The COVID relief bill signed into law on December 27, 2020 extended many of the provisions included in the original Coronavirus Aid, Relief, and Economic Security (CARES) Act passed earlier in 2020. But what’s in it for landlords? While the new package doesn’t provide any direct relief for landlords, aid for struggling tenants should help landlords indirectly. You also may be entitled to relief (such as protection from foreclosure) at the state or local level.
These are trying times for small business owners, including many landlords, as COVID-19 continues to strain resources across the board. Make sure you understand your options, including federal relief that’s provided in the latest relief bill, in order to make informed decisions for your rental business.
Questions about the coronavirus pandemic?
Visit the Coronavirus Legal Center and ask a lawyer today.
Does the bill provide foreclosure protections for small landlords?
The federal relief bill does not provide foreclosure protections for small landlords. However, the Federal Housing Administration (FHA) extended its eviction and foreclosure moratorium on FHA-insured mortgages through March 31, which may help some landlords avoid foreclosure.
Additionally, you may be eligible for COVID-related protections at the state or local level that may help you avoid or delay foreclosure. Examples include:
- California. The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 helps landlords with up to four units of residential rental property. The measure, which expires on January 1, 2023, requires mortgage servicers to provide landlords with information about forbearance options but does not halt the foreclosure process.
- District of Columbia. All evictions and foreclosures have been halted by the D.C. courts through the COVID-19 crisis (and for 60 days after). Qualified homeowners, including landlords, are eligible for up to 90 days of deferment for mortgage payments during this period as well.
- Indiana. Eligible rental property owners affected by the pandemic may qualify for a deferral of principal payments on their mortgage through April 30.
- Michigan. Through the MiMortgage Relief Partnership, certain mortgage lenders have agreed to provide additional relief for struggling property owners, including a 60-day freeze on foreclosures (following an agreement with your lender) and relief from mortgage-related late fees and charges for 90 days.
- New York. Mortgage foreclosures on rental property are suspended until at least May 1, in accordance with recent COVID relief legislation. To qualify, rental property owners must own fewer than 10 units, use one unit as a primary residence, and rent or make available for rent the remaining units.
In an ideal world, all moratoriums on evictions would be balanced with foreclosure moratoriums for landlords struggling to collect rent. While that’s not the case in all jurisdictions, many states offer other forms of relief for struggling property owners.
How will rent relief for tenants trickle down to landlords?
While the latest COVID relief bill doesn’t provide direct assistance for landlords, the provisions aimed at struggling tenants should help. The latest extension of the federal eviction moratorium will end on March 31, so—depending on any applicable laws in your state or local municipality—you may be free to evict a tenant for nonpayment of rent. However, the relief package also provides $25 billion to help tenants pay rent and utilities.
Eligible tenants may receive assistance for up to 12 months. Rental relief in the December COVID stimulus package is available to tenants with:
- A household income that’s no more than 80% of the area’s median income;
- One or more household members who would experience homelessness without aid; and
- One or more household members who qualify for unemployment benefits or who have experienced a financial hardship as a result of COVID-19.
If you, the landlord, decide to participate in this program, then the payments will be made directly to you.
How do I negotiate a payment plan with my tenant?
It may be beneficial for you and your tenant to reach a compromise that allows your tenant to continue renting but with modified terms, such as a reduced or deferred monthly rent. If their lease is ending, you may consider switching to a Month-to-Month Rental Agreement, which could give you and your tenant more flexibility in case things don’t work out. If you decide to reduce the rent or make other such changes, you’ll want to put it in writing with a Lease Amendment.
Whatever you end up doing, make sure you negotiate directly with your tenant and in good faith and properly document any changes to the original agreement. Of course, you and the tenant may agree that the best course of action is to sign an Agreement to Cancel the Lease without resorting to eviction or other adversarial action.
How can I help my tenant receive unemployment benefits or other types of assistance?
Since your tenant’s ability to pay the rent will depend on their income and any relief resources to which they may be entitled, it’s in your best interest as a landlord to help them get the assistance they need. If your tenant is unemployed and hasn’t yet applied for unemployment insurance (UI) benefits, you could provide them with a link to your state’s UI program or even just hand them a printout with the application instructions.
They may be entitled to local, state, or federal housing assistance, such as the programs listed above, many of which are payable directly to the landlord. If they’re struggling to put food on the table, they may be eligible for the Supplemental Nutrition Assistance Program (SNAP).
Take advantage of available resources to help your rental business stay afloat
As a landlord, you understand just how interconnected we are and how your tenant’s hardships can become yours as well. In the spirit of helping one another, you can also help your rental business endure the COVID-19 crisis. If you have any specific legal issues you’d like to discuss, don’t hesitate to speak with a Rocket Lawyer On Call® attorney.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.