Forbearances, Evictions and Notices to Vacate: Understanding the CARES Act and Ohio and Kentucky Orders
The COVID-19 pandemic and the resulting legislation, executive actions and court orders have had a marked effect on the relationship between landlords and lenders and between landlords and tenants. The following post summarizes key provisions of the CARES Act, recent Ohio actions and orders, and recent Kentucky actions and orders with respect to forbearances, evictions and notices to vacate.
Mortgage Forbearances for Multifamily Residential Landlords with Federally-Backed Loans
(CARES Act § 4023)
Under Section 4023 of the CARES Act, a multifamily residential landlord may qualify for a forbearance with respect to its federally-backed mortgage loan(s).
To be eligible:
- the landlord must be a borrower of a residential mortgage loan that is secured by a lien against a property comprising 5 or more dwelling units,
- the loan must be a HUD, Freddie Mac, or Fannie Mae loan, or otherwise made, insured, guaranteed, supplemented, or assisted in any way by any officer or agency of the federal government,
- the landlord must be experiencing financial hardship due, directly or indirectly, to the COVID-19 emergency, and
- the landlord must be current on its payments as of February 1, 2020.
If the landlord is eligible, it may request a forbearance from its mortgage servicer (orally or in writing). The forbearance is for an initial period of 30 days. The servicer may extend the forbearance for up to 2 additional periods of 30 days upon the landlord’s request, provided that the notice is made at least 15 days prior to the end of the initial 30-day forbearance period. The landlord has the option to discontinue the forbearance at any time.
During the period that the landlord is receiving a forbearance, the landlord may not (i) evict or initiate the eviction of a tenant from a dwelling unit solely for nonpayment of rent or other fees or charges or (ii) charge any late fees, penalties, or other charges to a tenant for late payment of rent. This appears to leave open the possibility of evicting for reasons other than nonpayment of rent, fees or charges.
Furthermore, during the period that the landlord is receiving a forbearance, the landlord may not issue any notice to vacate. After the forbearance period expires, the landlord may not require a tenant to vacate until 30 days after the notice to vacate is provided to the tenant. In other words, the earliest date on which a landlord can require a tenant to vacate is 30 days after the expiration of the forbearance period (provided that notice to vacate was given to such tenant immediately after the expiration of the forbearance period).
Restrictions on Evictions and Notices to Vacate for Residential Landlords with Federally-Backed Loans
(CARES Act § 4024)
Under Section 4024 of the CARES Act, a landlord of a “covered dwelling” is subject to certain restrictions on filing evictions and sending notices to vacate.
“Covered dwelling” means a dwelling occupied by a tenant pursuant to a lease or without a lease that is on a property that (i) participates in a covered housing program, (ii) participates in a rural housing voucher program, or (iii) has a federally-backed mortgage loan (such as a Fannie Mae, Freddie Mac or HUD loan).
For the 120-day period beginning on March 27, 2020 and ending on July 25, 2020, landlords of “covered dwellings” may not (i) make any filing with any court to initiate eviction proceedings for nonpayment of rent or other fees or charges or (ii) charge fees, penalties or other charges to the tenant related to nonpayment of rent. This appears to leave open the possibility of evicting for reasons other than nonpayment of rent, fees or charges.
Furthermore, for the 120-day period beginning on March 27, 2020 and ending on July 25, 2020, landlords of “covered dwellings” may not issue any notice to vacate. On and after July 26, 2020, landlords may not require a tenant to vacate until 30 days after the notice to vacate is provided to the tenant. In other words, the earliest date on which a landlord of a “covered dwelling” can require a tenant to vacate is Tuesday, August 25, 2020 (provided that notice to vacate was given to such tenant on July 26, 2020).
The immediately preceding restrictions on evictions and notices to vacate are in effect for landlords of “covered dwellings” for the period from March 25, 2020 through July 25, 2020, regardless of whether the landlord is receiving a forbearance under CARES Act § 4023.
Governor Mike DeWine issued an executive order on April 1, 2020 which requests that landlords suspend for at least 90 consecutive days rent payments and evictions for small business commercial tenants experiencing economic hardship due to the COVID-19 pandemic. It also requests that lenders provide Ohio commercial real estate borrowers an opportunity for forbearance for at least 90 days. (However, if Freddie Mac or Fannie Mae financing is in place, the CARES Act rules discussed above will control.) Note that DeWine’s order is a request, not a mandate. The full text of Governor DeWine’s order can be found here.
The Ohio Supreme Court issued guidance to local courts to temporarily continue eviction filings, pending eviction proceedings, scheduled move-outs, and the execution of foreclosure judgments, except in instances where allegations of domestic violence are involved. The Ohio Supreme Court guidance can be found here. Orders issued by Hamilton County courts can be found here.
Governor Andy Beshear, as part of his “Healthy at Home” order dated March 25, 2020, suspended all evictions within Kentucky, and ceased enforcement of eviction orders for residential premises, for the duration of the COVID-19 emergency. (However, if Freddie Mac or Fannie Mae financing is in place, the CARES Act rules discussed above will control if such rules are more restrictive.) The order does not relieve tenants from the obligation to pay rent, to make mortgage payments or to comply with any other obligation the tenant may have under their tenancy or mortgage. The full text of Governor Beshear’s order can be found here.
The Kentucky Supreme Court issued an order that, through Friday, May 1, 2020 (or until further order of the Court), all civil and criminal dockets are cancelled (including evictions), with the exception of certain emergency and time sensitive matters (e.g. domestic violence, custody, child support, criminal evidentiary hearings, in-custody arraignments, in-custody preliminary hearings, etc.) and unless a judgment determines that a matter requires prompt attention. With the exception of emergency matters and hearing statutorily required to be held, all existing evictions cases are continued. The circuit clerk will not accept new eviction filings until after May 31, 2020. The full text of the Kentucky Supreme Court’s order can be found here.
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