Podcast 318: The End of Eviction Moratoriums

A wave of evictions is sweeping across the United States as state eviction moratoriums are steadily being lifted. Will landlords be able to make up for lost rent and what will the future of renting look like?

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Show Transcription:

Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the RentPrep for Landlords podcast. This is episode #318, and on today’s episode, we’re going to be discussing eviction moratoriums ending and what that potentially means for tenants. We’ll also be discussing the confidence levels of real estate professionals with the current real estate market. And last but not least, we’re going to talk about the tenant who took her garden with her when she moved. We’ll get to all of that right after this.

Voice Over: (00:28)
Welcome to the RentPrep for Landlords Podcast and now your host, Andrew Schultz.

Andrew Schultz: (00:32)
All right, without further ado, let’s jump right into our first article. This one’s a little bit on the longer side, but there’s a lot of great information in here. This one’s published by NBC and it’s titled Coronavirus Rent Freezes are Ending – and a Wave of Evictions will Sweep America. This was published on June 22nd, 2020, and written by Emily A. Benfer, hopefully I’m pronouncing that right, director of the health justice advocacy clinic at Columbia law school. There’s a few sections of this article that I pulled out that I wanted to read. Starting here, underscoring, the pandemics immense toll researchers at the University of California at Berkeley Turner center for housing innovation estimate that 50 million renters live in households that have suffered COVID-19 related job or income loss with almost 40% occurring in low-income households. The demand for financial assistance is at an all-time high with 92% increase in daily rental assistance requests and food pantry requests increasing by as much as 2000% in some States in Houston, a $15 million rent fund rent relief fund, excuse me was depleted within 90 minutes of opening.

Andrew Schultz: (01:37)
Renters are stretched threadbare and are taking on the credit card or loan debt just to keep their housing. It’s not surprising then that over 31% of renters have slight or no confidence in their ability to pay next month’s rent. Moving forward in the article now without robust government intervention, the United States can expect an avalanche of evictions that will breed player communities and result in a cascade of additional losses to financial wellbeing, health, and housing opportunities. As a pandemic continues in policy patchwork phrase more and more families will find notices of eviction back to their doors. Sheriffs will forcibly remove them from their homes and their communities. Children across the country will watch as their beds and toys are piled on the curb or locked up in storage. On top of the emotional trauma eviction always leaves physical wreckage in the aftermath, family photographs, unmatched choose beloved childhood books left as trash on the sidewalk, evictions, a jagged downhill slide with no letter back up.

Renters aren’t the only ones feeling the brunt of this crisis. States cities, school districts and landlords are also suffering along with the runners when rent payments stopped. So due to the property tax payments, mortgage payments, building maintenance and employee salaries, declining rent payments are more likely to affect small landlords who like their renter’s lack of financial cushion to write out the pandemic. This type of housing instability is costly for families and society alike, tenant suit for eviction routinely blacklist in the rental market. Even if they ultimately win their cases and eviction also devastates credit scores, eviction almost always leads to a downward move into a more disadvantaged higher crime neighborhood. It also leads to unemployment, residential instability, homelessness, academic decline, and negative health consequences for adults and for children. Numerous studies have shown that eviction results in respiratory diseases increased mortality, depression, and suicidal ideation among other poor health effects, such outcomes, cross communities and tech players far more than the price of solving the housing affordability crisis itself. Yet the heroes act a bill that is endorsed by both housing advocates and property owner associations. And we provide over 100 billion in rent relief, create a national eviction moratorium and extend unemployment insurance past July sits unattached on Senate majority leader, Mitch McConnell does.

Andrew Schultz: (03:51)
So this article has quite a bit to unpack. I actually recommend going and reading through this article in full yourself. If you have an opportunity, just because there’s a lot of information that I had to jump over for time purposes here during the podcast. So for a couple of points worth mentioning after the article here July 31st is right around the corner, which as of right now is the end of the pandemic unemployment assistance, the extra $600 a week. That’s being offered to most of the people who are on unemployment currently that does expire at the end of July. And at that point, I do expect that we’re going to start to see more tenants defaulting on their rent obligations throughout the country. And that is definitely something that we should be looking at and being concerned about. I know that here in Buffalo, as we were doing our June rent collections, we’re starting to notice, you know, a couple of percentage points of difference between, you know, our month over month collections.

