LAW IN ORDER The Warren Report

By William S. Warren, Warren Law Firm

Despite being written in mid-December 2020, it will be a new year, 2021, when you first read this article. We all know what new years bring. They bring resolutions.

You will see countless articles and commentaries on what makes an effective New Year’s resolution. Typically, these resolutions are made by individuals, resolving to begin or change some behavior to make themselves better. Despite frequent failure of such resolutions, the exercise of creating them, and even temporarily committing to them can be quite useful.

Here we will focus on how resolutions by our civic leaders, and others, if made and adhered to, could have significant positive impact on the dilemma currently faced by the residential housing market. More specifically, since COVID-19 eviction moratoriums of one type or another essentially began in March 2020, a situation has been created where tried-and-true state eviction remedies have been pushed to the side. This is allowing people who have not paid rent for upwards of 10 months to nonetheless remain in leased premises. Stated another way, several of the eviction remedies provided for by the Supreme Court of Texas (SCOTX) and documented in Rules of Civil Procedure (TRCP) and Texas Property Code (TPC) provisions currently cannot be utilized.

Let us begin with a resolution for those on the federal level.

First, however, a bit of background is in order. The Centers for Disease Control and Prevention (CDC) is a federal government agency which has temporarily halted residential evictions through its September 2020 nationwide order, commonly referred to as the eviction moratorium order or the CDC Order.

In recognition of the immediate impact of the CDC Order, at the time this article was written there were at least six pending challenges in federal courts to its temporary halt on residential evictions. There is strong opposition to these challenges. CDC and the federal government defendants in these cases are maintaining the CDC Order was put in place to prevent the further spread of COVID-19.

There is a case challenging the CDC order pending in the United States District Court for the Eastern District of Texas, Tyler Division. There are a lot of parties to it, but for simplicity let us style it as Terkel vs. CDC. It is pending before U.S. District Judge Jake Campbell Barker in Tyler, Texas.

Most of the plaintiffs in Terkel vs. CDC own, built, or manage and maintain residential rental properties. Having expended substantial financial resources to do so, the plaintiffs in Terkel vs. CDC had the reasonable expectation, according to their pleadings, that they would be legally permitted to realize the benefit of their bargain by collecting monthly rent from their tenants.

The plaintiffs’ pleadings in Terkel vs. CDC go on to state that these owners, builders, and managers expected to have legal recourse if their tenants breached the terms of their lease by failing to pay the rent. They expected, according to their pleadings, that by following the standard procedures laid out by Texas state law for evicting the tenant, they would be able to replace tenants that fail to pay their rent with others that would fulfill resident monetary obligations in exchange for occupying the property.

Those who filed Terkel vs. CDC go on to state that immediately following the CDC’s emergency issuance of a nationwide eviction moratorium order, they have been denied the benefit of their bargain by a federal agency, on the pretext that exercising their well-established property rights will contribute to the spread of COVID-19.

Still relying upon language used in Terkel vs. CDC pleadings, the CDC claims that because some individuals who are evicted from their homes may move to another state, “mass evictions would likely increase the interstate spread of COVID-19.” There would be interstate commerce, they contend, crying out for federal intervention.

The largely government defendants in Terkel vs. CDC maintain that the stated intent of the CDC Order is “mitigating the spread of COVID-19.” These defendants contend that absent the emergency agency order imposing a temporary moratorium on residential evictions, there will be substantially more evictions, thus increasing the risk of disease transmission as persons move both in-state and interstate into congregate settings or experience homelessness, which would be contrary to the purpose of the order. They want the CDC Order to be interpreted and implemented in a manner as to achieve the broad global objectives of the federal government, sadly without much regard for state and local law.

The foregoing is a significantly boiled-down summary of the positions of the parties in Terkel vs. CDC. Those who have been sued in the challenge present an “ivory tower argument” that the federal government has the right, under the constitutional principle of the supremacy of federal law, to expand the scope of federal power and intrude upon the rights of the states, including Texas.

