Michigan has a plan to prevent thousands of evictions — rent relief for landlords

This story was co-published with Outlier Media, a Detroit-based service journalism organization. Try out their COVID-19 texting service with any questions about navigating the pandemic — more info here.

UPDATE, July 17: The 36th District Court in Detroit on Thursday extended the eviction moratorium for renters in the city through Aug. 15. The 450 outstanding evictions that have already been signed by a judge cannot begin until Aug. 16, according to the Detroit News. Statewide, the eviction moratorium ended Thursday, with experts expecting a flood of cases in the courts in the coming week after landlords issue seven-day notices of evictions.

In Detroit, the city, state and local partners set aside $11.5 million in COVID-19 relief funds for eviction assistance programs that will be run by the United Community Housing Coalition, MI Legal Services and Lakeshore Legal Aid. Detroiters who are at risk of eviction can go to www.DetroitEvictionHelp.com or call 866-313-2520 to access free legal counsel and financial assistance.

Previously…

On July 16 at midnight, Michigan will end its moratorium on evictions. 

For tenants who have fallen behind on rent during the COVID-19 pandemic, the worry is that landlords will rush to court and start the eviction process. The State Court Administrative Office estimates more than 75,000 eviction cases are already pending in district courts statewide.

To head off a catastrophe without extending the eviction ban for yet another time since it first went into effect on March 20, Gov. Gretchen Whitmer is instead offering to pay rent directly to some landlords if they promise not to evict a tenant who can’t pay rent for the duration of their lease. The state has put aside $50 million for the effort, called the Eviction Diversion Program.

But this initial funding probably won’t be enough. Jim Schaafsma, a housing attorney at the Michigan Legal Poverty Program, estimates the Eviction Diversion Program would run out of money after helping just 20% of the neediest renters in the state cover rent for only one month.

“This program will manage the flow of cases and reduce incidences of eviction, but without more cash in the pipeline there’ll be too many tenants,” Schaafsma says. “What’s needed is hundreds of millions of dollars. What we’ve got now is going to help, but I fear the need and demand will be greater than the resources allocated.”

The state is deferring much of the work of implementing the program to local agencies, even as it is less than two weeks from when the effort is expected to go live. This is what we know now—we’ll update as more information becomes available.

How does it work?

The state will give participating landlords up to 90% of rent that hasn’t been paid between March 1 and the beginning of an eviction proceeding if they halt the court process and agree to not evict the tenant. The landlord will also have to waive “one-ninth of one dollar of the remaining amount due for every dollar received as a lump sum payment.” In other words, if a tenant owes $1,000 in back rent, the landlord can get up to $900 if they forgive the last $100. 

How close a landlord can get to that 90% subsidy depends on the tenant’s household income. Renters making less than 50% of the area median income ($39,250 in Metro Detroit for a four-person household) won’t have to contribute any money. Renters who make more will have to pay a portion of their debt, based on their income, though no one in the program will have to pay more than 27.77% of the total back rent owed. 

As for the money the state isn’t covering and back rent owed prior to March 1, the tenant can pay it back in installments up to 12 months from when the agreement is signed. 

The ultimate goal of the program is to get a conditional dismissal of any eviction filed in court. Both parties would sign an agreement laying out how much the tenant must pay each month and the consequences for breaching the terms. 

Who can get help?

This is a program for landlords, even though it will also benefit tenants. In Metro Detroit a landlord needs to have tenants that made less than the area median income ($78,500) last year and suffered financial hardship because of COVID-19 to qualify. 

How do I apply?

The nuts and bolts of the program are still being worked out, but intervention will likely occur after an eviction has been filed by a landlord. The Michigan State Housing Development Authority (MSHDA) will issue grants to local housing agencies, like Wayne Metropolitan Community Action Agency, to publicize the program and then work with the courts to direct landlords and tenants to the funds. MSHDA will make the payments. 

The program is voluntary, but Schaafsma says that “the courts will put a lot of pressure on the parties to settle the case rather than go forward to trial.”

When can I get help?

The program begins July 16, the first day eviction proceedings can resume.

The state supreme court has changed the way new eviction cases will be heard since the pandemic. Local courts will be prioritizing cases where a landlord alleges illegal activity or damage to the premises. The next cases to be prioritized will be ones where the tenant is 120 days late, then 90, then 60 and then 30. 

Can I find out if my landlord got money from the program?

An agreement must be set between both the landlord and tenant, so all parties should be notified — but it is still unclear how the public will be able to find out which landlords participated in the program. 

Where did this money come from?

Funds for this program were part of an $880 million package passed by the Michigan Legislature and signed by Whitmer towards various forms of coronavirus-related assistance. That’s only part of the $3 billion the state of Michigan received from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The state has allocated $50 million to the Eviction Diversion Program. Money for the program will be available until it’s spent or December 30, 2020, whichever comes first.