The CARES Act and Evictions: What Landlords Need to Know

June 1 is rapidly approaching, and it appears that courts throughout the state of Kentucky will re-open on a limited basis at that time. On Friday, May 15, the Kentucky Supreme Court issued an order that addressed the re-opening of the court. The Order states that, effective June 1, the courts are to resume hearing civil and criminal matters using available technology to conduct proceedings remotely.

If the judge determines that a matter requires in-person attendance, the following guidelines must be followed:

• Courtrooms will operate at 33% capacity
• High-risk individuals must be allowed to participate remotely
• Social distancing must be followed
• Masks/scarves/bandanas that cover the mouth and nose must be worn
• Microphones, tables, and other surfaces must be disinfected after each use
• No entry by those exhibiting symptoms of COVID-19, who have been asked to quarantine, or who have been diagnosed with COVID-19 during the last 14 days or who have had contact with anyone who has.
• No purses or enclosed bags unless medically necessary

What does that tell us about evictions? Theoretically, the courts should start hearing eviction cases that were previously filed during the month of June. I do not know at this time if that will actually happen in Fayette County or not. I can tell you that some counties in central Kentucky have eviction hearings listed on their docket schedules right now. Louisville does. Jessamine County does. Scott County does. Fayette County does not. So, it remains to be seen whether evictions that were filed back in March will be heard in June or if the courts will make us wait until July. I’ll pass more info along as I get it. I have a meeting Wednesday afternoon on what to do with eviction cases once the courts reopen, so I hope to know more after that.

For most of you, the plan should be to be ready to file your evictions on July 1. But not all of you will be eligible to do that. Here’s where you need to pay very close attention. The federal CARES Act put a nationwide moratorium on evictions through July 25 at certain properties. I feel confident that when the courts open back up for eviction filings they will require landlords to certify that they are not filing the eviction at a CARES Act property. That means between now and early June you need to figure out for sure if your property is governed by the CARES Act. So let’s spend a few minutes looking at the details.

The CARES Act

On March 27, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The law does a number of things that landlords need to be aware of, but the first step is figuring out if the Act applies to your property. The CARES Act covers any property that:

1. has a federally backed mortgage loan or multifamily mortgage loan.
2. is covered by the Violence Against Women Act, which includes any property that:
3. participates in a HUD program
4. constitutes public housing
5. participates in the Section 8 Housing Choice Voucher program
6. participates in Section 8 project-based housing
7. is considered Section 202 housing for the elderly
8. participates in Section 811 housing for people with disabilities
9. participates in Section 236 multifamily rental housing 
10. Participates in Section 221(d)(3) Below Market Interest Rate (BMIR) housing
11. Participates in HOME
12. Participates in Housing Opportunities for Persons with AIDS (HOPWA)
13. Participates in McKinney-Vento Act homelessness programs
14. Participates in Section 515 Rural Rental Housing, Sections 514 and 516 Farm Labor Housing, or Section 533 Housing Preservation Grants
15. Participates in Section 538 multifamily rental housing
16. Participates in Low-Income Housing Tax Credit (LIHTC)

Most of you will know if you participate in any of the programs that are covered by the Violence Against Women Act, as participation in those programs is fairly apparent. However, some of you may not be aware of whether your property has a “federally backed” loan or not. In that case, my advice is to reach out to your lender to find out. Specifically, you need know if your loan meets any of the following criteria:

• Was it made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by any officer or agency of the Federal Government?

• Was it made in connection with a program administered by HUD or any other such officer or agency? or

• Was it purchased or is it securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association?

If you participate in any of the programs listed above or the answer to any of those three questions is “Yes”, your property is governed by the CARES Act. Here’s what that means for you.

You may not charge any fees for the failure to pay rent from March 27-July 25. No late fees, no penalties, etc. based on the failure to pay rent. If you’ve been charging such fees, you need to reverse them immediately.

You may not take action against a tenant who has failed to pay rent until July 26. The CARES Act suspends evictions until July 25. After that, you must issue a 30-day notice to pay or vacate, regardless of any state law or lease provision to the contrary. You may be used to giving seven (7)-day notices. If you’re covered by the CARES Act, you must give a 30-day notice and must wait until July 26 to give it.

Frequently Asked Questions about the CARES Act

What about evictions that were filed prior to March 27, 2020? Those cases are not affected by the CARES Act. You may move forward with those cases as soon as the courts allow.

What about evictions based on non-rent issues like failure to follow the rules of the property? The CARES Act does not affect those cases. Proceed as you normally would with giving notice and opportunity to cure, then file eviction if necessary in July.

What about non-renewals of the lease? The CARES Act would likely prohibit non-renewing a lease based on non-payment of rent during the period of March 27-July 25. In that case, you’d wait until July 26 and give the 30-day notice to pay or vacate. The CARES Act would not impact your ability to refuse to renew a lease or tenancy during that time period for reasons that are not related to non-payment of rent. As a quick review, you can refuse to renew a lease or tenant for any reason that is not (1) discriminatory or (2) retaliatory. See my post on non-renewals for more information.

CARES Act Database

The best resource for determining if your property is covered by the CARES Act is to speak with your lender. Beyond that, the National Low-Income Housing Coalition has created a searchable database that has a list of properties throughout the nation that it believes is covered by the CARES Act. Click here to access the database. I can tell you that this database is not without errors, nor is it complete. But it is a handy resource as a place to begin your research.

Here’s what I can tell you. There are tenant advocates out there who are itching to find a landlord who violates the CARES Act, either by filing an eviction too early or by charging late fees or penalties for non-payment of rent. They will be using this database. So, it’s a good idea to check the database to see if your property is listed.

SUMMARY

•  The Courts will open in limited capacity on June 1
• Conventional properties may file evictions on July 1.
• The CARES Act applies to properties with a federally backed loan or that participate in federal government programs.
• CARES Act properties may not charge late fees from March 27-July 25.
• CARES Act properties must issue 30-day notices to pay on July 26.