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Residential and Commercial Landlord Update: Federal CARES Act Eviction Moratorium

June 2, 2020

 

By: Nathan Zechman, Esq.

 

Many people are aware of the Paycheck Protection Program (“PPP”) loans available to small business under the Federal CARES Act signed on March 27, 2020, but fewer know about the temporary moratorium on residential evictions that was also enacted under the same CARES Act.  Residential landlords should know the keys to the Federal CARES Act Eviction Moratorium.

 

The eviction moratorium set forth in Section 4024 of the CARES Act provides that a landlord of a covered dwelling is prohibited from (1) filing legal action to recover possession of the dwelling from the tenant on the basis of non-payment of rent, and (2) charging fees, penalties or other charges related to the non-payment of rent. This prohibition extends for 120 days from March 27, 2020, expiring on July 24, 2020.

 

The moratorium applies to all residential tenants in covered dwellings, regardless of whether the tenant’s employment was affected by COVID-19. If unpaid rent accumulates during the moratorium, the tenant must repay the rent after the moratorium has ended.   The moratorium does not apply to evictions based on reasons other than for non-payment of rent. As such, a landlord may still evict tenants during the moratorium for other reasons such as tenant drug-use, criminal activity at property, or other lease violations not related to rent payment.  Note, even if a lease has “no-cause” language that allows an eviction for no cause, if such an eviction is motivated by tenant’s non-payment of rent it may still be barred.

 

Only covered dwellings are affected by the moratorium. A covered dwelling is one in which (a) a tenant rents under a federal housing program or (b) a tenant rents from a landlord which has a federally backed mortgage loan on the rented property. The federal housing programs that are covered include HUD public housing, HUD voucher programs, Violence Against Women Act housing programs, federal backed senior living and rural housing voucher programs.  Federally backed mortgages are those guaranteed or secured by HUD, VA, USDA, Fannie Mae or Freddie Mac, to name a few. If the landlord is unsure if it has a federally backed mortgage loan, a review of its mortgage and lending documents should provide the answer.

 

A landlord may continue its eviction action if it was initiated prior to March 27, 2020.  If not, even if the tenant was behind on rent payments prior to March 27, 2020, then a landlord may not initiate eviction action for a covered dwelling during the moratorium.   Even service of a Notice to Vacate cannot be completed until after the moratorium expires. The Notice to Vacate then must provide at least 30 days for the tenant to vacate.  Additionally, the Notice to Vacate cannot include late fees and penalties for rent not paid during the moratorium.  If a tenant does not vacate the property within the 30 time frame, then a 3-day Notice can be provided and subsequently an eviction action can be filed.

 

A landlord may not presume that a tenant has abandoned the dwelling solely because they have not been seen at the dwelling or acknowledged notices. Abandonment differs from absence and requires a fact-specific determination that the tenants are away from the property permanently, and not just to shelter-in-place at another location.  A landlord should make a specific determination with a degree of certainty based on many factors that the tenant has abandoned the property.

 

Lastly, a commercial tenant in Ohio does not receive the same protections under the CARES Act. However, on April 1, 2020, Ohio Governor Mike DeWine signed Executive Order 2020-08D in an attempt to assist small business owners during the economic downturn. The Executive Order “requested” that commercial landlords suspend rent collection for a period of 90 days and further “requested” a moratorium of commercial evictions.  Due to the language, it appears that this is simply a plea, and not a mandate, that commercial landlords refrain from enforcing their lease rights for 90 days.  As such, commercial landlords may be able to file evictions at this time. Although, as a practical matter, the tolling of time limits for filing pleadings enacted by the Ohio General Assembly and Ohio Supreme Court has delayed many court functions.  Therefore, collecting rent from commercial tenants or evicting tenants with the assistance of the court system may be very difficult until the end of July.

 

Notably, the City of Toledo’s Emergency Renters Fund is accepting applications for rental assistance to residential tenants impacted by COVID-19. See: https://toledo.oh.gov/renters?fbclid=IwAR1yu3TlQ4gW5nNABMzrdxpW4GogOwPe1CzFS6dDEbf4mInORKAi-gZx4JQ

 

If you have any questions, we welcome you to contact us.

 

This article is meant to provide a summary of potentially applicable issues and updates, is not comprehensive as to all potential legal issues or topics, and is not legal advice.  

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