David Winker, David J. Winker P.A. Photo: J. Albert Diaz

The Covid19 pandemic is affecting all aspects of life, but one of the most important aspects of the pandemic, outside of the obvious health issue, is the economic effect of quarantining to "flatten the curve" to prevent our health system being overwhelmed. This "shelter in place" effort has shut down huge swaths of our economy, from tourism to hospitality to elective healthcare to restaurants and bars.

One of the most critical economic issues is how landlords and lenders and the court system will handle this.

Representing landlords and tenants, as well as borrowers in foreclosures, I find myself on the front lines of this issue. Based on informal surveying of my clients, I believe that 30% to 40% of tenants and owners won't make rent and mortgage payments this month.

This results from a chain reaction, where tenants don't pay rent, which causes a cash flow problem for landlords who in turn don't make mortgage payments.

This chain reaction, in addition to homeowners simply being unable to make mortgage payments because they lost their jobs, puts a stress on individuals, families and our court system.

Relief for Landlords but Limited Relief for Tenants

So far, federal relief programs are focused on landlords and homeowners and provide limited relief for renters.

In addition to the $1,200 payments to almost every citizen, there are a number of emergency programs available from the Small Business Administration, a federal agency charged with assisting with economic recovery after disasters. These programs include $10,000 Economic Injury Disaster Loans, which are available for small businesses and sole proprietorships.

Owners with federally backed mortgages, which make up about 60% of mortgages, can avail themselves of up to a year of payment deferrals from their lenders, with those payments being added to the back of their mortgages without additional late fees or penalties.

Unfortunately, such a deferral does not work in the rental context as it is impossible to defer payments to the end of a lease.

And those with nonfederally backed mortgages will have to work out solutions with their lenders based upon the mitigation policies of those lenders.

As such, landlords are being left to make decisions on how to proceed on a case-by-case basis.

Some landlords are demanding payment as usual and if those rental payments are not made, the landlords will be providing statutory three-day notices and moving forward with the eviction process.

Although the Florida Supreme Court has issued an order putting a moratorium on granting writs of possession, which is the final order used by law enforcement to physically remove tenants, that does not stop landlords not subject to the federal moratorium discussed below from filing actions for eviction and ensuring everything is in place for eviction immediately upon the moratoriums being lifted. It is important to note that the accumulation of late fees and penalties in these cases are not abated.

The Florida Supreme Court's moratorium on Writs of Possession expires April 17, but will likely be extended given the Federal governments shelter in place advisory until the end of April. The Miami-Dade police department has also indicated that it will not be enforcing writs of possession so long as a state of emergency is declared in Miami-Dade County.

There is a federal moratorium on certain evictions through July 24 that prohibits the filing of new eviction actions for failure to pay rent. Landlords are also prohibited from charging fees or interest for late payment during this period, but amounts owed are not erased and will become due at expiration of the moratorium.

Covered properties include:

• Properties with federally backed mortgages (FHA, Freddie Mac, Fannie Mae, VA, HUD, USDA)
• Properties receiving low-income housing tax credits (LIHTC)
• Section 8 (vouchers and project-based units)

Importantly, these protections do not apply to eviction cases filed before March 26 and eviction cases based on breaking a rule in your rental agreement.

Working Together Helps Everyone and Will Get the Economy Up and Running More Quickly

The current unprecedented circumstance is complicated by uncertainty as to whether the economy can "crank back up" once the pandemic inevitably passes.

There is a good chance that the economy can roar back to life, because there was nothing fundamentally wrong with the economy prior to the pandemic—the shutdown was caused by an external public health crisis. However, the longer the shutdown lasts the more likely fundamental damage will occur that will affect the recovery.

Housing uncertainty and a court system overwhelmed by eviction and foreclosure actions will slow recovery.

As such, we need elected officials and the court system to help put order to this important housing issue so that we can get the economy back up and running smoothly.

David Winker is a Miami attorney with David J. Winker P.A. who is active in civic issues.