What Asset Managers Should be Doing During the Eviction Moratorium

Hours after his inauguration, President Biden issued an executive order extending the eviction moratorium until March 31. The current moratorium had been put into effect by the Center for Disease Control and Prevention in September 2020 to prevent the further spread of COVID-19.  The last day the moratorium, designed to stop renters from being evicted for non-payment of rent, was set to end December 31st, 2020.  It was predicted that over 5 million American households were susceptible to being evicted.

When it comes to commercial properties – the danger of “non-payment” has also been very real.  Landlords, Asset and Loan Portfolio Managers, Private Lenders, and Investors, also have had to navigate the challenges of not only the non-performing borrowers, but if they foreclose and take title, what to do with non-performing commercial tenants?  Far too many investment commercial landlords, dealing with non-paying tenants, have themselves been pushed into the positions where their commercial loans have now been in default for eight months.  While many in this situation have been diligent and sought to report back to lenders and loan organizations, the forbearances commercial lenders issued throughout the pandemic it turns out has simply served to delay the inevitable.  Months later, far too many asset managers now are having it generate stress and strife as they are forced to take action.  

Moody’s Analytics has reported that over seventy billion dollars in rent has gone unpaid this past year. What was once a legally ensured way of making a living has turned into a penniless game of sitting on your hands. With the moratorium eviction ending, the question on everyone’s lips is: what now?

The obvious is obvious: Asset managers delaying the inevitable are just compounding the problem.  Moreover, in a commercial setting, besides the foreclosure action that should be initiated promptly, you also have to worry about if the underlying property does not sell at auction, you now take title and ask – what next?  If you take title, be prepared to file commercial evictions against tenants who have become accustomed to receiving PPP monies but not paying the rent.  (Ludicrous as that sounds since part of the forgiveness to the SBA PPP program is demonstrating you’ve use it to pay labor and rent/mortgage payments.  Still, many do not.)       

There may not be a one size fits all approach to this situation, but one thing is universally true: the longer you wait to decide what to do, the harder it will be to follow through on that decision. Princeton University reported that more than 150,000 eviction petitions had already been filed prior to December.  Keep in mind: How quickly you can react in a commercial setting – foreclosures or evictions – also determines how quickly you will get paid again.

Check in with your borrower, or if an eviction, your tenant.  If they are not planning on paying any back mortgage payments or rent due, time to take them to court.  (If they don’t have a plan, might be time for you to make one for them.)

After assessing your situation, it is important to consult legal help. In a commercial setting – foreclosures and evictions require expertise.  That requires a law firm and attorneys with skill, expertise and know-how in this area of the law.  The courts are already backlogged, and there’s going to be a gigantic influx of new filings this year. There is no time to wait on making a decision.

Reyes Legal Group is focused on assisting Asset Managers, Loan Portfolio Managers, Private Lenders and Investors, navigate the legal minefield – in Florida statewide.  We take legal action to help our clients recoup their commercial real estate loan investments.  If you struggled to get paid throughout most of 2020, don’t let 2021 be a repeat.  Contact the Reyes Legal Group where we defend your investment, preserve your rights, and value your trust every … single … day.

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Reyes Law Group

Reyes Law Group represents clients in a multi-disciplinary legal practice involving real estate transactions and litigation with a “footprint” that covers the State of Florida. Over the firm’s first 10 years, Reyes Law Group has closed over $100M in commercial closings, representing buyers and sellers in contract negotiations, due diligence, and the related title review and policy issuance related to closings. In litigation, the firm has commercial litigation experience focused on prosecuting or defending claims such as breach of contracts, partition actions, trade secret violations, and breach of non-competes. However, our firm’s MAIN FOCUS is assisting asset and loan portfolio managers, investors and private lenders with a “ 4-PILLAR APPROACH” to the legal challenges they face with non-performing assets: 1) LOAN WORKOUTS; 2) COMMERCIAL FORECLOSURES (across the State of Florida); 3) COMMERCIAL EVICTIONS; and 4) REO COMMERCIAL CLOSINGS.30+ years’ legal experience means - WE CAN HELP!

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