RENT IS PAST DUE: What Landlords Need to Know About COVID-19

May 8, 2020 | Uncategorized | 0 comments

In no other time in our American history have we experienced so much job loss and loss of income in such a short period of time. When the month of March began, we all knew there was a virus overseas known as the novel Coronavirus, or COVID-19. We knew the virus had made its way to the United States, but we could have never anticipated the devastating economic impact that it would create. 

Many families have experienced job loss, reduced income, or a family member that has fallen ill with the virus. Because of this, the Texas Supreme Court issued an emergency order suspending residential eviction proceedings through May18, 2020, unless there is a threat of physical harm or criminal activity.

Tarrant county is following the orders given by Governor Gregg Abbott who gave the following statement after the Texas Supreme Court issued the emergency order suspending residential eviction proceedings: 

“This decision by the Texas Supreme Court offers a lifeline to many Texans who are beginning to feel the economic impact of COVID-19. Temporarily suspending residential eviction proceedings will provide Texans whose personal income has been affected by the spread of this virus with greater flexibility to meet their housing needs and provide for their families. I thank the Texas Supreme Court for its swift action on this matter.”

The Supreme Court of Texas’ Twelfth Emergency Order extends this suspension of evictions through May 18, 2020, and extends the execution of writs of possession to May 25, 2020.

Dallas County Judge Clay Jenkins issued a Stay Home Stay Safe amended order on March 29, 2020, advising the Dallas County Justices of the Peace to suspend eviction hearings and writs of possession for at least the next 60 days to prevent renters from being displaced. This suspends residential eviction proceedings and issuance of writs of possession in Dallas County through May 28, 2020.

Further, to supplement state and local orders, the United States Federal Government passed what is now known as the CARES Act. Section 4024 of the CARES Act provides a temporary moratorium on eviction filings as well as other protections for tenants in certain rental properties with federal assistance or federally related financing. These protections are designed to alleviate the economic and public health consequences of tenant displacement during the COVID-19 outbreak. 

The eviction moratorium is in effect for a 120-day period beginning on March 27, 2020, the date the CARES Act was enacted. This suspends residential eviction proceedings on certain rental properties with federal assistance or federally related financing through July 25th. This moratorium applies ONLY to evictions related to NON-PAYMENT OF RENT and other charges. Section 4024’s protections, however, do not absolve tenants of their legal responsibilities to pay rent. Tenants who do not pay rent during the eviction grace period can still face financial and legal liabilities, including eviction after the moratorium ends.

What does this mean for you, the Landlord?

As I write this many landlord are checking their books, and noticing rent payments haven’t been received for April and May. The bottom line for Tenants is the rent is still due. A renter who misses a payment, or pays rent late is still subject to the terms of the residential lease contract and the property code; meaning you, the landlord, may still impose late fees and penalties per the terms of the lease contract, and you, the landlord, may still exercise your right to refuse to accept rent if paid late, with the exception to landlords on certain rental properties with federal assistance or federally related financing. A landlord may still issue a notice to vacate and file an eviction proceeding with the court, however, the courts will not schedule an eviction trial until after May 18, 2020 under the Texas Supreme Court Order, or May 28, 2020 under the Dallas County Judge Clay Jenkins Stay Home Stay Safe Amended Order. If an eviction has been previously granted, a landlord may obtain a writ of possession but the execution of such a writ may not occur until after May 25, 2020, or May 28, 2020 under the Dallas County orders. 

This will create a negative economic impact for landlords who rely on rental income; After all, the mortgage is still due! For some landlords, there is relief in the CARES Act. Two protections for homeowners with federally backed mortgages include:

  1. Your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
  2. If you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.

If you don’t have a federally backed mortgage, there is some relief through the Texas Supreme Court’s Twelfth Emergency Order providing that no trial, hearing or other proceedings may be conducted, and statute of limitations deadlines are tolled until after May 18, 2020. This will help delay any potential foreclosure proceedings against your rental property. If a foreclosure was granted prior to the Texas Supreme Court’s Emergency Orders, an eviction filing may be accepted but issuance and service may not occur until May 18, 2020, or May 28, 2020 in Dallas County. If an eviction had been granted prior to the Texas Supreme Court’s Emergency Orders, a writ of possession may issue but execution may not occur until after May 25, 2020, or May 28, 2020 in Dallas County. This gives some time for you, the landlord and property owner, to make arrangements for possible redemption if such a remedy is available, or to contact the lender and try to work things out. 

Also, many lenders have implemented their own modification programs in light of the current circumstances. You should contact your mortgage loan servicer and find out what modification or forbearance programs they have available to you. 

Unfortunately, there is still a lot of uncertainty surrounding the COVID-19 pandemic, the county stay at home orders, and the economy, so it is unclear if these orders will be further extended or expanded upon.

If you are a landlord and have specific questions regarding your rights as a landlord, contact me