âEmergency Rule Related to Residential Rental Late Fees and Penalties âOn what date may landlords resume charging late rental fees and penalties because the emergency rule is no longer in effect?
Late rental fees and penalties may be charged starting August 9, 2020.
Late fees and penalties may never be assessed or charged for any missed rent payment or any late rent payment that occurred during the effective period of the emergency rule. The emergency rule is effective from April 25, 2020 through August 8, 2020. â
It seems to me that August 8th is mathematically improbable, but it is the date we should adhere to.
Why improbable?
If the Public Health Emergency ended with the May 13th Supreme Court decision, then 90 days is August 11th. This has no consequence for most tenancies as the due date of the rent would generally be August first.
However, as The WI Supreme Court found EO 28 to be âunlawful invalid and unenforceableâ, then the Public Health Emergency ended on 4/24 with the expiration of EO 12, 90 days after is July 23rd.
If you charged late fees after April 24th you have violated the DATCP 134. The penalties for doing so are great. You should reverse those late fees and notify your tenants that you have done so.
More important than late fees of course is working with your tenants that are struggling. My company waived late fees for April, well before the moratorium. We will evaluate the situation for September based on what we see the economy doing at that time.
There is a prohibition against evictions for nonpayment until July 25th for tenants receiving Rent Assistance or properties covered by the CARES ACT due to having a federally backed mortgage. There are some other factors as well. For an overview see the prior posts on Eviction Moratoriums Under the CARES ACT and Eviction Moratoriums under Section 8, Rent Assist.
But can you evict for cause? Yes.
Be aware if you try to “invent” a cause eviction to remove someone who isn’t paying in a covered unit you may have more problems than just losing the eviction case. So save this for solving the problem it was meant to be used for.
Here is a HUD FAQ on this:
Q8. During the moratorium period, may owners evict tenants for lease violations that are not related to nonpayment of rent, fees, or charges?
Yes, the CARES Act moratorium does not apply to evictions based on violations of permitted lease terms other than nonpayment of rent or other fees, penalties, and charges. CDBG, NSP and CDBG-DR grantees, subrecipients, and owners of properties with CDBG, NSP, or CDBG-DR- assisted loans should also review their state and local laws, as many are also enacting their own moratoriums on evictions.Â
There is a lot to consider now that the eviction moratorium has been lifted, including the delays facing the eviction courts as well as if the tenant is still waiting to receive unemployment or other payments.
Vacancies and evictions are expensive for owners and disruptive for tenants. When there is a better option, take it. In some cases, mediation may be a better answer than court.
In all cases, you should talk to your tenants before filing, both to understand their situation as well as giving them time to make arrangements to pay or move.
Suggest they attempt to get on the WI Rent Assist Program waiting list as well as apply for Emergency Assistance. We have links to these as well as a list of other resources for tenants on the Affordable Rental Associates, Tenant Resource page that you can share with your tenants.
I am reading more and more that both state and federal unemployment is not being paid as it should be. Part of the problem is many employers are closed and therefore are not responding to UC separation notices. Part of the problem is the state computers they are trying to process the deluge of new applications on is less powerful than your kids Nintendo.
The Federal Pandemic Unemployment Compensation program has not paid one of three who should be eligible to receive it:
Almost one-third of unemployment benefits estimated to be owed to the millions of Americans who lost their jobs as a result of the coronavirus slump havenât been paid yet, as flagship policies struggle to cope with the unprecedented wave of layoffs.
In Milwaukee County, evictions hearings will resume on Thursday, May 28 — starting with the 300 cases that were filed before the moratorium went into effect. However, [Judge] Colon says new cases may not be heard in Milwaukee County until late June or early July.
WI Governor Tony Evers initiated a $25M rent assist program that will help a lot to avoid evictions. Those checks are being administered by local organizations. Here the organization is SDC. The first payments will be issued mid-June.
WI Unemployment has a backlog of 700,000 people who have not received their checks, many of whom’s applications have not been processed. Eviction courts are not ready yet. Judge Colon has stated new filings will be heard in late June, early July.
For all of these reasons, owners should be prepared to work with their tenants. Not just for the tenants’ sake, not just because it is the right thing to do in many cases, but also because it is often the best decision for your business as well.
I was invited by TMJ4 to talk about the end of the WI eviction moratorium on Friday. I cannot find a link to the show, but here are my notes and a picture from when my granddaughter happened to catch the broadcast when she was watching tv. It must have been one of her homeschooling assignments. đ
My notes for the interview. Unfortunately I was not able to make all my comments.
How are you working with tenants?
Most important is communication. Tenants need to talk to their landlords. The sooner the better.
