Executive Order Suspending Evictions Doesn’t Let Renters Off The Hook
People who rent out property wish the state told tenants they still must pay
Michigan Gov. Gretchen Whitmer’s executive order imposing a moratorium on residential evictions for nonpayment of rent during the COVID-19 pandemic is set to expire June 11.
And for people who have homes and apartments to rent out – and whose own mortgage, tax, insurance and utility expenses have remained mostly constant for the last three months — it can’t come soon enough.
“A lot of people don’t realize that (eviction or the threat of eviction) is the only legal tool landlords have for tenants who won’t pay,” said Douglass Benson, of Esker Properties, a business in the Lansing area. Benson is also president of Rental Properties of Mid-Michigan, an association of landlords.
“The (property owner’s) bank doesn’t care if you have tenants that won’t pay,” he said.
Most tenants have made good faith efforts to remain current during the crisis, with those thrown out of work benefiting from enhanced unemployment and a bonus $1,200 income tax payment, Benson said. But some, he added, seem to believe the moratorium is more akin to a rent holiday than a suspension of the right to evict.
Not enough of the early attention accorded to the eviction ban emphasized the notion that “there is still an obligation to pay” at some point, he said.
The governor’s office stated in an email that it had no official update to provide.
“It’s critical Michiganders can self-quarantine and continue staying safer at home without fear of being evicted,” Whitmer said in a May 14 press release that announced the extension of the suspension of evictions. “This Executive Order gives renters and mobile home owners some peace of mind as we continue to flatten the curve.”
Benson, like other property owners and landlord representatives who spoke to Michigan Capitol Confidential, said he has made concessions to hard-pressed tenants. He has tried to negotiate payment plans and had suspended penalties for late payment even before Whitmer issued her order.
Omar Shouhayib is president of Choice Properties, a Troy-based family-owned business that has thousands of residential and commercial tenants in Southeast Michigan.
“We’ve been more than happy to work with (tenants under economic stress),” he said.
“We direct them to government assistance programs, make sure they know how to seek unemployment and federal stimulus checks,” he said. Overall, tenants have behaved responsibly, even “better than we might have expected,” Shouhayib said.
But a minority - usually those who were late or unreliable before the health crisis - have adopted the moratorium as a weapon, he said. They have told his company, “What are you going to do (if I don’t pay)? You can’t evict me if you wanted to.”
Shouhayib said Choice Properties will likely file eviction actions against as many as 50 tenants in landlord-tenant court once the moratorium is lifted.
Oakland County attorney Matthew Paletz, who represents landlords in Michigan and Ohio, said the impact of the moratorium on property owners has been muted so far by government assistance to out-of-work tenants. It also, he said, depends heavily on individual circumstances.
Even in the best of circumstances, eviction is a bad option for both landlord and tenant, Paletz said. But for some property owners, who have limited holdings and rely on rental income to pay their own bills, a nonpaying tenant can lead to financial ruin, he said, especially if the tenant’s occupancy is extended for months by government order.
One such landlord is a Wayne County retiree who rents an upstairs apartment in the home he occupies. After asking not to be identified, he told Michigan Capitol Confidential that he is in peril of losing the property for nonpayment of taxes. The reason: a tenant who stopped paying rent shortly after moving in earlier this year.
“I’m not in the landlord business,” he said. “I just rent the upstairs to help pay the taxes. I know (the tenant) is struggling. But why is Gov. Whitmer making me provide social services? That’s the government’s job.”
Benson said landlords generally support government assistance for tenants affected by the health crisis. But that doesn’t mean property owners should be ignored, he said. Instead, he suggested, some consideration should be given to tax relief for the cost of unpaid rent. He also said policymakers should consider a boost in financial support to landlord-tenant courts once the moratorium is lifted.
Paletz, the attorney, said conditions in the property management sector have so far not been as cataclysmic as initially feared. But the virus - and market disruptions like the ban on residential evictions - could push rental real estate into severe recession, especially if the disruptions continue, he said.
Largely ignored to date, Paletz said, is the plight of property owners with commercial tenants. Although not affected by bans on eviction, they are dealing with many tenants who were deemed inessential business by government orders and abruptly deprived of income.
Landlords have been making widespread concessions, such as waiving rents temporarily in exchange for extended lease agreements, he said. But that means landlords don’t have revenue to cover their own current expenses or to maintain and, under COVID rules, reconfigure and sanitize premises, he said.
Shouhayib, of Choice Properties, predicted that the economic fallout from the virus on the commercial market will lead to increased vacancies and depressed revenues.
“In America, landlord is a dirty word,” he said, “It sounds feudal. But everybody needs help in this crisis ... tenants and landlords.”
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.