The end of eviction moratoriums may finally be in sight.
After a series of extensions, the eviction moratorium now in place until October 3 – should be the last, on a national scale. The Federal Housing Finance Agency’s eviction moratorium for Fannie Mae and Freddie Mac-backed properties is slated to expire at the end of September.
While state municipal moratoriums are still in place in certain markets, it’s time for multifamily properties to start preparing for the inevitable expiration of the pandemic moratorium era. For most apartment communities, the behind-the-scenes process needs to begin now.
Below are five best practices to help position multifamily properties for the end of eviction moratoriums:
1. Have a plan ready to deploy
To avoid losing time and additional revenue when moratoriums are finally lifted, property teams need to have a plan in place. It’s time to freshen up on corporate eviction policy and fair housing compliance, and assign eviction-related duties among teams.
Teams also need to establish a plan to pursue debt recovery while the residents are still living at the community. Once a resident is evicted and moves out, teams are forced to chase that debt remotely and property management companies recover only a fraction of that revenue. Consider payment plans or helping residents apply for COVID relief funds, or loan assistance programs to help delinquent residents get back on track.
While onsite teams have plenty to do preemptively, there will be an element of hurry up and wait once moratoriums are lifted. The number of backlogged eviction cases is immense, and it is going to take the courts months - if not years - to sort through the logjam. Being ready to file early will help, but management teams shouldn’t expect to get caught up on their eviction filings all at once.
2. Initiate the process immediately
The issuance of late notices initiates the eviction process, and ideally should take place as soon as legally allowable when eviction moratoriums are lifted. Prior to the pandemic and the related eviction prohibition, busy onsite teams rarely prioritized timely eviction notification. Historically, operators have also been hesitant to trigger the eviction process opting to delay under the hope that residents will pay.
But even once notifications have been issued, operators still have a window of opportunity to work with residents on debt recovery before the situation escalates. If escalation is necessary, promptly issuing notices is a crucial prerequisite to starting the legal process. Every day that the process is delayed equals lost revenue. By starting the process immediately, management teams can ensure a timely process and maximize their returns.
3. Create a documentation checklist
The back-and-forth process with attorneys to request and submit the correct eviction paperwork can take weeks, sometimes months. Waiting to find and compile the required documentation until it’s time to file can drag out the eviction process and prolong revenue loss.
Operators can save themselves the administrative burden and frustration by establishing a checklist of actions and required documentation that walks through filing procedures. Compiling electronic documents and resident files, so that they are readily accessible and easily shared, can also substantially expedite the process.
Eviction software that fully integrates with property management systems enables additional efficiencies; establishing a simplified eviction workflow that can be initiated alongside other end-of-lease operations. The integration ensures that property teams commence with their action item checklist in a timely manner.
4. Don’t inadvertently restart the process
Eviction laws vary from state to state, and it’s important to know which debts an operator is permitted to pursue in an eviction lawsuit. Certain states limit eviction filing to lease payments alone, and don’t provide an avenue to recover fines or fees. When an unauthorized line item appears in a suit, the court may kick it back.
Other inconsistencies, such as paperwork that doesn’t match throughout the process or notices that weren’t served properly, can also reset the clock on eviction proceedings.
While it may seem like a good faith gesture, it’s important for operators to avoid accepting partial payments from delinquent residents. By receiving any percentage of the rent payment, operators legally and unintentionally acknowledge the continuation of the lease, nullifying any eviction process that has already been initiated.
Operators also need to strictly adhere to fair housing laws and avoid any perceived preferential treatment. By taking a quantitative versus qualitative approach to eviction filings, management companies arrive at uniform eviction policies that can be applied to all residents, and from one property to the next.
5. Pursue rent-relief funds
While the impact of the pandemic is fading, the financial stability of all renters isn’t necessarily recovering at the same pace. When the eviction moratoriums finally lift, there will still be residents who aren’t able to pay their rent. And in those situations, there will be little recourse for operators to collect from struggling residents.
The best chance for operators to recover large amounts of debt is going to come from rent-relief programs. The Biden administration recently pledged a government-wide effort to expedite the distribution of the emergency rental assistance appropriated to renters and housing providers by Congress. The rent-relief funds total $46 billion.
Registering for rental assistance dollars will supplement operators’ direct debt recovery efforts with residents, as well as eviction filings, and help to facilitate the most comprehensive collection outcome for multifamily properties.