Landlords will finally be able to go after tenants who haven’t paid their rent

July 30 – The eviction moratorium for renters will expire tomorrow and that means that landlords and banks will finally have their hands untied to evict and foreclose on people who haven’t been paying to live in their homes. 

But any back payments may likely be gone forever.

You’ll remember in June, the Supreme Court upheld the eviction moratorium due to issues with COVID (which has jammed this up for more than a year), but they were clear in saying they would not approve any further extensions beyond July 31.

So tomorrow is it.

Attorney Clint Barkdoll, Pat Ryan and Michele Jansen discussed the end of the eviction moratorium this morning during the Big Talk on First News.

Barkdoll predicted, “You’re going to see a lot of activity starting next week around the country in the areas of evictions and mortgage foreclosures.”

Ryan asked, “What is a landlord to do at this point? Are we talking about a tenant that’s been renting that hasn’t paid their rent in six, eight months or so. We finally get to move on that tenant. Even if that tenant says okay I’m going to start paying now, I’ll give you this month’s rent, they can go into a whole other cycle. Pennsylvania seems to side very thoughtfully with the tenant not with the guy or gal who took the risk to get a rental piece of property and then has his own obligations to the bank in the first place.”

Let’s say you’re a landlord or a bank and you have a tenant that hasn’t paid for a few months – and you couldn’t kick them out because of the eviction moratorium. Come Monday, you can go into the local magistrate’s office, file an eviction complaint, which could also include whatever the back rent is.

Within about two weeks, the magistrate would hold a hearing, assuming that an order is issued to evict the tenant and provide money damages to the landlord, that would be what the landlord needs to get the tenant out.

Now remember, the tenant can appeal, which would buy them more time, but in PA, when they file an appeal, they do have to keep paying monthly rent and they have to make a deposit based on the judgment that was entered.

Barkdoll pointed out that not long ago, they were able to file appeals and ride it out for free, but the laws have been changed and they do need to keep paying rent while the case is on appeal.

Ryan said, “Thank goodness. Thank goodness someone is helping out these property owners. I’d imagine the magistrate’s office there’s probably going to be a traffic jam down there.”

What could we be looking at in Franklin County? How bad is it?

Barkdoll said, “I hear this from a lot of landlords that they’ve been just sitting and waiting. They don’t want to get mired in a mess of trying to evict someone during the moratorium. I think there is a lot of this action waiting on Monday. Also in the world of foreclosures. I talk to a lot of banks and bank representatives. I’m told just say locally in Franklin County there may be hundreds and hundreds of foreclosures that have been sitting for over a year that now they will start filing next week in civil court. This will be the process eventually that the bank would actually repossess the entire property. These would be homeowners that have not paid on their mortgage for say a year or more. I think you’re going to see an explosion of this kind of activity and not just here locally. I think it’s really going to be all over the country over these next few weeks and months.”

Ryan brought up the fact that “we’ve got a very pinched market with housing right now. Does that mean we’re going to get a market filled with houses that go on the market again? Is this an opportunity for realtors again?”

Barkdoll said, “A lot of people have been making the point this can’t go on forever like this, this economy, the housing market, the stock market. How does it end? When does it end? There are some economist that think that this issue we’re talking about could be the catalyst that really puts the brakes on like a housing market.”

For instance, imagine locally, what if there would be a flood of hundreds of foreclosures that suddenly hit the market? Then multiply that by every county around the country.

This could bring about a pretty big shift in the real estate market.

Barkdoll suggested, “That might be the sort of thing that would throw cold water on this hot housing market and in some ways that might be a good thing. People are finding trouble getting houses. There’s a big shortage of starter homes. The rental market is very tight. Maybe these are the things, the dynamics, that finally unlock some of these problems.”

Jansen said, “I feel like people have been set up by the government in this. I’m afraid this is going to end up being some of the push back on this legally. How many were actually asked to prove whether or not they could afford their rent or not? Or was it just so loose and willy-nilly that you have a lot of people – human nature being what it is – they take advantage of it. Okay I’m struggling a little bit, I’m not going to pay my rent. And then months and months and months and months go buy and you have this build up, build up, build up of this large debt and people don’t prepare for it. They don’t put money aside. When they got extra money from the government, did they put that aside for their rent payment? Probably not.”

Ryan said, “I thought you were going in a different way here on this set up for people here. There’s a dream out there from somebody – is it Bill Gates? – that says we don’t want anybody to be property owners anymore.”

Jansen confirmed, “That’s going to be then the result will be a lot of people saying no, wait a minute, you set us up. (Bill Gates) is part of the whole thing about ‘you won’t own property and you’ll like it!’”

Barkdoll added, “During the moratorium I don’t know that there has been a strict enforcement of someone to prove that they’ve had a hardship based on COVID. Technically that was the criteria, but I heard a lot of bank people, I heard a lot of landlords say I’m not even going to bother with the headaches of trying to get this done through court. The other problem, though is in every case if you’re a banker or a landlord and let’s say you get a huge judgment against these tenants, you’re not going to collect it. Even though they’ve gone maybe ten months or a year and haven’t paid a dime. I realize there were rent relief programs and other areas that maybe this could have been addressed, but in almost every case, if you’re the landlord and let’s say you get the judgment for all of the bank rent, very, very rarely will you collect any of that money. So the judgment effectively will be simply to get them evicted from the property, knowing that you’re probably never going to get reimbursed for all the back rent that was never paid.”

Ryan asked, “Why couldn’t you put a lien on them for the rest of their lives? I mean if I’m out $12,000 in rent, somehow or other, I don’t care if you have to pay me $50 for the rest of your life, you’re on the hook for it, the lease said so, doesn’t it?”

Barkdoll said,, “If you get a judgment, it’s a lien, it’s on their credit report that that judgment has been entered. The problem for a lot of these folks is A, they could go bankrupt, that’s one way they might discharge the judgment, but secondly, they may have no assets. If they don’t own real estate or other unencumbered assets, in many ways, the judgment doesn’t affect them. Yes, it’s on their credit, but if they’re living kind of week to week, they’re renting month to month, moving to various places, the judgment really doesn’t have the effect on them that you might think it would.”