On Sept. 1, the Centers for Disease Control and Prevention (CDC) announced an order to halt residential evictions through Dec. 31, 2020. The CDC issued the order under Section 361 of the Public Health Service Act in an effort to prevent the further spread of COVID-19.

According to data from the Census Bureau’s American Housing Survey, almost a third (32%) of renters responded that if evicted, they would have to move in with family or friends. However, the CDC notes that “household contacts are six times more likely to become infected by an index of COVID-19 than other close contacts.”

In addition, some evicted renters may go to transitional housing, and others would be homeless. But according to the CDC, extensive outbreaks have occurred in homeless shelters. There’s also a concern that some homeless renters could become unsheltered (meaning they’re sleeping outside, etc.), and this group is at even higher risk of spreading COVID-19.

The CDC notes that the order doesn’t relieve individuals of their obligation to pay rent, and doesn’t preclude charging or collecting fees, penalties, and interest as the result of failing to pay rent in a timely manner.

In addition, residents can still be evicted for other reasons, like engaging in criminal activity, posing a health or safety risk, or damaging rental property. And tenants who make more than $99,000 a year ($198,000 for couples) are also excluded from the order.

Between 30 and 40 million people could be at risk of eviction, according to a report by the Aspen Institute, so the halt was welcome news to many Americans already on the edge. “You have a group of people who might currently be out of a job, and depending on the city or state in which they live, finding another job is nearly impossible,” says Juan Marin, real estate agent and investor at IBR Group Corp. “Leaving them out to dry is a bit inhumane.”

According to the 2015 American Housing Survey, of the 48.5 million rental units in the U.S., 22.7 million are owned by mom-and-pop landlords. “These are not necessarily extremely wealthy individuals, they are regular people who saved up and made the right decisions,” Marin explains.

So, how will the ban affect these small landlords?

Unable to Pay

The first and most obvious effect of the CDC’s ban on evictions is that small landlords will struggle to meet their own financial obligations. Jessica Ornsby, founder of A+O Law Group and a landlord/tenant attorney, says small landlords will likely be disparately impacted. “Many small landlords may qualify for mortgage forbearance as well, but that does not protect against the entirety of the possible economic loss,” she says. “For landlords who rely upon rental revenue for income, these landlords will be without recourse when a tenant stops paying rent.”

William Gonzalez, president of Federal Direct Tax Services, notes that, for example, New York Gov. Andrew Cuomo has urged banks to waive mortgage payments for three months. “However, he does not have the authority to order them to do so — only Congress can do that.”

And Gonzalez says that other bills, such as water and sewer, have not been postponed. “Some landlords have worked out payment plans with tenants, while others have said they cannot offer concessions because they face their own challenges,” he says.

Also, not all landlords even quality for a forbearance. And among those who do, Bill Samuel, residential real estate investor and owner of Blue Ladder Development, says this isn’t a true solution to their problems. “It is important to understand that landlords aren't being made whole by the forbearance plan because there are still expenses they are paying with no revenue coming in for properties with tenants who aren't paying,” he says. “Small landlords are simply getting partial temporary relief, and the question is: how long can small landlords survive operating at a loss?”

Unable to Inhabit

Some small landlords may have leased out properties thinking that if they themselves ever got in financial straits, they could always go live in the rental property. “In situations where the landlord previously intended to reenter the rental property for personal use and occupancy, what happens now?” asks Ornsby. “If a tenant now refuses to leave, that landlord would be unable to take legal action to allow them to take residence.”

Unable to Keep/Unable to Sell

Stephen Keighery, founder of Home Buyer Louisiana and Bald Eagle Investments, owns several rentals in New Orleans and is lucky enough to have spare capital to survive this period. But, he says that some of his friends are facing the realization that they might have to sell their rentals. “They can't pay their note and taxes when the tenant isn't paying and have no way of collecting the rent.”

But he says even selling a property could be problematic. “Other landlords don't want to buy a house with a tenant that is not paying and they can't evict — unless there is a significant discount on the price,” Keighery explains. “I understand the need to protect tenants during this period, but they’re neglecting the need to protect small landlords like us.”

Obligated to Make Repairs

Just as utilities and other bills are still due, small landlords are still responsible for upkeep. “If there are items within the rental property that need to be repaired, the landlord is still obligated to make those repairs,” Ornsby says. “The financial obligations associated with doing so seem incongruent with the same landlords possibly going months without any rental income.”

What’s Next?

So, what can small landlords do to stay afloat? Gonzalez recommends that they call their own creditors and set up whatever terms are possible. “Also, shore up whatever cash you can hold onto.”

And if a tenant breaks any of the rules that can result in eviction, Gonzalez recommends consulting an attorney and immediately taking action.

“With new tenants, consider asking for more than a security deposit, as well as the first and last month's rent,” he says. “Even if discounts need to be offered, 2020 is a different year from any other, and it requires different rules.”

David Reischer, a real estate attorney and CEO of LegalAdvice.com, agrees, and adds, “A landlord must be exceptionally vigilant when it comes to screening a potential person to reside in a property for even a short period of time, because evicting a person is a long, arduous and expensive process even in the best of times.”

He says landlords need to think long, hard, and carefully before choosing renters. “Even for a period as short as 14 days, if the tenant decides not to leave for whatever reason, then there will be serious consequences for the landlord's ability to legally get the person removed.”

Is the Housing Landscape Forever Changed?

When all of this is over, the housing landscape may never look the same. “While evictions are currently halted, the backlog continues to grow,” explains David Dye, founder and CEO of GoldView Realty. Dye is a real estate and mortgage broker, as well as a rental property owner. “Once evictions are allowed to resume, many fear that the sheer number of proceedings at one time will worsen the housing issue in America,” he says.

“While laws are allowing landlords to recoup deferred rent in the future, many small landlords know that their tenants are not going to be able to afford it.” For many small landlords, Dye says obtaining back rent is going to be a lost cause. “With the courts being backlogged, getting a judgment against a tenant will be difficult.”

One landlord frustrated with the system and already shifting gears is Brian Davis, co-founder at SparkRental.com. “Eviction is literally the only legal enforcement mechanism available to landlords, and without it, leases become unenforceable and are effectively one-way contracts.”

Under those circumstances, Davis questions why anyone would invest in rental properties if they can’t actually collect the return and enforce their leases.

“My partner and I are shifting our primary real estate investments away from residential rentals, and toward investments that can actually be enforced and collected, like land,” he says. “If the public and politicians are going to demonize landlords, then we’re going to stop putting our money into providing the service of rental housing.”

Davis has also shifted his remaining rental investments to higher-end housing. “The default rate among higher-end renters is a tiny fraction of the default rate among lower-income renters,” he says. “There’s simply no reason to invest in lower-income rentals when you can’t enforce your leases — it’s all downside and no upside.”

These changes may also have an unintended negative effect on renters as well. When the floodgates open and evictions are allowed to resume, Dye predicts that many renters with an eviction on their record will find it difficult to find a new home.

Domenick Tiziano, creator of Accidental Rental, agrees. “This will ultimately cause many smaller landlords to sell to institutional investors to get out of the game,” he says. “Unfortunately, it's these small landlords who often give less than perfect tenants a chance to rent.” He believes that institutional investors are much stricter, and this will hurt a lot of renters in the end.