This article provides a concise summary of the newly enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as it relates to foreclosure relief for homeowners and owners of multifamily real estate as well as protection for tenants residing in such properties. The provisions of the Act that affect real estate will remain in effect until the earlier of (a) December 31, 2020, or (b) the date of the President’s termination of the national emergency related to COVID-19.
The CARES Act provides the following relief to homeowners, landlords, and tenants:
Forbearance – Residential Properties
(single family residential to 4-unit buildings, including condominiums and cooperatives)
A borrower with a federally backed mortgage loan (FHA, VA, USDA, FHLMC (Freddie Mac), FNMA (Fannie Mae)) may request forbearance—whether or not the borrower is currently delinquent on payments—for up to 180 days (with allowance for a 180-day extension). The borrower merely has to make a request of forbearance to the loan servicer and provide a written confirmation of a financial hardship due directly or indirectly to COVID-19. In addition, no interest, penalties, or fees accrue during the period of forbearance.
Forbearance – Multifamily Properties
A multifamily borrower with a federally backed multifamily mortgage loan (HUD, Freddie Mac, Fannie Mae) may request forbearance for up to 30 days (with allowance for up to two 30-day extensions), but the borrower must have been current on payments as of February 1, 2020. The borrower must give notice to the loan servicer at least 15 days before the expiration of the initial 30-day period for any extension of a forbearance period (or 15 days before the expiration of a renewed 30-day period). During the forbearance period, the multifamily borrower may not evict or initiate eviction of any tenants solely for nonpayment of rent or charge any tenants late fees, charges, or penalties for such nonpayment of rent. In addition, the multifamily borrower may not evict any tenant in its building prior to expiration of the forbearance period. The earliest a multifamily borrower can evict a tenant would be 30 days after giving a notice to vacate upon the expiration of the forbearance period.
Except for a vacant or abandoned property, a loan servicer of a federally backed mortgage loan may not initiate foreclosure proceedings, move for an order of sale, or execute a foreclosure related eviction for 60 days beginning on March 18, 2020.
For a period of 120 days beginning on the date of enactment of the Act (July 25, 2020), the landlord of any property that has a federally backed mortgage loan (or multifamily mortgage loan) may not evict or initiate eviction of any tenants for nonpayment of rent or charge any tenants late fees or penalties for such nonpayment of rent. In addition, the landlord may not require a tenant to vacate until 30 days after giving notice to vacate. Such notice cannot be provided until the expiration of the 120-day moratorium.
Click to review the provisions of the Act that pertain to the above real estate provisions.
We will continue to provide updates on these regulations, as well as other legal developments in real estate in connection with the COVID-19 pandemic.
Q: If I am a borrower under a federally backed multifamily mortgage loan, and I do not seek a forbearance request from my loan servicer, does the eviction moratorium still apply to my apartment complex (i.e., multifamily building)?
A: Yes, the language of the Act is broad, and the eviction moratorium will apply notwithstanding any refrain from seeking forbearance assistance.
Q: What if my residential tenant defaults under the lease for reasons other than non-payment (i.e., non-monetary default)?
A: The Act only prevents eviction for reasons of non-payment not for failing to adhere to other non-monetary provisions in a lease (i.e., promise to maintain the property, promise to repair the property, etc.).
Q: Can I still collect past due rent at the end of the eviction moratorium (July 25, 2020)?
A: Yes, the Act only prevents eviction during the eviction moratorium. The Act does not forgive tenants of the obligation to pay rent altogether.