Read about the Supreme Court decision in Alabama Association of REALTORS® v HHS.
What has struck me about the CDC moratorium is the assumption, and at times the insistence, that landlords are not harmed. Of course they are, as are tenants, when government interferes so broadly with private property rights and right to private contract.
Remember back to March 2020. Within a few hours of the announcement the Country would be in lockdown for 2 weeks, landlords and tenants (both residential and commercial) began re-negotiating rental agreements to accommodate the new reality. By early April 2020, the government had taken a wrecking ball to those two principles and now we have a crisis for tenants and landlords.
Landlords have been required to pay expenses, taxes and provide safe habitable conditions while having their property essentially taken by the government with no compensation.
When WeSERV surveyed our members during the course of 2020, we were informed many times over of landlords who would be forced into financial hardship within 30-60 days without rental income. That did happen and those that have hung on this long face increasing hardships with no consideration for their living circumstances or rights.
According to a June 2020 HUD rental survey, 73% of residential rental properties are owned by individuals and another 16% of rental properties are owned by LLCs. We know a large percentage of LLCs owning rentals are made up of 1, 2 or 3 individuals who choose to establish an LLC for liability or tax purposes. The vast majority of our residential rentals (80% or more) are owned by small investors.
I have always found it interesting the CDC assumes that landlords, whom they financially compromised, will suffer no harm. And that if they are forced to no longer own the property through foreclosure or bankruptcy, nothing unfortunate will occur to them or their families. But don’t you think a more prudent approach would be to ask: “What happens to those families?”
Following the CDC’s own logic in court hearings that tenant evictions should not occur because at some point some evicted person may cross state lines and may have Covid, then the same can be said of property owners: some subset of those distressed landlords will lose ownership and financial stability, Some subset of those people will relocate to other states or regions. And some subset of those people will have Covid. So, there should be rental assistance directly paid to property owners and they should not suffer negative affects from the government’s Covid restrictions such as foreclosure or bankruptcy.
And one would think that if the CDC truly believed the former, they would also believe the latter.
But that is the problem with emotional actions brought on by conjecture without regard to principle. Principles are what are required for good crisis decision making. When emotions run high, limiting the immediate and future negative effects relies on decisions born of rational thought and based on principles already established.
The market was solving the tenant/landlord issues. Individuals were discussing outcomes agreeable to both parties, but government policy decided to favor one party over the other. Enormous personal and financial injury has been done to landlords. We have watched in our market as rental property owners place their properties on the market for sale. The message has been made clear, owning and renting real estate is very risky when government can seize your asset, your money, your business – but hold you responsible for the costs of maintaining the asset. It is essentially a federalization of private rental property, without the just compensation called for in the Arizona and United States Constitutions.
Going forward, I think WeSERV has an enormous opportunity to advocate on behalf of both property owners and tenants. Let’s face it, can you imagine anything worse for a tenant than occupying a property that has been foreclosed on or is held in bankruptcy? Having worked with tenants during three financial recessions, I can tell you tenants are not well cared for during these events.
Can you imagine anything worse than being a property owner who relies on the monthly rental income to provide for your family, and being told you cannot gain that income, but are still responsible under the Arizona Landlord Tenant Act and the rental contract to perform your duties?
Can you imagine being a rental property owner who is told after over a year of no income that your tenant must apply for rental assistance, you cannot apply, and that you must provide your taxpayer identification number and your financials to the tenant? Can you imagine that if the tenant applies for the funds and receives them, there is no rule that you be paid?
With all the legislation directing funds to “housing providers”, it seems rental property owners are not considered “housing providers”.
We have become so beleaguered with the overreach and misguided policy of government, that I increasingly hear comments such as “At least I was able to survive so far” or “At least I lost everything early”.
This should not be about the “luck” of surviving or “loosing early” so there is less damage. It should be about our nation and state’s basic principles of private property rights and right to private contract. It should be about respect for individuals to work with each other, come to mutually agreeable terms and abide by those terms. It should be about our commitment to guard, preserve and protect these basic rights now and in the future.
REALTORS® and our affiliate members are the most able to represent individuals, their rights and to help preserve them. That is what you do every day.
Watch WeSERV GAD in the future for opportunities to help advocate on behalf of property owners and tenants at the local, state and national levels.
Want to help now? Go to NAR’s website to find talking points directed at advocating to the federal government to rapidly release Emergency Rental Assistance funds to property owners. It is estimated only 10% of those funds have been released.
Go to aaronline.com to learn more about Arizona REALTORS® efforts to encourage the Governor to provide rental assistance funding directly to property owners.
And watch WeSERV Government Affairs over the next several months as we discuss this and other issues with our locally elected officials and their staffs. Send me your and your client’s stories if this policy has disrupted people and their lives in your sphere of influence.
This Fall we will be hosting a Fair Housing, ADA and Disparate Impact event with attorneys who can answer your questions about government policy and real estate.
We will also be providing cities in our jurisdiction with updates on the real estate industry: the commercial, residential, rental and purchase environment and trending. If you are interested in participating in these local updates, email or call me 623-931-9294.