Property Rights and Eviction Moratorium

 

The State Legislature is wrestling with the problems created by Governor Inslee’s prolonged Eviction moratorium Edict. Here is a run down on what may turn into over a Billion dollar problem hitting small landlords the most. Analysis of the Bill passed by the Senate March 4th, 2021 is included… This is definitely an attack on affordable housing AND private property rights

By David Spring:

David Spring

Washington State Eviction Crisis About to Explode

I have degrees in Science Education from Washington State University and the University of Washington. I have also spent nearly 20 years teaching courses in Problem Solving at Bellevue College. In April 2020, I became alarmed that the “emergency” policies being dictated in Washington state would cause much more harm than good. Therefore, on May 8, 2020, I published a 400-page book including more than 200 scientific studies analyzing the harm created by closing schools and locking down the economy. You can read this book for free at this website: Common Sense Book.org.

One of my predictions was that shutting down businesses would greatly increase unemployment which in turn would mean that families could not make their rental or mortgage payments. At the time, there was a Rental Eviction Moratorium in Washington state. It was scheduled to run out on June 4, 2020. I predicted that there would be massive homelessness when the moratorium ran out.

The Eviction Moratorium was ordered by Washington Governor Jay Inslee on March 18, 2020. At the time, the eviction moratorium was only supposed to extend one month to April 20, 2020. However, on April 16, 2020, Inslee extended the moratorium until June 4, 2020. Then on June 2, 2020, Inslee extended the moratorium until August 1, 2020. Then on July 20, 2020, Inslee extended the moratorium to October 2020. Then in October, Inslee extended the moratorium until December 31, 2020. Then on December 24, 2020, Inslee extended the moratorium to March 31, 2021. Since past behavior is the best predictor of future action, it is certainly possible that Inslee will extend the moratorium again.

But kicking the can down the road never solves any problem. This problem will only get worse the longer it is allowed to continue. The fact is that an economy can not work when huge sections of the population do not work

Estimating the scale of the problem.
Washington state has a population of 7.8 million and a home ownership rate of about 60%. This means Washington state has about 4.7 million people living in owned homes and 3.1 million people living in rental homes and apartments.

Several national surveys have indicated that about 10 to 20 percent of renters were behind on their rental payments in 2020. https://www.cnbc.com/2021/01/25/nearly-20percent-of-renters-in-america-are-behind-on-their-payments.html

One study concluded that 26 to 34 percent of renters in Washington state face eviction.

https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/

So the estimates are all over the map and there is no way of knowing what the true scale of this problem is. But it is safe to say that at least 300,000 to 600,000 people in Washington state are facing eviction when and if the Inslee Eviction Moratorium runs out. Since there are about 2 people per rental household, this means that about 150,000 to 300,000 households in Washington state face eviction.

At the same time, about 10% to 20% of Washington’s 1.5 million landlords have not received rental payments from tenants in up to 11 months. Slightly less than half of these landlords are Mom and Pop seniors who bought a single rental home in order to supplement their retirement. Not only have they not received rental income in over 10 months, but they have been required to continue making payments on their mortgage notes and property taxes – thus suffering a triple financial disaster of no money coming in from renters and massive expenses going out to the banks and government. It is ironic that the government placed a moratorium and lockdown on private property owners but did not place a moratorium on tax collections.

How much is owed?
Every month the amount goes up. At an average monthly rent of $1500 times 10 months, many of these renters now owes their landlord $15,000 or more. Multiple this times 150,000 to 300,000 households and you can see that a tidal wave of disaster is about to be unleashed here in Washington state. Incredibly tens of thousands of former landlords are about to join hundreds of thousands of their former tenants on the breadlines and homelessness encampments.

The State Legislature Makes This Problem Even Worse
On March 4, 2021, the Washington State Senate passed Senate Bill 5160 by a party line vote of 29 to 20. While this bill must still clear the State House of Representatives, it is being fast-tracked with a hearing and executive session both scheduled to occur by March 20, 2020. The sponsor of the bill has claimed that the bill is designed “to keep tenants housed and to help landlords pay their bills.” However a close reading of the actual text of the bill confirms that it will provide only temporary relief to tenants – and no relief at all to landlords.

Republicans opposing the bill countered that additional regulations could push landlords into foreclosure – further reducing the supply of low income housing and thereby increasing homelessness at a time when it is already at record levels.

The Devil is in the Details
Here is a link to the latest version of this 23 page bill in case you would like to read it yourself: http://lawfilesext.leg.wa.gov/biennium/2021-22/Pdf/Bills/Senate%20Bills/5160-S2.E.pdf?q=20210314183306

Here are some quotes from the bill:

Page 2, Line 1: Hundreds of thousands of tenants in Washington are unable to consistently pay their rent.

Page 3, Line 27: For rent that accrued between March 1, 2020, and the governor’s eviction moratorium expiration date, a tenant’s nonpayment of rent must not be a factor in any housing decision affecting a tenant’s right or ability to occupy a rental dwelling unit.

