discrimination based on race, color, religion, sex, handicap, familial status, and national origin.

EHI’s report concludes that the approach of the Federal Fair Housing Act shows some promise as a model for a comprehensive ban on exclusionary housing practices. Studies show that since creation of that statute in 1968, racial isolation in housing—notably of African-Americans from whites—has been decreasing steadily and substantially in each decade, in the nation overall.

Among the strengths of that statute are its specific definitions of prohibited conduct, and its strong enforcement provisions. The statute may be enforced through legal action by the Justice Department, and by victims of violations, as well as by the U.S. Dep’t of Housing and Urban Development (HUD). A variety of strong remedies are authorized where violations are found.

EHI also analyzes the prominent, time-tested, state statutory approaches in Massachusetts, New Jersey, California and Oregon. Each of those statutes introduced bold, innovative and helpful features, and each of them has been credited with leading to substantial increases in the amount of housing in the state that is affordable to low- and moderate-income people.

However, those state statutes have not been able to prevent worse-than-average housing affordability problems in their states. None of those statutes includes an outright ban on exclusionary housing practices.

Thus, none of those statutes appear to offer a sufficiently reliable model for minimizing those practices comprehensively, statewide or nationwide. Nor do any other state statutes of which EHI is aware make a comprehensive ban on exclusionary housing practices unnecessary. For more, please click on TOWARD A COMPREHENSIVE BAN ON EXCLUSIONARY HOUSING PRACTICES.

 

Rapidly growing Loudoun County, in Northern Virginia, approves new Comprehensive Plan with much more housing than previously envisioned—as EHI urged

 

On June 20, 2019, Loudoun County, Virginia’s governing body (the Board of Supervisors) approved the first Comprehensive Plan in 18 years for that that burgeoning, outer suburb of Washington, DC. The amount of new housing that should be planned for was among the chief sources of debate during the 3½-year planning process, which included more than 100 public meetings. However, the final Plan (which covers the period to 2040) appears fundamentally consistent with the expanded housing demand forecasts by the County’s Planning Commission and planning staff, as well as outside experts—including EHI.

According to those forecasts, the county will need much more new housing than previously envisioned, in order to balance the tremendous job growth there by 2040. Loudoun anticipates about 110,000 new jobs by then—almost a two-thirds increase from 2015.

To balance that job growth, about 73,300 new housing units would be needed by 2040, based on the commonly-used standard of one suitable housing unit for approximately 1.5 jobs in the community. However, the county’s official housing forecast had been for only 45,800 new housing units—about 62.5 percent of that amount.

Failure to balance Loudoun’s enormous job growth with enough housing growth would lead to problems such as increased traffic congestion, development sprawl, loss of open space, housing price escalation, residents living in poverty, and perhaps even more homelessness—in Loudoun County and the Washington, DC, region.

Under Loudoun’s new Comprehensive Plan, the new housing will be concentrated in the urbanizing Eastern end of the county, near Dulles International Airport and the county’s two future Metrorail (commuter rail) stations. A substantial portion of that housing will be affordable to low- and moderate-income people, under Loudoun County policies.

Loudoun’s comprehensive planning process was spearheaded by first-term Board Chair Phyllis Randall. The county’s Planning Commission came out strongly for meeting housing needs, in its Draft Comprehensive Plan transmitted to the Board in March.

EHI has been involved in Loudoun’s housing planning for four years. EHI’s in-depth report on Loudoun’s Metrorail-related housing needs was submitted to the members of the current County Board at the beginning of their terms, in January 2016. EHI’s President, Tom Loftus, has been a member of the Loudoun County Housing Advisory Board since 2017.

EHI submitted written comments to the Board as part of the public hearing in April 2019. To read them, please click on EHI COMMENTS TO LOUDOUN BOARD ON 2019 COMP PLAN. To read EHI’s previous report mentioned above, please click on LOUDOUN’S METRORAIL-RELATED HOUSING NEEDS (2015). For further background, please click on EHI's other Loudoun articles, such as LOUDOUN COMP PLAN HOUSING ISSUES (Dec. 2018).

