By Madeline Makoul
With a statewide moratorium barring evictions as a result of the coronavirus (COVID-19) pandemic, landlords are bearing the burden of unpaid rents.
Under the Illinois Eviction Filing Moratorium, residents are protected from evictions, halting both filings and enforcement, according to Governor JB Pritzker’s executive order implemented to help renters whose jobs are affected by COVID-19 economics and cannot afford to pay rent.
The moratorium began in April with an initial ban of 30 days, and the State repeatedly extended it as the pandemic continues to help tenants. The latest moratorium runs through Saturday, Nov. 14.
Landlords see things differently.
Chris Pezza, who serves on the Chicago Association of Realtors board of directors, said a ban on all evictions, including those already in process before the pandemic, places a heavy financial burden on landlords that will have longterm effects.
“The feeling is that our government has basically said to our landlords ‘now you’re in the lending business, now you are giving interest free loans to your tenants with no end dates,’” Pezza said. “There’s only one person that this falls on, and it’s the landlord.”
Impact on landlords
Some landlords are noticing renters taking advantage of the State’s eviction moratorium.
Martha Padilla, a landlord with property in Woodlawn and South Shore, said about 60% of her tenants currently are not paying rent. Though the moratorium requires renters show proof of hardship, Padilla said many of her tenants have not done so, and she cannot do anything about it.
While renters are obtaining relief with the moratorium, Padilla’s responsibilities as a landlord continue, despite a massive decrease in funds available from rents.
“I have my own garbage service I have to pay, I have to pay property taxes, water bills on properties, and some of these buildings are just not generating enough money to pay the basics to keep the building running,” Padilla said. “As a landlord, it’s still required to do all that despite the fact that our hands are being tied and we can’t collect the rent we need to keep these properties moving.”
In addition, Padilla and other landlords cannot continue with the eviction process for tenants who were not paying rent before the pandemic.
To try to get some money back into the building, Padilla helped tenants apply for assistance. Through both the Chicago Department of Family and Support Services and the Illinois Housing Development Authority, tenants could apply for emergency assistance to help pay rent—relief that can trickle down to benefit landlords as well. (See related article, page 1.)
Through this process, Padilla heard back about the City’s denial of one tenant’s request for assistance after it determined the tenant had the funds to pay rent.
“If you have proof from one of these agencies that thoroughly looked into their finances and determined they have enough to pay you rent and they aren’t, why shouldn’t a landlord be able to evict them?” Padilla said. “A landlord’s hands are tied, even when a governmental agency told you they have more than enough money to pay.”
Pezza explained how landlords with minimal numbers of properties, such as Padilla, get hit worst, which their property quickly reflects. As Padilla explained, landlords first cut costs on trash pickup, lawn care, and extermination. Next, they cut maintenance and repairs, ultimately deteriorating the housing stock over time.
“Now let’s say we already cut some of those ancillary things like extermination, and more important things like repair and maintenance, and rent still isn’t coming in,” Pezza explained. “Well, now owners can’t pay their mortgage, and once owners hit this point, banks take the buildings back and you have less housing available to the open rental market, the tax base actually shrinks because those properties are no longer income producing, and ultimately the property values decline. That’s really how a recession begins.”
This is where larger corporations come in, buying properties and increasing rents as “ma and pa” landlords disappear, Pezza explained.
Pezza and Padilla both noted the pre-COVID eviction process already took about four to six months. Once the ban lifts and a flood of cases come in, landlords could be waiting at least a year to get through the eviction process, Pezza said, noting that is one year, at least, without rent.
“Next year will be really bad for landlords, and we will see how the City and State react,” Padilla said. “Are you going to stop foreclosures? Will you stop forcing people to pay property taxes because we don’t have the money to? Somehow, I don’t think so. Because people’s attitude is, ‘you’re a property owner, you have money,’ but it’s our business at stake.”
Downside for renters
With landlords feeling pressure from missing rent while property costs continue, renters see a trickledown effect.
Pezza said decreased rent payments and continued expenses for maintenance prompt more landlords to simply sell properties.
Richie Zie, a Chicago historian, tour guide, and radio personality, experienced firsthand what happens once a landlord decides to sell. After ten years living in and managing a building in Little Italy on the Near West Side, Zie alleges the new owner gave him only five days’ notice to move out—despite the eviction ban.
“I got a call on Thursday that I have to be out on Tuesday,” Zie recounted. “I’ve known [the previous landlords] for 50 years, and I was trying to do my best to get out, but I couldn’t find a place to live and I wasn’t getting out fast enough.”