According to the largely government defendants in Terkel vs. CDC, the “supremacy clause” states that federal law “shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the constitution or laws of any state to the contrary notwithstanding.”

The need for some well-crafted and strictly followed resolutions should now be clear. It is time, therefore, for some new year’s resolutions.

Resolve, federal courts, when considering the constitutionality and legality of the CDC Order, to look at the effect of the existing situation through a lens of reality.

In TPC chapters 24 and 92, and in TRCP rules 500 through 510, the Texas legislature and the SCOTX set forth time-tested guidelines and rules governing residential tenancies. Throughout those rules is a grant to the justice courts and county courts at law of the right to determine who, between a landlord and a tenant, guided by contract and equity, has the superior right to possession of leased residential premises. Texas law afforded the same types of people who are the plaintiffs in Terkel vs. CDC relief through the eviction process. In the TRCP, there were essential prerequisites to seeking that relief, and proven timetables to possibly obtain that relief.

TRCP 510, in fact, addressed the time for trial (which must be not less than 10 days nor more than 21 days after the petition is filed) and appeal of the justice court judgment (within five days after the judgment is signed). Those deadlines are not presently being followed. This is due to, among other things, various eviction moratoriums which began with the federal CARES Act, were supplemented through local moratoriums affecting notices to vacate, further addressed by emergency orders of the SCOTX, and finally impacted by the CDC Order.

The first resolution, therefore, should be to direct the focus of the debate, and the basis for the judicial relief being sought, to the actual and multi-faceted reality affecting both landlords and tenants.

It is indisputable that the COVID-19 pandemic has had enormous worldwide effect; and not a single of the 50 states within the United States has escaped its terrible consequences. To resolve the problems we all face, there must be a cooperative effort, involving a give and take, which is widely focused.

New Year’s resolutions, to be effective, must be achievable. Resolution No. One is achievable. It simply compels those who adopt it to paint with a broad brush, to look at the big picture, and to require those who govern us and have the power to control our actions to act in an unbiased manner. Resolution No. One can succeed if landlords and tenants, and the many who are affected beyond that relationship, are viewed as having equally important rights deserving of realistic solutions, of whatever magnitude, for all.

Resolve, local governments, to stop extending the same moratorium type prohibitions over and over, for they are not working.

Those of you who have been following the effect of COVID-19 on residential rental housing (and quite frankly, who hasn’t been?) know that the “deadlines” for expiration of the restrictions have been extended multiple times. Frustration among property owners and managers is rampant, largely because every time a deadline approaches, governing personnel like mayors, city council members and county judges extend the same deadline for months at a time. There is no progress, just restraint.

The City of Austin has an ordinance which states that a 60-day notice of proposed eviction must be given in a nonpayment of rent situation before a notice to vacate can be given. That same ordinance has been extended multiple times, often on the eve of its expiration. In fact, is this article goes to press, this city ordinance is scheduled to expire December 31, 2020. As you read this article in 2021, the city’s 60-day notice of proposed eviction moratorium type of relief may or may not have been extended, and the time frame if there was an extension may or may not be tolerable.

In addition to city council members enacting restrictions, mayors and county judges continually do so as well. During the current pandemic, the mayor of the City of Austin and the Travis County Judge have enacted nearly identical orders prohibiting the issuance of notices to vacate in certain residential evictions, a prerequisite to an eviction suit, multiple times. Like the 60-day notice of proposed eviction, these orders which directly affect a notice to vacate have been extended multiple times and are scheduled to expire December 31, 2020. What will the future hold for them? Another extension?

Resolve, Supreme Court of Texas, to permit an immediate return to the Texas Rules of Civil Procedure, specifically TRCP 510, to restore the timeline which has been effective in its current form since 2013, and well before that in similar form.

There are hundreds of courts in Texas that are involved with the eviction process. All justice courts are in play, for evictions must originate in a justice court in the county where the property is located. In addition, county courts at law in each county are also in play, for they are the courts to which a de novo appeal of an eviction judgment goes.

