| CFPB Issues Rule Affecting Evictions
A new rule issued this week from the Consumer Financial Protection Bureau (CFPB) has property managers concerned about collecting delinquent rent. This ruling states:
".....debt collectors, including attorneys, seeking to evict tenants for non-payment of rent must provide tenants who may have rights under the CDC order with clear and conspicuous written notice of those rights. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed."
The kicker here is that this notice must be in writing (on paper) and not via email. The rule is effective May 3.
As a property manager we qualify as a debt collector when pursuing unpaid rent. Our standard Pay Rent or Quit Notice will qualify as debt collection. Our national association (NARPM) is also suggesting caution with property manager actions in respect of this rule.
Our notices to all delinquent tenants will now include the following "suggested language" from the CFPB.
"Because of the global COVID-19 pandemic, you may be eligible for temporary
protection from eviction under Federal law.
Learn the steps you should take now:
- Visit www.cfpb.gov/eviction
- Or call a housing counselor at 800-569-4287"
Legal eviction notices from attorneys will also include the above language or something similar.
So, if we take action to collect rent we are to advise tenants of how they can complete a document to be protected from penalty and not pay their rent.
What is even worse (from our perspective) is what can happen to a property manager serving as a debt collector, who violates this new order?
"Debt collectors who evict tenants who may have rights under the moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act (FDCPA) and are also subject to private lawsuits by tenants."
Under the FDCPA private lawsuits are limited to $1000 damages per violation. There are also different federal and state laws that can create significant fines and potentially jail time. These are the penalties we now will potentially risk for attempting to collect your unpaid rent or other charges from your tenants.
I think it is safe to say this is one new significant hurdle for collection of unpaid rent as long as the CDC declaration continues.
It is for this reason that Rental Assistance Programs are where we are placing a significant amount of effort. Remember we shared with you recently that in accepting rental assistance in Marion County/Indianapolis, we are also agreeing to not start an eviction action until the CDC Declaration expires.
You might like reading this Interesting story on Indianapolis evictions. Stick with it as the article is long but it does turn to a discussion of rental owners and the affect of moratoriums on you. If you are not aware the attorney interviewed, Kathryn Ransburg, is our evictions and damages attorney.
Stay Safe! WILMOTH Team | 