Andrew Schultz: (04:40)
And it seems to be for the most part, the same tenants who didn’t pay us in April and may also didn’t pay in June and quickly. It’s starting to become a balance that will likely become insurmountable for them to be able to recover from. And hopefully, it does not wind up in an eviction, but oftentimes when you start to see multiple month balances, that tends to be the way that things go. A couple of ways that we could try to stop this for being a nationwide concern and overall concern. The first thing I think that we should look at is the opportunity of expanding the housing choice voucher program through section eight. I know that at least locally here, section eight, the section agency is who administers the housing choice voucher program. It’s what we commonly refer to as the section eight program here in Buffalo is the HTVs that program might be the opportunity that a lot of tenants need in order to maintain their housing situation moving forward.

Andrew Schultz: (05:34)
And when we’re talking about a, I believe the article mentioned the heroes act was a hundred billion dollars in rent relief, putting a bunch of that money into a housing choice voucher program to expand that effort could go a long way in helping people to maintain their homes. The other thing I wanted to mention as the article calls out, being blacklisted as a result of an eviction, at least here in the state of New York blacklisting is illegal. I want to think that that would probably be illegal in a lot of States, but that was actually codified in June of 2019 with the landlord-tenant law updates here in New York, that putting a tenant on a blacklist after they’ve been evicted is illegal. And as a matter of fact, we aren’t even allowed to use eviction data when we’re conducting our tenant screening any longer here in the state of New York.

Andrew Schultz: (06:16)
So that’s definitely something to keep in mind as well. I think that you’re going to find more and more policies will be created in the more tenant-friendly fashion to help tenants both get into and to maintain housing going forward during, and after this pandemic, you know, something to keep in mind when you’re considering this article is that landlords ultimately want to continue to rent to people who are able to pay the rent. It’s basically how they make their income. It’s how they make their living. It’s how they keep a roof over the tenant’s heads. And in many instances how they keep a roof over their own head. A lot of times the statistic that’s not mentioned in articles like this is that the overwhelming number of landlords are not large institutions with large stockpiles of money. They’re small landlords that own maybe one or two properties.

Andrew Schultz: (07:07)
We, a lot of times we’ll call them the accidental landlord. They inherit a property after a parent passes away, or they wind up having to transfer jobs for work and get stuck with a home in their home city that they ultimately decide to rent out. These are not people who have large sums of money in order to be able to weather a storm like this much, the same way that their tenants do. And the article does mention that, but I wanted to expand on it a little bit that the overwhelming number of landlords well over 75% only own maybe one or two properties. So that is something to keep in mind as well. The landlords are not necessarily the best finance in order to be able to weather these storms either. So I think that there definitely needs to be support on both the landlord and the tenant side in one way, shape or form in order to prevent this from being a much larger issue over the course of time.

Andrew Schultz: (07:52)
Moving on now to something a little bit lighter. This article published by Housing Wire titled Real Estate Investors Feeling Optimistic about the housing market, LendingHome survey finds was published on June 23rd, 2020, and written by Julia Falcon. I’m going to pull some of the stats out of this article here for you, just so that we can get a feel for how people are feeling. There was more optimism than we expected. And we are a bit surprised that Matt Humphrey, co-founder and CEO of lending home, when asked how they thought, how long they thought the pandemic would affect their business. 42% of total respondents said it would be a one to six-month impact while 26%, it would be seven to 12 months. Interestingly 12% said there would be no impact as a result of the pandemic when broken out by type of respondent, 88% of real estate brokers thought the pandemic would be short-lived while 80% of full-time real estate investors and 74% of the part time investors felt the same when asked how positive they were feeling about their businesses. Just over half also said they felt positive about it on a scale from one to five, with one being negative and five being positive. 29% said that they were at a four and 28% were at a five. So to break that down further 59% of full time investors felt positive about the real estate industry while 54% of part time investors and 51% of brokers felt the same way.

