As referenced in our prior blogs from April, early May, and late May, the federal CARES Act (see pp 561-564 for relevant provisions) implemented a moratorium of evictions for nonpayment of rent in covered properties. The Federal Moratorium is set to expire July 25, 2020. Beginning July 26, landlords of covered properties will be permitted to proceed for possession against nonpaying tenants. Our May 28, 2020 post defines covered properties. However, landlords must proceed with caution against nonpayment tenants because the CARES Act continues to impose two main restrictions on landlords even after the expiration of the prohibition against nonpayment evictions.
Restriction on a Landlord’s Ability to Charge Late Fees on Unpaid Rent
Under the CARES Act, a landlord of a covered property cannot charge “fees, penalties, or other charges” to the tenant related to any nonpayment of rent that occurs during the 120-day moratorium period. This prohibition continues after the expiration of the moratorium period, meaning that a landlord can never apply any type of late fee, interest, or other penalty for rent that was due and went unpaid during the 120-day Federal Moratorium period from March 27-July 25, 2020.
For example, if on July 26, a landlord sends a notice of nonpayment of rent to a tenant who failed to pay rent due on July 1, the notice cannot contain any type of late fee. Likewise, this tenant should not be incurring late fees, including within the landlord’s internal accounting system, for such unpaid rent.
30-Day Notice to Vacate Additional Requirement on a Landlord’s Ability to Evict
The CARES Act adds what is effectively a 30-day tail on to the moratorium period. Once the moratorium period expires on July 25, a landlord may not “require a tenant to vacate the unit [due to nonpayment of rent]” until 30 days after the landlord has provided the tenant with notice to vacate, and such notice may not be provided any sooner than July 25, 2020. Thus, residential landlords are essentially prohibited from evicting a tenant for nonpayment of rent until August 26, 2020, and otherwise until after they have given a tenant an additional 30-day period to vacate the premises.
Accordingly, when dealing with nonpaying tenants, landlords of covered properties must provide a new 30-day Notice to Vacate, in addition to the standard Iowa 3-day Notice of Nonpayment of Rent, before commencement of an eviction action. To assist, we drafted a new Notice of Non-Payment of Rent for use with CARES Act Properties, which should be used for all covered properties as of July 26 and going forward, in lieu of the standard Iowa Notice of Nonpayment of Rent. This new notice contains the normal 3-day notice to cure language and also contains the additional 30-day notice to vacate requirement under the CARES Act.
As set forth within the notice, Iowa tenants will still only have the normal 3 days from the date of the notice (or 7 days if the notice is served via mail/posting) to cure their default in rent, but if tenants do not cure, they have a total of 30 days (or 34 days if the notice is served via mail/posting) during which they can remain in the premises before the lease terminates and the landlord can commence an eviction action.
Undecided Questions under State and Federal Law
One question Iowa landlords need to answer is whether they will include in the Notice of Nonpayment of Rent one month’s worth of rent, as is typical, or rent for all months that was not paid during the moratorium period. Consult your attorney to discuss the specifics of your situation.
In light of Iowa’s 30-day peaceable possession statutory bar, the safest approach is to include only the current month’s rent in the notice. However, other landlords, after speaking to legal counsel, may decide they are comfortable with the notice including rent for all months unpaid during the moratorium period, particularly in light of recent Iowa case law, including Des Moines RHF Hous., Inc. v. Spencer, and the Iowa Supreme Court’s May Order: In the Matter of Ongoing Provisions for COVID-19 Impact on Court Services. Paragraph 40 of the Iowa Supreme Court order states “the section 648.5(18) bar does not apply where the plaintiff could not have initiated proceedings under chapter 648 due to a state or federal moratorium.”
However, it is currently unclear what county magistrates will do when faced with this question, and, as noted, landlords should consult with their attorney to evaluate their particular situation.
In addition, landlords of covered properties nationwide face the unanswered question of when the 30-day notice to vacate requirement sunsets under the CARES Act. There is no sunset date written into the CARES Act, so landlords of covered properties will be required to give tenants this extra 30 days to vacate until congressional action is taken.
Other Considerations for Iowa Landlords
There are several other considerations for landlords to take note of and be familiar with relating to the Iowa Supreme Court’s recent order, including the following:
- Going forward, for all evictions based upon nonpayment of rent, landlords must complete and file the new CARES Act Landlord Verification, which was discussed in our prior blog post.
- Landlords should also take note of the Court’s provided information regarding the scheduling of eviction hearings, hearing requirements, the 30-day peaceable possession bar, and the duty to advise the court of COVID-19 risks. These topics were discussed in detail in our prior blog post as well.
Landlords with tenants who have not paid rent in months are thankful that the moratorium is coming to an end but should still take note of the requirements before proceeding with eviction. Landlords are encouraged to consult an attorney to discuss the specifics of their situation to ensure their status as a covered property and the right next steps.