The Federal CARES Act and Residential Properties
On March 27, 2020 the Federal government enacted the Coronavirus Aid, Relief, and Economic Security Act. The intent of the act is to keep workers paid and employed, enhance the healthcare system, and stabilize the economy in the face of the COVID-19 pandemic. A key provision of the act addresses eviction restrictions and mortgage relief in an effort to help people keep their homes during this time. The full text of the CARES Act can be found here.
The act preempts state law and establishes a number of protections. One such protection prohibits filing or initiating legal action to recover possession of covered properties. Protected properties are those that participate in federal housing programs or that are financed under a “federally backed mortgage loan” or “federally backed multi-family mortgage loan.”
“Federal” Housing Programs include; (i) Section 8 Housing Choice Voucher programs (42 U.S.C. §1437 (f)), (ii) Section 8 project-based housing (42 U.S.C. §1437 (f)), and (iii) Low-income Housing Tax Credit (26 U.S.C. §42)
Federally-backed Mortgage Loans are those insured, guaranteed, supplemented, or assisted in any way by the Federal Government. Multi-family mortgage loans are those which cover property used to house multiple families, usually five or greater, such as an apartment building. Virtually any mortgage secured through a bank will likely be covered under the Act, but it is always wise to speak directly with your loan servicer to ascertain whether your property qualifies.
Residential property evictions are banned through July 25, 2020.
This means Landlords of covered properties may not; (i) initiate or file any non-payment of rent proceedings against tenants, (ii) charge or collect late fees from tenants, or (iii) terminate a tenancy with less than 30 days prior notice for the nonpayment of rent.
Qualified mortgage holders with up to 30 days of forbearance on their mortgage payments if they hold federally backed mortgage loans, or federally backed multi-family mortgage loans as described above. This may be renewed up to two times, for up to 90 days. It is important to understand that a forbearance is not forgiveness and fully understand the impact of these deferrals.
It is also worth noting that there are no eviction or foreclosure moratoriums in place for commercial properties.
If you have any questions regarding your real estate properties, the CARES Act or your rights the Kendrick Law Group is available to guide you. Contact us today for a complimentary consultation.
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