Despite dire predictions by attorneys for Legal Action, we do not anticipate a large increase in overall evictions.
What may be surprising to some, rental owners do not like evictions. It is in both parties best interest for a resolution. Successful landlords need successful tenants. Every eviction is costly to landlords in terms of lost rent and often damages. Evictions are costly to tenants as it impacts their future housing and is disruptive to their lives.
If tenants have resources to pay rent, then there will be no eviction crises when the moratorium is lifted. Governor Evers just announced $25M Wisconsin Rental Assistance Program will go a long ways to providing those resources and preventing many evictions.
Most owners did not charge late fees for April, well before the prohibition against late fees was issued.
We are seeing greater than 85% of tenants have paid their rent in full for April and May and generally timely.
As would be expected, some tenant took advantage of the moratorium and did not pay rent when they had an ability to do so. Many people are in better financial position today than they were three months ago due to the enhanced federal unemployment and stimulus money.
Our company and many other landlords are working with Mediate Milwaukee to attempt to resolve some of these issues without filing for eviction.
Are you worried about how the rest of the year looks?
Absolutely. Landlords need to collect their rents in order to survive. If landlords do not survive, tenants and municipalities suffer.
The real fear is, unless something dramatically changes, that August and September will be far worse due to the expiration of the enhanced federal unemployment, the stimulus money being spent, and those employers who received the SBA Payroll Protection Program grants will no longer be required to keep those employees.
Any substantial disruption in rent collections will cause an impact on not only the property owners, but also on future rental housing costs.
Milwaukee and other communities have recently furloughed employees due to COVIDâs impact on their budget. This comes well before we will see the impact of COVID on payment of property taxes, sewer and water and reductions in collections of other city fees.
We can look at 2008 and see how that impacted Milwaukeeâs housing for years after. The City ended up foreclosing on hundreds of properties, with many having been vandalized to the point they were razed. Milwaukee continues to have a huge number of tax foreclosures today, even in what was one of the best economies in history. It will only get worse now due to COVID. This is not only a burden to the cities but also reduces future housing choices for tenants.
Picture of one of Sherrena (from Desmondâs EVICTED) properties on 10th & Center that was foreclosed upon shortly after the 2008 crises. It burned in April 2018 and was finally razed in November 2019. (Photo by Heiner Giese)
There are predictions that the COVID housing impact will be far worse than the Great Recession. The 2008 bubble was predictable and the build up to it was over a couple of years. Many people in the housing industry realized the prices of real estate at the time was unsustainable and those people were not harmed.
COVID brought the economy to a sudden and unpredictable stop. No one was prepared, and many businesses will not return.
What resources are available to landlords?
Not many.
Landlords with very specific mortgages may forgo payments, but interest may still occur.  Mortgages are only a fraction of the operating costs.  Nearly an equal amount is paid to the municipalities in taxes, sewer, water, and other fees.  Maintenance is a large portion of the ownersâ expenditures as is insurance and other operating costs.
Here is an infograph from the National Apartment Association:
Cliff Notes version: No late fees, scheduled repayment periods, no evictions for a year, extra Rent Assist and emergency assistance, ten times penalties for violations. Â Bad for landlords and mortgage providers
[P]age 934 [L]ine22Â SEC. 110201. EMERGENCY RENTAL ASSISTANCE. (a) AUTHORIZATION OF APPROPRIATIONS.âThere is 24 authorized to be appropriated to the Secretary of Housing and Urban Development (referred to in this section as the ââSecretaryââ) $100,000,000,000 for an additional amount for grants under the Emergency Solutions Grants program under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371 et seq.), to remain available until expended (subject to subsections (d) and (n) of this section), to be used for providing short or medium-term assistance with rent and rent-related costs (including tenant-paid utility costs, utility- and rent arrears, fees charged for those arrears, and security and utility deposits) in accordance with paragraphs (4) and (5) of section 415(a) of such Act (42 U.S.C. 11374(a)) and this section.
P 961 L5 SEC. 110203. PROTECTING RENTERS AND HOMEOWNERS FROM EVICTIONS AND FORECLOSURES.
(b) MORATORIUM.âDuring the period beginning on the date of the enactment of this Act and ending 12 months after such date of enactment, the lessor of a covered dwelling located in such State may not make, or cause to be made, any filing with the court of jurisdiction to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges.
All rentals are covered, not just those with Rent Assist or Federal backed mortgages :P966 L1
(1) COVERED DWELLING.âThe term âcovered dwellingâ means a dwelling that is occupied by a tenant
(A) pursuant to a residential lease; or
(B) without a lease or with a lease terminable at will under State law.
