Available Remedies for Housing Providers In the Event of Default during COVID-19

The Covid-19 pandemic has caused much uncertainty for housing providers over the past few weeks.  Both the federal government and cities have made changes to policies and procedures that will certainly affect your rights and responsibilities.

The most recently passed federal legislation is referred to as The CARES Act and is Phase three of Congress’ coronavirus relief aid. Section 4024 of this Act specifically deals with residential evictions during the next 120 days. The Act eliminates the ability to evict tenants for failure to pay rent or other fees in certain “covered properties”.  Further, those properties not covered by CARES may still be subject to restrictions imposed by local governments and by order of individual courts.

The following memo explains what types of tenancies are affected by the Act, the duration of the Act, and possible solutions. As always, we recommend that you call Powers Friedman Linn about your specific situation.

CARES Act Application and Restrictions

Application.  The CARES Act imposed a moratorium on evicting filings for certain covered properties.  The moratorium applies to all residential properties with (1) A federally backed mortgage loan or (2) A federally back multifamily loan.  Applicable mortgages include loans to real property that are purchased, insured, or assisted by Fannie Mae, Freddie Mac, or HUD. Sec. 4024(a)(4).

The moratorium also applies to the properties that participate in the following programs:

  1. Section 1701q of title 12- housing for the elderly;
  2. 42 U.S.C. 8013 – supportive housing for persons with disabilities;
  3. 42 U.S.C. 12901- supportive housing for persons with immunodeficiency syndrome;
  4. 42 U.S.C. 11360 – housing entities receiving grants for individuals at risk for homelessness;
  5. 42 U.S.C. 12741 -housing authorities receiving funds to supply affordable housing (i.e. CMHA, LMHA properties);
  6. 12 U.S.C 17151 – housing for low and moderate income families and displaced families;
  7. 42 USC 1437d and 1437f – low income families receiving assistance payments (Section 8 project-based housing and Section 8 Housing Choice Voucher program);
  8. 42 USC 1484-1486, 1490 – rural housing for farmers and the like;
  9. 26 USC 42- low income housing receiving tax credits (LIHTC)

Restrictions.    The CARES Act imposes a 120-day moratorium on evictions for non-payment of rent or other contractual charges from all covered properties.   The effective period begins on March 27, 202 and expires on July 25, 2020.  During this time, a housing provider for a covered property cannot charge late fees or other “penalties” and cannot issue a 3 Day Notice or any other notice of default for any financial obligation due to the landlord.

Exceptions.   The CARES Act moratorium does not apply to commercial (non-residential) leases.  It also does not prohibit a housing provider from serving notices to tenants regarding conduct-based lease violations or filing an eviction action based on a non-monetary breach of the lease.

The Act further does not restrict a housing provider’s ability to terminate a lease at the expiration of the lease term or to non-renew a periodic tenancy.    A housing provider can still file an eviction action against a tenant for “holdover”.  In the context of a non-renewal of lease term, the landlord must  properly serve the notice in accordance with the timeframe required by the lease.  For termination of a periodic or month-to-month tenancy, the landlord must serve the 30-day notice in a manner consistent with a rental period or payment term.

Additional Restrictions by  State and Local Governments

In addition to the restrictions imposed by the CARES Act, local governments and individual courts have imposed further restrictions on the eviction process.

On March 23, 2020, Cleveland City Council passed an emergency resolution suspending evictions that  resulted from an economic hardship caused by COVID-19 pandemic for at least 60 days.   The Cleveland City Council Resolution appears to exclude defaults that occurred prior to April 1, 2020 but would apply to both residential and commercial cases. The Cleveland Housing Court has issued an order canceling all eviction hearings and bailiff move-outs for cases already filed with the Court until after April 17, 2020.  It is unclear when the new hearing and move-outs dates will be set.  The Cleveland Housing Court has also stopped accepting new eviction filings until April 20, 2020.

Other municipal courts have generally remained opened for new eviction filings,  but most have continued any hearing dates until late April or May.  Its is unclear when the new hearing dates will be set or when these courts will resume conducting bailiff move-outs.

The Ohio House of Representatives introduced House Bill 562, which proposes a moratorium on any eviction actions until the state of emergency order issued by the Governor terminates.  The bill has only been introduced and likely will be not be voted on in the next 60 days.