The federal disaster relief, CARES Act, passed last week included a 120-day moratorium on evictions, late fees and other penalties, starting on March 27, the date the legislation was signed. It is important to understand the details of this provision as we approach the first rent collection period since the pandemic was declared.
- This moratorium applies to all properties with a federally insured mortgage (Fannie Mae, Freddie Mac, FHA, HUD, VA) and properties participating in a covered housing program, such as the Section 8 voucher program, rural housing voucher program, the Low-Income Housing Tax Credit and properties covered by the Violence Against Women Act.
(Note: For properties with Section 8 voucher holder residents, the moratorium applies to voucher holders only, not to all the residents at the property. Also, for properties with a Fannie Mae/Freddie Mac mortgage, this moratorium applies regardless of whether the property opts to partake in the GSE mortgage forbearance programs, which have their own eviction moratorium requirements.)
- Covered property owners are prohibited from providing eviction notices or initiating legal actions to recover possession from residents for nonpayment of rent, fees, or penalties for 120 days. The law also requires property owners to provide eviction notices at least 30 days in advance of the eviction date, which essentially extends the eviction moratorium to 150 days.
- Covered property owners also may not charge late fees to any resident.
- This moratorium applies to ANY resident who fails to pay their rent, not just those whose incomes have been disrupted by COVID-19. Unfortunately, the way it is written, that currently means the moratorium also applies to residents who simply choose not to pay their rent, which is why communications on this topic should remind residents that the moratoriums are just a pause on the process, not a rent forgiveness mechanism.
- This federal moratorium supersedes any state/local eviction moratoria that are shorter or less stringent, namely the many state and local moratoriums that only provide protection to residents who can show an adverse impact from COVID-19. It also does not prevent the enforcement of more protective state/local restrictions.
NMHC is already working with Congress to try and fix the blanket nature of these moratoriums as well as other troubling elements of the bill.