The end of the COVID-19 eviction ban could be a positive development for HOAs and condo associations in South Florida, but it also brings uncertainty.
On August 1, 2020, the temporary moratorium on evictions for unpaid rent throughout Florida will end.
The conclusion of the eviction ban seems like a positive for HOAs and condo associations, as least on the surface, because they can begin removing tenants who aren't meeting their rent obligations and searching for new occupants who will pay.
Things aren't as simple as they seem, however, because unemployment in Florida remains high. With the Federal Pandemic Unemployment Compensation program that provides an extra $600 per week to end on July 31, many South Florida residents won't have the means to pay.
Estimates by the National Multifamily Housing Council suggest that 95.9% of apartment tenants made their June payments by the end of the month, only a slight decrease from the same month in 2019.
In Florida, however, more than 33% of adults reported missing their rent or mortgage payment in June or say they'll likely miss it in months ahead. The current unemployment rate combined with the end of the stimulus package could place a lot of pressure on the housing market, putting landlords and HOAs in an uncomfortable position.
Here is some information on navigating the lift on COVID-19 eviction bans starting on August 1.
What this means for landlords
Once the moratorium ends, landlords, HOAs, and condo associations can begin evicting renters who haven't paid their rent. They can also collect rent from previous months that they haven't received, although this will likely prove troublesome.
This development is generally helpful for homeowners because they'll have some legal recourse for tenants not paying what they owe.
Landlords should be aware that the ban's conclusion doesn't necessarily mean that they'll have money coming in again, as they'll have to find new tenants after filing an eviction lawsuit, all of which could take some time.
The end of the order also lifts the limitations on foreclosures. Ending the ban on foreclosures could leave homeowners in a tight spot, especially if they haven't received rent from their tenants for a few months.
Keep in mind that the state eviction ban only applies to private housing with a private mortgage. The Federal Housing Finance Agency won't allow foreclosures or evictions on single-family homes with federally-backed mortgages from Freddie Mac and Fannie Mae until at least August 31.
Working together with tenants
If everyone who currently owes rent money ends up evicted at once, we could end up with a significant housing crisis and an unparalleled amount of homelessness.
As of June, the U.S. Bureau of Labor Statistics reports a 10.4% unemployment rate in Florida, up from 2.8% in January and February.
These numbers suggest that many people remain unemployed because of the COVID-19 crisis and, therefore, it could be challenging to find new tenants to move into a home or condo in the coming weeks.
As a result, HOAs and condo associations should attempt to work things out with their renters to recoup at least some of the amount owed while keeping these people off the streets.
If you evict your tenants, you'll likely never see any of the money that they owe, but by coming to a settlement and letting your renters stay, you could recover some of it. This effort will also save you from having to find new renters in a challenging financial environment.
You can start the process by reaching out to your renters and attempting to strike an agreement. Make sure you get everything in writing and receive the necessary legal advice to protect yourself if things don't go according to plan.
In situations where your renters won't respond to your queries or agree to an amicable compromise, you might have to begin the eviction process.
Filing the paperwork
According to 2011 Florida Statute Title VI § 83.56, you can't forcefully evict a tenant from your property. Instead, you can give a three-day notice to pay rent or quit. If the renter doesn't pay rent or move out at the end of these three days, you can file an eviction lawsuit.
The eviction lawsuit involves registering the necessary paperwork in civil court and waiting for a decision. Once you've won the suit, you can have a sheriff or constable remove the renters, but can't do it yourself.
You must follow the procedures carefully because failure to do so could make the eviction invalid. Some landlords have already filed eviction paperwork in court, but it's best to wait until the moratorium ends because we don't yet know how the courts will react to these proactive measures.
Civil court backlog
Another aspect to consider is a potential backlog in civil court once the eviction ban ends. The delay depends on how many HOAs and condo associations cannot reach agreements with their tenants and choose to go through the courts.
If we see large numbers of eviction lawsuits filed, we could end up with a backlog in the courts that will make your wait to get the property back on the market even longer. These delays provide more reasons to reach an agreement with your renters, as there's no way of knowing how long it will take the courts to clear the backlog.
An extension is possible
Of course, there's always the chance that we could see an extension of the moratorium on evictions and foreclosures. Governor DeSantis has lengthened the order twice, with the second occurrence happening just four hours before the ban was set to expire on July 1.
The situation is continuously evolving, so it's best to stay up to date with the most current information and receive advice whenever you don't know how to proceed.
Peyton Bolin is a full-service real estate law firm serving homeowners and condo associations throughout Florida. Contact our team for advice on how to minimize the financial hurdles you'll encounter due to tenants not paying their rent due to COVID-19 and their impending evictions.