Rental Property Owners Statewide Left to Face Foreclosure Avalanche As State High Court Declines Jurisdiction In Special Action Seeking Relief Amid Pandemic, Economic Crisis

 The Arizona Multihousing Association (AMA) and thousands of struggling rental housing owners expressed deep disappointment today at news that the Arizona Supreme Court has refused to hear a special action seeking to invalidate the Executive Order delaying evictions.

In declining to hear the lawsuit, the high court has left many of the state’s rental property owners with little hope as they try to navigate six months of unpaid rent and an uncertain future.     The special action argued that the Executive Order delaying evictions represents a violation of the separation of powers imposed by the Arizona Constitution. The plaintiffs also contended that the Executive Order violates the Constitution’s contract clause.

“We’re shocked and disappointed that the Arizona Supreme Court has declined to hear this case, which has far-reaching consequences not just for rental housing owners, but for the Arizona economy,” said Courtney Gilstrap LeVinus, the President and CEO of the AMA. “We can fully expect to see a rental home foreclosure avalanche in the months to come, or certainly in the beginning of 2021. Our hope now is that the state and local governments which have allocated $100 million in eviction relief finally begin to deploy those resources more quickly and efficiently. Because to date only about $18 million has actually been distributed to those in need since the beginning of the pandemic.”

“I am saddened for the mom and pop rental property owner who has invested their life savings only to see their income, investment and oftentimes their retirement wiped out .  They have done nothing wrong, yet they have had the rug pulled out from underneath them.  I am honestly not sure where they go from here,” said LeVinus.

The eviction delay is slated to last until at least October 31, 2020, according to the Governor’s executive order.

“The Executive Order has effectively rendered null and void almost one million private contracts,” said Gilstrap LeVinus. “Rental property owners have done everything they can to be cooperative, but their bills keep coming. This is a serious crisis that needs to be fixed immediately.  No other industry has been asked to provide a service or product for free for seven months, this is not sustainable nor is it fair.

An economic impact study of the eviction moratorium by economist Elliott D. Pollack underscores the impact of the potential seven-month rent holiday on property owners – everyone from retirees who own a duplex to luxury rental communities with hundreds of units and dozens of employees. The Pollack study shows that:

❏              For every one percent of Arizona’s 920,000 rental households that do not pay their rent for the seven-month eviction moratorium, that would create about $67 million in lost income. The costs of the eviction process and finding a new tenant drives that total to about $87 million in lost income.

❏              If 15 percent of renters do not pay their rent for the seven-month eviction moratorium, that would create about $1.3 billion in lost income including working through the eviction process and finding new tenants.

❏              If 30 percent of renters do not pay their rent for the seven-month eviction moratorium, that would create about $2.6 billion in lost income including working through the eviction process and finding new tenants.

For information on the special action, visit https://www.azmultihousing.org/. For interviews or questions, please contact David Leibowitz at david@leibowitzsolo.com or 602-317-1414.