Governor Hogan’s “Substantial Loss of Income” defense applies to residential, commercial and industrial tenants.

If a tenant successfully raises this defense, no eviction can take place until Governor Hogan’s Executive Order of 4/3/2020 is rescinded and/or the state of emergency is lifted. Read more here.

“Substantial Loss of Income” Defense

First, pertaining to residential, commercial and industrial leases, until Gov. Hogan’s 4/3/2020 Executive Order on Evictions is rescinded and/or the state of emergency is lifted, tenants in Failure to Pay Rent and Breach of Lease actions can continue to raise the “Substantial Loss of Income” defense as an affirmative defense.

Substantial Loss of Income is defined in Gov. Hogan’s Executive Order as follows: “Substantial Loss of Income” means (i) with respect to an individual, a substantial loss of income resulting from COVID-19 or the related proclamation of a state of emergency and catastrophic health emergency, including, without limitation, due to job loss, reduction in compensated hours of work, closure of place of employment, or the need to miss work to care for a home-bound school-age child; and (ii) with respect to an entity, a substantial loss of income resulting from COVID-19 or the related proclamation of a state of – 3 – emergency and catastrophic health emergency, including, without limitation, due to lost or reduced business, required closure, or temporary or permanent loss of employees.  

If a tenant is successful in asserting this defense, the court will determine the merits of the case and/or the amount that is due for possession but will reserve entry of judgment until such time as the judgment is not prohibited by the governor’s executive order.  In other words, no evictions until the Order is rescinded and/or the state of emergency is lifted.

New CDC Order

Second, specific to residential properties only, based on an Order issued by the CDC effective 9/4/2020, a tenant of residential property cannot be evicted if they provide their landlord a declaration under penalty of perjury (sample form available to the tenants online…) indicating that:

1) The individual has used best efforts to obtain all available government assistance for rent or housing;

2) The individual either (i) expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return), (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;

3) the individual is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses;

4) the individual is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other non-discretionary expenses; and

5) eviction would likely render the individual homeless— or force the individual to move into and live in close quarters in a new congregate or shared living setting— because the individual has no other available housing options.

This affirmative defense in Failure to Pay Rent Cases can be raised until at least 12/31/2020 (could be extended by the CDC).  If a tenant is successful in asserting this defense, the court will determine the merits of the case and/or the amount that is due for possession but will reserve entry of judgment until such time as the judgment is not prohibited by the governor’s executive order.  In other words, no evictions until the Order is rescinded and/or the state of emergency is lifted.

Contact Harford County Attorneys at SLHS for More Information

Please contact Laura Bechtel, lbechtel@slhslaw.com or 410-893-7500 if you have any questions or for assistance related to a landlord/tenant matter.