By Rachel Puryear, Attorney at Law
If you are a “mom and pop” landlord, you may be anxiously wondering if you will ever get that rent check for April. Given the widespread job losses occurring due to the coronavirus, as well as moratoriums on evictions being implemented, hardship is unfortunately in store for a lot of small landlords. Even if you were lucky enough to collect rent for this month, you might not be able to for later months. So what can you do to protect yourself and minimize your losses?
Relief pursuant to the CARES Act:
If you are still paying your mortgage, and are struggling to do so now because of the pandemic, you may be eligible for mortgage forbearance pursuant to the CARES Act. In order to qualify, your mortgage must be federally backed (i.e., made by a federal entity such as HUD, FHA, Freddie Mac, Fannie Mae, VA).
- If you have a single-family mortgage: You must write to your mortgage servicer requesting forbearance for 180 days due to coronavirus-related difficulties. You can also request an extension of an additional 180 days if necessary. (For a total of 360 days.) No additional fees or penalties or interest may be assessed against you which is not normally part of your mortgage agreement. The servicer may not request any additional documentation beyond your original claim.
- If you have a multi-family mortgage: Same as above, except that you only receive an initial 30 days of forbearance, plus the option to extend for two additional 30-day periods after that. (For a total of 90 days.) You cannot charge any fees for nonpayment or late rent payment for tenants on your multifamily properties.
- Foreclosure moratorium: Foreclosures are suspended for 60 days beginning on March 18, 2020 (60 days later is May 17, 2020). This does not apply to vacant properties.
- Eviction protection: Through July 25, 2020, tenants in housing which is federally subsidized or subject to a federally-backed mortgage cannot be evicted.
- Note: Forbearance of a mortgage is not a waiver of the payment. It simply pauses the monthly payments.
What if you do not qualify for relief under the CARES Act?
In California, many banks including Wells Fargo, U.S. Bank, CitiBank, and J.P. Morgan Chase have agreed to grant mortgage relief and delay foreclosures. Check with your bank to find out what help is available. Many other states have also negotiated varying levels of relief with financial institutions for homeowners not qualifying for relief under the CARES Act.
What if you need more relief?
You can apply for an Economic Injury Disaster Loan (EIDL). Such loans are being provided pursuant to the recent stimulus package.
According to Congresswoman Jackie Speier (in a town hall meeting from yesterday), small landlords distressed by the coronavirus situation are specifically eligible to apply for an EIDL. These loans can be for up to $2 million dollars, have an interest rate of 3.75%, are available to small businesses suffering economic injuries due to the coronavirus, and are meant to pay for fixed and operating expenses (like house maintenance and property taxes) which could have been paid for had the disaster not occurred, or for extraordinary expenses arising out of the disaster (like having to sterilize a unit because a sick tenant was living there). You can apply online at the website of the Small Business Association.
As an added bonus? You can get a $10,000.00 advance on the EIDL within three days of the SBA processing the application. Even if your loan is not approved, you can still keep the $10,000.00 as a grant. If nothing else, this should help you out.
There is no fee to apply for this loan.
As always, reach out to your elected representatives and tell them your concerns. If your needs are not being met, tell them what could be done to help your situation better.
As always, dear readers, be safe and healthy out there. Please help keep everyone safe by observing official recommendations for social distancing, sheltering in place, and practicing proper hygiene. Please also help others where you can in ways big and small, and ask for help if you need it. We will all get through this together. Thank you for reading, and for following me. I hope you enjoyed this, and learned something valuable.
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Please note that the above is offered for educational purposes only. The information presented may not take into account every exception, variation, or complication which could apply to someone’s legal matters. Accordingly, nothing in this post or blog is ever intended as, nor should be construed by or relied upon by anyone, as legal advice. If you need legal advice, please consult an attorney who can give you assistance specific to your needs.