Five days later on a Tuesday in August, Zie left around 11 a.m. with some of his belongings to meet movers at a storage unit. After a long day of moving, Zie returned to his apartment around 5 p.m. to find someone had thrown out the vast majority of his remaining belongings.
Zie estimated he lost about $15,000 of his personal items, including a $2,000 tripod, hearing aids, and antique furniture.
“It was 90 degrees, I was so overwhelmed,” Zie said. “I didn’t know what to do or say. I got the last things out of there and I left.”
Zie described the next three days as the “twilight zone,” spending the first two in a motel with his cats and the third sleeping in his car. After three days, he found a place to rent.
“I couldn’t even think about what happened or why,” Zie said. “I’m doing okay now. I’m surviving.”
The previous landlord did not respond to requests for comment. The current landlord did, but refused to allow his named to be used.
He said his purchase “was always under the premise that the building would be empty from day one when the contract was signed. Because of the condition of the building, it definitely needed to be empty. It needed updates and repairs to make it livable.”
He also said closing took around 45 days, so it was not a surprise to tenants.
He said he did not know about any circumstances of the eviction and was always under the impression the building would be empty by the time it was his.
“The dastardly acts of some landlords to illegally displace tenants from their homes by continuing to serve eviction notices, changing the locks on the doors, disconnecting the utilities, and other actions that compromise the safety and security of families should be swiftly and decisively rebuked and punished,” said the Lift the Ban Coalition in a statement.
“The State Legislature has only met for four days since the onset of restrictions related to the pandemic,” the Lift the Ban statement continued. “We cannot allow the veto session to come and go without real protections being enacted for the hundreds of thousands of Illinoisans at risk of eviction.”
While stories like Zie’s multiply across the city, improper eviction is not the only way tenants will see effects of coronavirus economics.
Padilla said the eviction moratorium has led some of her tenants to use money they would have spent on rent to buy other items.
Pezza noted a big spending trend, as renters who believe they are safe from eviction start spending on other items they would not buy normally. Pezza said that eventually, when the moratorium lifts and tenants owe back rent, they will take a big hit to both their credit score and rental history.
“Really, the only benefit is the tenant gets to stay in their home a little longer,” Pezza said. “You’re really just delaying the inevitable. That really is the only positive. From the tenant’s side, it’s doing a disservice by giving a false hope that ‘I’m going to be okay, you can’t evict me.’”
The Lift the Ban Coalition is asking for more for renters. The group “appreciates the extension of the eviction moratorium,” it said in a statement. “We contend, however, the debt accumulating for renters and small landlords alike is not resolved by moratoria. We continue to call upon Governor Pritzker to: void rent payments during the ‘stay-at-home’ order and the following three months, engage State licensed mortgage holders to defer mortgage payments until the end of the loan without additional interest or penalties, extend the eviction moratorium through to the end of the economic recovery, and repeal the Rent Control Preemption Act to enable municipalities to take actions deemed appropriate to help residents find relief in the midst of this unprecedented calamity. It is only just that in the midst of multiple crises, our elected representatives act to protect those of us who are experiencing vulnerabilities in this moment.”
Looking toward the future
With no end in sight for the pandemic, landlords also hope for changes to alleviate the burden.
Pezza said the courts should hear eviction cases again, allowing judges to determine what evictions are warranted while finding solutions for those tenants more heavily affected by COVID-19.
“We have all been affected by COVID, all of our incomes and lives have been affected,” Pezza said. “It’s very easy to just say I can’t pay rent because of COVID. And with this eviction moratorium, you just can’t get in front of a judge, and that’s what really bothers me. This outright ban on evictions is basically the State saying we don’t trust our judges.”
Padilla said the year ahead looks hard for landlords like herself, even if the eviction moratorium ends. She noted even when she can pursue evictions, the process can be pricey, on top of months, if not years, of tenants missing rent payments.
“It becomes a cost issue,” she explained. “Are you willing to pay $3,000 to $4,000 to get rid of someone who in actuality is never going to pay you back rent? The frustration that my eviction attorney has stated is that, by the time this moratorium is lifted, these people will get about two years of free rent that will be extremely difficult to go back and get.”
“We want tenants and landlords alike to understand we are all affected, we have all been harmed by this,” Pezza said. “We are in this together and need solutions that work for everybody.”
For the Chicago Association of Realtors, call (312) 803-4900. To learn more about the Illinois Eviction Filing Moratorium, visit www2.illinois.gov/Pages/Executive-Orders/ExecutiveOrder2020-55.aspx. For the Lift the Ban Coalition, log on to www.ltbcoalition.org or call (312) 805-4326. For more on Richie Zie, visit richiezie.com.