Governor Whitmer and Supreme Court Push Family-owned Landlords into a Financial Abyss
June 26th, 2020 | By: Matthew I. Paletz, Esq.
An abridged version of this article was featured in the Detroit News on June 19, 2020 and can be read here.
The government overreach of the COVID-19 crisis continues to plague Michigan businesses. Governor Whitmer keeps extending the moratorium on residential evictions (now through July 15) with the stated intention of protecting renters struggling from COVID-related job losses. It also has wielded another blow to family-owned landlords who are struggling to pay their own mortgages. Yet most disturbing is the public misrepresentation of the Michigan Supreme Court in relation to potential eviction cases which they say will flood our court system.
Along with the Governor’s extension, the Supreme Court issued an order detailing how an expected “deluge” in landlord-tenant cases should be dealt with once the moratorium expires. The Court estimated that because 17,000 landlord-tenant cases are typically filed each month, more than 75,000 could be filed ‘immediately” after the moratorium ends. As an attorney who routinely deals with these cases, I can tell you first-hand that this is a blatant misrepresentation.
First, rent payments for April, May, and June have been better than anyone could have predicted, due to the additional unemployment benefits in the Federal CARES Act. This is because since its passage, most tenants have received stimulus checks in addition to these unemployment payments, and so this has helped them pay their rent.
Second, many landlords have used government-backed FHA loans to acquire their properties and so are restricted from filing eviction notices until the end of August because of federal regulations. A conservative number is that this represents over 50% of the potential cases filed in Michigan, and I’m afraid that this, combined with the state order, is going to force some of my clients into bankruptcy; bankruptcies which will affect local tax revenue, jobs, and the supply of desperately needed affordable housing.
The Michigan Supreme Court has used this opportunity to take control over the entire landlord-tenant court system. The false narrative of courtrooms being overrun contrary to public health concerns, even if true, would never need to happen because there are several Michigan courts that adopt a “court by mail” method which allows everything to be done by mail and remote Zoom hearings if needed.
Therefore, instead of using this crisis as an ulterior pretext for “pioneering a new approach” as Chief Justice McCormack said, our entire state can implement these options and it should be allowed. Otherwise as it currently stands, there will be long delays which will hurt small business, creating additional hearings which is counterintuitive to social distancing.
No one is advocating for mass evictions in the midst of a pandemic. The local judges should be able to exercise their discretion while allowing landlords and tenants to keep working together.
As Michigan businesses continue to dig out of COVID related economic trauma, our State, our Governor, and our Supreme Court need to enact orders which help our small and family-owned businesses, not a false-narrative to drive their respective futures into financial ruin.