Andrew Schultz: (09:17)
So this article is actually pretty interesting because it does show us that there is still a lot of optimism in the real estate market nationwide. I would go so far as to say that I agree. We’re still seeing a very strong real estate market here in the Buffalo region, both in terms of sales. It’s definitely a sellers market here in Western New York. And in terms of rentals, I know that once we were able to start showing apartments again when we got into, I think it was phase two, that we were allowed to start showing apartments. Then almost immediately, as soon as we were able to start renting homes, our inventory started moving quickly. So there was definitely a pent up demand there. And there’s definitely a pent up demand on buyers as well, which is why it’s such a sellers market here in Western New York.

Andrew Schultz: (10:01)
I would say that I still feel very strongly about the real estate market here. I don’t know, as though Buffalo is necessarily indicative of the nation as a whole, but I would say that what we’re seeing here is definitely a strong real estate market. I think that one of the things that helps support the confidence in the real estate industry as a whole is the fact that we’re not in this situation as a result of a failure in real estate. This isn’t like 2008 where the mortgage industry was fundamentally broken and needed to be overhauled from top to bottom, which caused a real estate collapse. This is a completely different situation. And real estate largely has not collapsed. So you may find individual properties or things like that, where there’s an issue, there’s a foreclosure, something along those lines. But when you look at the real estate industry as a whole, there hasn’t been a major collapse or anything along those lines, which I think is helping to steer people toward a more positive mindset when it comes to the real estate industry as a whole.

Andrew Schultz: (11:01)
And I think that that’s something that definitely warrants consideration, as you think about the real estate market moving forward in your market. And for our last new story, we’re going to talk a little bit about the complicated landlord tenant relationship. This is actually posted on cheeseburger.com. Well, I won’t call it a news story here, but it definitely is a, is pretty humorous. And I think that you’ll agree once I get through this, I’m gonna read this one. It’s an entirety. You really need to have the entire article in order to understand what it is that we’re dealing with here. And then afterwards, I’ll cover a little bit about it.

Andrew Schultz: (11:33)
This is looks like it’s originally pulled from a Reddit thread. Am I the plank for bringing my garden with me? When I moved, I’m a female 25 years old and I’ve been running a house since I was 18, approximately seven years when I moved in the backyard was a large piece of dirt, no lawn or anything, just a decently big backyard, a fence all around.

Andrew Schultz: (11:54)
It was cheap, but not great house. I signed because I wanted the backyard space over the past few years, I’ve erected a small garden shed, greenhouse and pizza oven, all transportable planted, lots of vegetable gardens and big transportable garden beds and put down some nice papers and aquaponics set up and generally made the backyard a really green and beautiful place to be. It became the green Oasis that all my friends gathered at a few months ago, my landlord let me know that they were planning to sell. And my final move out day was a week ago when I left, I brought my garden with me to my new place. Nothing in my last backyard was directly planned into the ground and nothing permanent. I dismantled the sheds and greenhouse loaded up all the pots and garden beds onto a truck and cleared the backyard in three days with lots of help.

Andrew Schultz: (12:38)
My former landlords are furious over this and demand that I returned the backyard to the former state. Apparently they’ve listed the house for sale with pictures of the backyard and potential buyers were walking away from the house. When they saw the parent backyard, they’re accusing me of stealing their plants and wrecking the backyard. Legally, I’m fine. My contracts that I could garden, and I have photos from the first real estate walkthrough before I moved in that show, the yard was in the same state as I first found it. Although with more fertile soil now, probably the same real estate agents signed off on my final inspection. And I got my deposit bag. I’ve received mixed responses though because I saw the landlords taking pictures of the backyard before I left, but didn’t make the connection because in my opinion, when pictures of a house have furniture in it, you don’t expect to also get three furniture. Some of my coworkers have suggested that I am the jerk because the house valuation certainly has fallen dramatically because I didn’t tell them I was taking my garden with me. So they couldn’t plan a landscape before lockdown.