The SCOTX, in an effort to ensure uniformity and fairness, issues rules and orders (including emergency orders) which govern these very local and very important courts. As things currently stand, the Supreme Court is granting a great deal of leeway to the local courts to make decisions about eviction case filings, trials, judgments, appeals and writs of possession. This leeway, however, enables court-tocourt differences which have the effect of expanding the rules unilaterally and inconsistently. An unbiased resolution by SCOTX could help get things back on track, and once again, in accordance with the TRCP.

Resolve, Tenants, to realize that COVID-19 troubles are not unique to you. More specifically, resolve, tenants, to make an unbiased resolution recognizing that the pandemic’s dilemma engulfs owners and renters alike, harms both landlords and tenants, and needs your cooperation for a viable remedy to be discovered and enacted.

This resolution will be joined shortly below by a similar resolution for landlords and owners. It too will be based upon an absolute unbiased need for cooperation.

Let us remain optimistic that tenants will resolve to recognize that rent collections are essential to rental property operations. Things like mortgages, repairs, taxes, management and leasing costs, and personnel costs are recurring, regardless of the pandemic. These hard costs all contribute to enabling a renter to have a desirable and safe home.

The desirable and safe home goal requires income – rent income. The failure to pay rent, however, wreaks havoc on budgets and imperils survival of the residential rental community. If tenants keep that in mind, and cooperate, remedies can be found.

Further resolve, tenants, to actively seek all sources of government and other assistance available to you to help with rental payments. The wave of the future, if one is to come from federal legislators, will likely be in the provision of funds to be earmarked for rent payments to landlords whose collections are repeatedly suffering. It is the tenant who must seek this monetary relief. If that is regularly done, the negative impact of the lower collections can be significantly reduced.

Resolution No. Five: Landlords, resolve to hang in there, maintain a positive outlook and a desirable rental community. Do not give in to any temptation to do otherwise.

It would be easy to become frustrated with what has been going on since March 2020 due to the COVID-19 pandemic and its horrendous effects on the multi-housing industry. But such frustration solves nothing. It impairs the ability of one to see the recovery when it comes.

Further resolve, owners, managers, and on-site personnel, to maintain and improve your relationships with your tenants, good and bad. One day, assuming the forgoing resolutions succeed, lease contracts will once again be enforceable and eviction courts will once again be restored to their pre-pandemic effectiveness.

As multifamily professionals, you are highly trained to address a multitude of problems. Never forget that training, for it is what gives you your professionalism, which in turn enables your rental communities to maintain excellence.

Resolve, vaccines, to be effective and to work quickly to enable us to tame the raging beast which is COVID-19.

We are all eternally optimistic that the millions of virus inoculations which began at the end of 2020 will soon bring this pandemic under control. Be supportive of our front-line workers and those who make daily sacrifices for the good of all. If we join in on the resolutions proposed above, in fact, those making the sacrifices will include all those committing to the resolutions.

Unbiased resolutions are beneficial to all. There is no doubt about it. Happy 2021!

The year 2021 marks BILL WARREN’s 41st year of practicing law. His law practice focuses on a variety of issues and cases, the majority of which address the concerns of those active in the multi-family industry. He founded and manages Warren Law Firm. In addition, he serves as Of Counsel for the Texas Apartment Association and as Legal Counsel of the Austin Apartment Association. Bill is also a Credentialed Mediator in Texas. He writes and speaks regularly, and as author of Law In Order: The Warren Report he has had over 120 articles published. His topics cover all nature of issues pertaining to rental housing, from onsite to the boardroom to the courtroom. Bill has been Board Certified in Civil Trial Law by the Texas Board of Legal Specialization for 30 years, and is also a Fellow of the College of the State Bar of Texas. He can be reached at Warren Law Firm, 1011 Westlake Drive, Austin, Texas 78746, (512) 347-8777, or through his firm’s website at www.WLFtexas.com.