On March 27, 2020, Congress enacted and the President signed into law the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”. Among the Act’s many provisions, Sec 4024 is of particular importance to Landlords. In essence, it imposes a national Moratorium on the charging of fees and the initiating of new evictions for non-payment of rent. The Moratorium lasts for 120 days and applies to any rental property that is subject to a Federally Backed Mortgage (or Multifamily Mortgage) Loan.
Definition of Covered Properties:
- The temporary Moratorium applies to properties:
- With a federally backed mortgage or multifamily mortgage loan through the Department of Veterans Affairs (VA), the Department of Agriculture (USDA), the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD), Fannie Mae or Freddie Mac; or Occupied by a resident who participates in a covered housing program or the rural housing voucher program.*
- Covered housing programs include:
- Public Housing;
- Section 8 Housing Choice Vouchers;
- Section 8 Project-Based Rental Assistance;
- Section 202 Supportive Housing for the Elderly;
- Section 811 Supportive Housing for Persons with Disabilities;
- Housing Opportunities for Persons with AIDS (HOPWA);
- McKinney-Vento Act Homeless Assistance grants;
- Section 236 Preservation Program;
- HOME Investment Partnerships;
- Rural Development multifamily housing (Section 516 Farm Labor Housing Grants, Section 542 Rural Development Vouchers, Section 521 Rural Rental Assistance, Section 533 Housing Preservation grants); and
- Low Income Housing Tax Credit (LIHTC) properties.
***Be Advised: While many within the real estate sectors interpret the applicability of the CARES Act eviction moratorium to be limited to covered properties and further specific dwellings within some covered properties, as was Congress’ intent, Section 4024 of the CARES act as written leaves room for an expanded interpretation.
On March 29, 2020, the National Apartment Association also released best practices to guide National Apartment Association (NAA) members regarding rent collections amid COVID-19, also referred to as coronavirus. To view those best practices, click here: https://rb.gy/h6vhbk.
In keeping with the recommendations of the NAA, as well as of countless Federal and State officials, it is also our recommendation that all rental property owners, managers, and residents work together to find the best collective solution(s) for issues such as economic hardship during this time of unprecedented health crisis in our Country. As a courtesy, NAA has also provided a Payment Plan Agreement (COVID-19 Pandemic) form. This form allows a resident who, as a result of COVID-19, is experiencing loss of wages, unemployment or unexpected medical expenses to pay rent and other monies owed at a later date. Payment plans should be agreed on by both the owner or management company and the resident affected. All parties should sign the document.
Source: National Apartment Association
Finally, here is a short-list of valuable information to better help you navigate Sec. 4024 of the CARES Act.
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Section 4024 – https://bit.ly/2z0H6nX
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NAA Best Practices – https://bit.ly/2z0UM2f
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Payment Plan Agreement – https://bit.ly/34yvJPE
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Notice of Temporary Waiver of Late Fees – https://bit.ly/2K1KmBx
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HUD Statement on Fair Housing and COVID-19 – https://bit.ly/2yRUCKn
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HUD April – https://bit.ly/3b41HG1
If you have any questions or would like to better understand your unique responsibilities for the properties in your portfolio in light of the CARES Act and any other state and local eviction mandates due to COVID-19 fill out the contact us form.