Andrew Schultz: (13:38)
So essentially this tenant is trying to determine if they’re the jerk for removing their garden from the home. I believe that this article actually came out of the UK originally. So I’m going to apply some US law and logic to it. I’ll preface this by saying that I’m not an attorney. And it’s just my opinion as to what is, or is not an attachment or a fixture on a home. You’re probably going to, and in a lot of instances, when I’ve seen situations like this occur, it winds up going to an attorney or an arbitrator. And that’s usually how the thing gets decided. So pulling from an article now from the balance.com, with regards to what our house fixtures in real estate, this is actually pulling from the test that the California courts use to determine whether something is a fixture or not.

Andrew Schultz: (14:23)
There is a series of five tests that the California courts use to make that determination and not every test needs to be met. So the acronym is Maria, M A R I A. And that stands for a method of attachment is the item permanently affixed to a wall ceiling floor using nails, glue, cement pipe, whatever adaptability if the item becomes an integral part of the home, it can not be removed. For example, a floating laminate floor is a fixture, even though it’s a snap-together flooring relationship of the parties. If there’s a dispute between tenant and landlord, the tenant is likely to win. If the dispute is between buyer and seller, the buyer’s likely to prevail the intention of the party when the item was attached. When the installation took place, if the intent was to make the item a permanent fixture, for example, a built-in bookcase, that item becomes a fixture and agreement between parties must contain a clause that expressly defines items included in the sale and the ordinary state, all existing fixtures and fittings that are attached to the property.

Andrew Schultz: (15:21)
And that was in quotes. And I know that here locally in the border realtor’s contract that we use when purchasing and selling property in the Western New York region, it actually specifically calls out several different types of fixtures, such as hot tubs and outdoor speakers and things like that may or may not be considered a fixture. So it gets actually addressed right there in the contract. There’s also an item for you to specifically include or specifically excludes certain items when you’re dealing with a situation like this. So if you have, for instance, an above ground hot tub that sits on your deck, you can specify in the contract, whether or not that’s going to be considered a fixture, or if that’s going to be something that is removed with the home. So that’s just something to keep in mind. It sounds to me like this tenant was more or less in the right.

Andrew Schultz: (16:09)
Everything was planted in movable planters and transportable planters. You know, the one thing that I might argue would be the pavers that she put down since they would probably be set into the ground. I would argue that the pavers probably were a fixture at that point, but she does specifically say in the article that everything is in transportable, moveable containers, even the shed, it sounds to me like the shed must have been like a temporary shelter type of a thing or something like that, that she was able to take down and remove when she moved out as well. It sounds to me like the tenant had both before and after photos showing what the property looked like when she moved in and when she moved out, good job on the tenants part on that. So many tenants forget to do that. But it sounds to me like the tenant definitely got one over on the landlord on this one.

Andrew Schultz: (16:55)
I would even say got one over there. The tenant definitely followed the intent of the law when it came to something like this, at least in my opinion. And again, I’m not an attorney, so that pretty much wraps us up for this week. We’ll be back next week with our brand new format that we’re super excited about. So be sure to tune in, if you’re looking to get in contact with us, we can be found online at rent-prep or on Facebook, facebook.com/tenantscreening. I also strongly recommend looking into the RentPrep for landlords Facebook group that can be found at facebook.com/groups/rentprep. You’ll find that there are over 12,000 landlords in that group, and it’s a great place for open discussion. It is a private closed group. So you do have to apply, answer the questions, and then we review those and approve your membership. We try to keep that group just landlords and property managers whenever possible. So that’s why we do the little bit of prescreening before you’re allowed access into there. If you’re looking to connect with me, I can be reached at www.ownbuffalo.com. You can also catch me on Facebook, facebook.com/buffaloforeclosedhomes. Thank you all so much for listening for rent prep.com. I’m Andrew Schultz, and we’ll see you next week.