Pursuing “win/win” solutions with current residents, to resolve concerns about permitting needed, new housing in their area

 

Residents’ resistance to permitting new housing in their area is probably the chief, underlying obstacle to creating enough housing in the right places, suitable for the low- and moderate-income people who need it. That resistance—often called NIMBY (“Not In My Back Yard”) sentiment—is quite powerful, because the local officials responsible for decisions on housing issues are either elected by those residents, or appointed by elected officials.

Any new housing development, or any other land use that has potential side-effects on existing residents, will get a predictable response from those residents: “How will the development impact me and my family?”

Residents in the area may have a myriad of concerns. Typically, among the biggest worries are the risks of increased traffic congestion, loss of open space, lower property values, and/or higher taxes resulting from the development. Such adverse impacts generally can be avoided, but doing so takes careful planning and follow-through.

The surest way to overcome the NIMBY syndrome is to make sure that the vast majority of people in the area understand that the benefits that will flow to them and their community from the new development will outweigh whatever costs and impacts they are likely to experience. It appears that such a “win/win” solution often can be achieved through: (1) sufficient analysis and explanation to residents of the actual facts, combined with (2) a reasonably supportive attitude by the local government.

For example, the local government often can provide assurances pro-actively, early on, that it can commit adequate funding to make the needed infrastructure improvements (roads, schools, and other public services)—without heaping new tax burdens on current residents. The necessary public funding usually can be supplied from the increased tax revenue generated by new development overall, including commercial growth (such as new office, retail, and industrial development). Commercial growth typically provides a great deal of net tax revenue to the locality.

For more about strategies to address residents' concerns, please click on PURSUING “WIN/WIN” SOLUTIONS TO MEETING HOUSING NEEDS.

 

• EHI recommends “leveling the playing field” for victims of economically exclusionary housing practices, by authorizing courts to require reimbursement of their litigation expenses by violators. For more, please click on please click on LEVELING THE PLAYING FIELD FOR VICTIMS OF UNLAWFUL, EXCLUSIONARY HOUSING PRACTICES.
• EHI celebrated its significant achievements, both locally and nationwide, on its 10th anniversary--September 19, 2018. For more, please click on EHI's FIRST TEN YEARS. 
• The U.S. Supreme Court has ruled that the federal Fair Housing Act prohibits housing practices that have a disproportionately adverse effect on members of minority groups—unless those practices have a justifiable purpose and properly limited scope. For more, please click on SUPREME COURT DISPARATE IMPACT DECISION.
• Major report by McKinsey Global Institute finds that overcoming exclusionary housing policies is the most critical step in providing affordable housing--in the United States and around the world. For more, please click on McKINSEY REPORT ON MEETING GLOBAL HOUSING AFFORDABILITY CHALLENGE.
• EHI memorandum summarizes how exclusionary housing policies aggravate housing problems that have been linked to increased developmental problems among low-income children. Among those problems are children's health (physical, mental and emotional), safety, educational achievement, and general cognitive and behavioral development.. For more, please click on CHILDREN'S DEVELOPMENT & XHPs. 
• Inside Philanthropy urges funders to support EHI’s efforts to break the grip of exclusionary zoning and other exclusionary housing policies on housing opportunities for low- and moderate-income people. For more, please click on Inside Philanthropy urges funders to support EHI. 
• EHI letters printed by Washington Post highlight serious, adverse effects of local housing and land use policies For more, please click on EHI LETTERS IN WASHINGTON POST. 

• EHI analyzes whether Congress has Constitutional authority to prohibit unwarranted state and local regulatory restrictions on housing supply, if those restrictions affect interstate commerce—as a number of recent studies indicate they now do. For more, please click on INTERSTATE EFFECTS OF REG. BARRIERS (2017).

• EHI issues analysis of role of governmental land use planning in housing shortages and excessive costs. For more, please click on EHI ANALYSIS OF JOBS-HOUSING REPORT

 

Equitable Housing Institute

P.O. Box 1402