We are nearly 9 months into the so-called COVID-19 global pandemic. While not without historical precedent, COVID-19 has wreaked havoc on the physical and economic health of millions both within the United States and around the world. In Minnesota and across the country, governors and their public health departments have exercised “peacetime” emergency powers designed both to limit the spread of the virus but also to minimize its adverse impacts, both physical and financial, to the broader population. The success of these measures has been mixed.
While much is being written and debated regarding the merits of social distancing, including masking policies, as a means of protecting public health, less is being written and debated regarding the direct economic effects of some of these policies, which in any other context, would spawn enough litigation to swamp state and federal courthouses in all 50 states.
In Minnesota, there have been few such challenges to the emergency powers exercised by Gov. Tim Walz. These challenges have targeted public health decrees relating to social distancing, including mandatory stay-at-home and business closure orders. The author is not aware of any such challenge finding success in a courtroom, probably due to the underlying legal authority granted to state leaders, but also the perceived public health benefit of these orders.
Certainly stay-at-home orders, including business closure orders, have imposed massive economic hardship, but their public health premise has thus far shielded Gov. Walz and other national leaders from successful legal challenges. Less discussed are those policies that actually impose a government-sanctioned cost on businesses and individuals with no direct public health connection, akin to a government taking of property with no due process or compensation for the loss.
The clearest example is the COVID-related policy that blocks landlords from evicting or non-renewal of a lease of a residential tenant for non-payment of rent. In Minnesota, Gov. Walz imposed a restriction on tenant evictions almost immediately, along with other prescriptive measures. The prohibition on evictions or lease terminations is nearly universal in scope, allowing evictions or lease terminations only when there is clear evidence of criminal activity occurring in the leasehold premises that endangers the safety of others, such as threats of violence or illegal drug use. But for this limited exception, landlords have no remedy for a tenant’s failure to pay rent, whether willful or otherwise.
The actual economic plight of the tenant, if any, is irrelevant. What’s ironic is that thousands of tenants facing sudden unemployment have benefitted from state and federal cash grants to supplement traditional unemployment benefits. Not only have such policies not been tied to meeting existing lease obligations, they have actually led business owners to complain that they can’t attract workers back to their jobs.
Yes, under the emergency orders the tenant has a continuing legal obligation to pay rent when due, but a tenant needs no excuse, no permission, no reason at all, to withhold payment of rent. Meanwhile landlords, including thousands of small property owners, are forced to eat the cost of this policy, hoping to be made whole some other day, if they are not first foreclosed upon by an unforgiving lender.
Someday the moratorium on tenant evictions will be lifted and a flood of eviction proceedings will commence in district court across Minnesota and across the country, searching for the attention of a backlogged court system. Yet the high cost of seeking a court remedy paired with a low likelihood of actually collecting past-due rent means that in the end, landlords will solely bear the financial cost of this COVID-19 policy notwithstanding the undisputed government-sanctioned “taking” being imposed on private property owners