COVID-19 CARES Act Eviction Moratorium

As you may know, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020, in response to the COVID-19 outbreak. Among a wide range of aid, relief, and stimulus provisions, it also instituted a temporary moratorium on evictions for non-payment of rent from a “covered dwelling” for a period of 120 days commencing March 27, 2020 (Section 4024 of the CARES Act).

During this 120-day period, a lessor of a covered dwelling unit is prohibited from making, or cause to be made, any filing with the court to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges.  After the 120-day period expires, the notice to vacate must provide at least 30 days for the tenant to vacate.  In addition, a lessor is prohibited from charging fees, penalties, or other charges related to the nonpayment.

What is a “covered dwelling”

A “covered dwelling,” is a dwelling occupied by a tenant (i) pursuant to a residential lease; or (ii) without a lease or with a lease terminable under State law and which is on or in a “covered property.”

A “covered property” is one that:

  1. participates in a “covered housing program” as defined by the Violence Against Women Act (as amended through its 2013 reauthorization);
  2. participates in the “rural housing voucher program under section 542 of the Housing Act of 1949”;
  3. has a federally backed mortgage loan; or
  4. has a federally backed multifamily mortgage loan.

By including reference to VAWA, the moratorium covers most federally assisted rental housing programs, including those under the Department of Housing and Urban Development, Department of Agriculture, and Department of Treasury. See 34 U.S.C. 12491(a)(3). Specifically, this includes: public housing (42 U.S.C. § 1437d); Section 8 Housing Choice Voucher program (42 U.S.C. § 1437f); Section 8 project-based housing (42 U.S.C. § 1437f); Section 202 Supportive Housing for the Elderly program (12 U.S.C. § 1701q); Section 811 Supportive Housing for Persons with Disabilities program (42 U.S.C. § 8013); Section 236 multifamily rental housing (12 U.S.C. § 1715z-1); Section 221(d)(3) Below Market Interest Rate housing (12 U.S.C. § 1715l(d)); HOME (42 U.S.C. § 12741, et seq.), Housing Opportunities for Persons with AIDS (42 U.S.C. § 12901, et seq.); Section 515 Rural Rental Housing program (42 U.S.C. § 1485); Sections 514 and 516 Farm Labor Housing program (42 U.S.C. §§ 1484, 1486); Section 533 Housing Preservation Grants (42 U.S.C. § 1490m); Section 538 multifamily rental housing (42 U.S.C. § 1490p-2); and the Low-Income Housing Tax Credit (26 U.S.C. § 42).

For the purposes of the CARES Act eviction moratorium, a “federally backed mortgage loan” is defined to include loans secured by any lien on residential properties that have 1-4 units and that are “made in whole or in part, or insured, guaranteed, or supplemented, or assisted in any way, by an officer or agency of the Federal Government or in connection with a housing or urban development program administered by [HUD] or a housing or related program administered by any such officer or agency, or is purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.” A “federally backed multifamily mortgage loan” has the same definition but is secured by property with five or more dwelling units.

The definition of a federally backed mortgage loan is much broader than the one used in Section 4022(a)(2) of the Act, instituting a moratorium on foreclosures[1]. That section limits the definition to a short list of federal agencies and programs. This means that the eviction moratorium may apply in cases where the foreclosure moratorium would not.

PLEASE NOTE that the moratorium does not apply to (i) cases filed prior its effective date (March 27, 2020), (ii) those involving non-covered tenancies, or (iii) evictions based upon reasons outside of non-payment of rent, fees, or charges.

LDD suggests that landlords closely review all relevant documentation to determine whether the moratorium applies to each of their rental properties and tenancies or consider contacting an attorney at LDD for assistance on making that determination. The documentation that should be reviewed includes, but is not limited to, the promissory note, mortgage, closing statements/documents and related lender correspondence. LDD further suggests that if you have a nonpaying tenant in a covered dwelling unit that you refrain from serving a notice to vacate (i.e., a 3-Day Notice) for non-payment, and instead serve a 30-day notice to vacate after the expiration of the 120-day moratorium.  If the tenant has still not vacated, then serve a notice to vacate (i.e. a 3-Day Notice) after the expiration of the 30 day  period in order to begin the process to initiate an eviction action. Also, be advised that a tenant’s representatives may request documentation from the landlord in order to prepare a defense to an eviction action that  may be subject to the moratorium.

[1] The term “federally backed mortgage loan” in Sec. 4022(a)(2) is limited to those: (A) insured by the Federal Housing Administration; (B) insured under section 255 of the National Housing Act; (C) guaranteed under section 184 or 184A of the Housing and Community Development Act of 1992; (D) guaranteed or insured by the Department of Veterans Affairs; (E) guaranteed or insured by the Department of Agriculture; (F) made by the Department of Agriculture; (G) purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.

Note that the information presented above is for discussion purposes only and does not constitute legal advice.