My comment: A landlord can never evict a tenant???

Page 4, Line 10: A landlord in violation of this section is liable in a civil action for up to four and one-half times the monthly rent of the real property at issue, as well as court costs and reasonable attorneys’ fees. A court must impose this penalty in an amount necessary to deter future violations, payable to the tenant bringing the action.

My comment: This seems to indicate that a landlord who attempts to evict a tenant for non-payment will face mandatory fines of $10,000 to $20,000.

Page 4, Line 18: If a tenant has remaining unpaid rent that accrued between March 1, 2020, and the end of the public health emergency, the landlord must offer the tenant a reasonable schedule for repayment of the unpaid rent that does not exceed monthly payments equal to one third of the monthly rental charges during the period of accrued debt.

My comment: If the rent was $1500 per month, the landlord could offer a plan to have the renter pay $2000 per month. But assuming the renter owed the landlord $15,000, it would take 2 ½ years for the renter to pay off what was owed. No renter in their right mind would do this. Instead, they would either remain in place, or walk away find a different apartment for $1500 per month. Either way, the landlord gets nothing.

Page 4, Line 33: The court must consider the tenant’s circumstances, including decreased income or increased expenses due to COVID-19.

My comment: This is why a lot of renters will just stay put. They will be advised that the court will be required to take their side.

Page 5, Line 9: Not include provisions or be conditioned on: The tenant’s compliance with the rental agreement.

My comment: This is the most shocking line in the entire bill. Rental agreements used to be legal contracts that the court was required to enforce. If this bill is allowed to stand, then all legal contracts will run the risk of being declared null and void.

Page 9, Line 38: total reimbursement from the (Landlord compensation) program may not exceed five thousand dollars per tenancy.

My comment: Landlords will basically be required to surrender all rights and a 15,000 debt for a potential payment of $5,000. More likely, they will be put on a wait list and get nothing. For example:

Page 9, Line 14: A landlord in receipt of reimbursement from the program is prohibited from: Taking legal action against the tenant for damages or any remaining unpaid rent.

Pages 14 and 15 grant renters the right to an attorney and a dispute resolution process in which the presumption appears to be in favor of the tenant.

My comment: This will create lots of income for attorneys and Dispute Resolution counselors but this massive amount of red tape is unlikely to help either tenants or landlords.

Page 23, Line 14: This act… takes effect immediately.

My comment: It is likely that this act will be passed by the House and signed by the Governor before March 30, 2021. This act is certain to drive up housing prices and drive down the supply of affordable housing – leaving tens of thousands of low income renters with no place to go. At the same time, it will deprive tens of thousands of Mom and Pop landlords with any source of rental income.

While it is possible that Inslee will kick the can down the road a few more months, this will only result in tens of thousands of retired couples losing not only their rental property but even their personal homes as their source of income will disappear.

This is on top of the fact that hundreds of thousands of children are being deprived of an education for no good reason and hundreds of thousands of small business owners have been driven out of business for no good reason. This is a disaster that is getting worse every day it is allowed to continue.

The real underlying problem here is an out of control Governor who has been not been held accountable by anyone and who has lived in a fantasy land that he can suspend the economy for month after month without eventually facing severe adverse consequences.

The people who will suffer from this lunacy are low income tenants and Mom and Pop landlords. Rents will go up to pay for the “new normal” and availability will go down. Within a month of the end of the moratorium, homelessness (which is already at record levels) will explode. But even if we personally are not made homeless, we will all be the victims – because what we are really losing is our private property rights under the Washington State Constitution.

Article 1, Section 3 of the Washington State Constitution, passed by wise people back in 1889, states: “No person shall be deprived of life, liberty, or property, without due process of law.”

Article 1, Section 16 states: “No private property shall be taken or damaged for public or private use without just compensation having been first made, or paid into court for the owner.”

Article 1, Section 23 states: “No bill, ex post facto law, or law impairing the obligations of contracts shall ever be passed.”

https://leg.wa.gov/CodeReviser/RCWArchive/Documents/2019/WA%20Constitution.pdf

By taking private property from hundreds of thousands of people without just compensation, and rendering hundreds of thousands of previously legal contracts to be null and void, Senate Bill 5160 is an obscene violation of three of the most important sections of the Washington State Constitution. This bill renders not only landlord private property rights to be meaningless – but renders the Washington State Constitution itself to be meaningless.

Since our current Supreme Court was appointed by Inslee or his friends, I have no hope that our current Supreme Court will defend the Washington State Constitution.

It will therefore be up to us as citizens to hold government officials accountable for their actions. Thomas Jefferson decided that the people should have the right to hold new elections every two years. We are certain to face a massive crisis in the next few months. Hopefully, the voters will realize who created this crisis and elect a different government at the next election.

We need a government that will defend private property rights, defend the right of our children to an education, defend the right of business owners to open their business – and uphold their oath to defend our State Constitution.

As always, I look forward to your questions and comments.

Regards,

David Spring M. Ed.

springforschools@gmail.com

 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here