P1004 L16 (b) TENANT-BASED SECTION 8 RENTAL ASSISTANCE.âThere is authorized to be appropriated for an additional amount for fiscal year 2020 for the tenant-based rental assistance under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) Â $3,000,000,000, to remain available until September 30, 2021, of which not more than $500,000,000 may be used for administrative fees under section 8(q) of such Act (42 24 U.S.C. 1437f(q)).
P1037 SEC. 110402. RESTRICTIONS ON COLLECTIONS OF CON2 SUMER DEBT DURING A NATIONAL DISASTER OR EMERGENCY.
(1) COVERED PERIOD.âThe term âcovered periodâ means the period beginning on the date of enactment of this section and ending 120 days after the end of the incident period for the emergency declared on March 13, 2020, by the President under section 501 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 4121 et seq.) relating to the Coronavirus Disease 2019 (COVID-19) pandemic.
P1038 (1) IN GENERAL.âNotwithstanding any other provision of law, no debt collector may, during a covered periodâ
P1039 (D) commence or continue an action to evict a consumer from real or personal property for nonpayment;
P1040 (e) VIOLATIONS.âAny person or government entity that violates this section shall be liable to the applicable consumer as provided under section 813, except that, for purposes of applying section 813
(1) such person or government entity shall be deemed a debt collector, as such term is defined for purposes of section 813; and Â
(2) each dollar figure in such section shall be deemed to be 10 times the dollar figure specified.
The AASEW has done a lot of great things for the industry and sustainable rental housing.
One that benefited many owners was the change to Sheriff moves to eliminate the mover, which is a large portion of the costs. Â
Our attorneys, working against their own personal interest, changed the law to allow LLCs to be represented by a member or agent, rather than requiring an attorney. This saves a lot of money as well as making the case less confrontational.
Here are the laws passed through the work of the AASEW in:
I have a number of people ask me about the prior post stating there is an eviction moratorium for Section 8 Voucher recipients. Below is the analysis from the Congressional Research Service.
CARES Act Section 4024(b) prohibits landlords of certain rental âcovered dwellingsâ from initiating eviction proceedings or âcharg[ing] fees, penalties, or other chargesâ against a tenant for the nonpayment of rent. These protections extend for 120 days from enactment (March 27, 2020).
Section 4024(c) requires landlords of the same properties to provide tenants at least 30 days-notice before they must vacate the property. It also bars those landlords from issuing a notice to vacate during the 120- day period. In contrast to the eviction and late fee protections of Section 4024(b), which are expressly limited to nonpayment, Section 4024(c) does not expressly tie the notice to vacate requirement to a particular cause. Thus, Section 4024(c) arguably prohibits landlords from being able to force a tenant to vacate a covered dwelling for nonpayment or any other reason until August 23, 2020 (i.e., 120 days after enactment, plus 30 days after notice is provided).
Section 4024(b)âs and (c)âs protections, however, do not absolve tenants of their legal responsibilities to pay rent. Tenants who do not pay rent during the eviction grace period may still face financial and legal liabilities, including eviction, after the moratorium ends.
What properties does the CARES Act protect?
The CARES Actâs eviction protections only apply to âcovered dwellings,â which are rental units in properties: (1) that participate in federal assistance programs, (2) are subject to a âfederally backed mortgage loan,â or (3) are subject to a âfederally backed multifamily mortgage loan.â
Covered federal assistance programs include most rental assistance and housing grant programs, including public housing, Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, rural housing programs, and the Low Income Housing Tax Credit (LIHTC) program.
A âfederally backed mortgage loanâ is a single-family (1-4 units) residential mortgage owned or securitized by Fannie Mae or Freddie Mac or insured, guaranteed, or otherwise assisted by the federal government. The term includes mortgages insured by the Federal Housing Administration and the Department of Veterans Affairs, and the Department of Agricultureâs direct and guaranteed loans. The act defines a âfederally backed multifamily mortgage loanâ almost identically to âfederally backed mortgage loanâ except that it applies to properties designed for five or more families.
Researchers estimate that roughly 12.3 million rental units have federally backed financing, representing 28% of renters.
The CARES Act includes a 120-day moratorium on evictions, late fees and other penalties for properties with federally backed mortgages (Freddie Mac/ Fannie Mae/ FHA /VA / HUD), beginning March 27th.
These prohibitions also extend to tenants receiving Section 8 vouchers.
Owners of properties with the government backed mortgages or tenants on rent assist are prohibited from serving eviction notices or filing evictions until July 25th. The law also requires a 30 day notice to evict, effectively not allowing evictions until August 24th.
This does not apply to tenants that are not receiving rent assist or living in a federally mortgaged property.
That said we are not charging late fees during this unprecedented time and urge other owners to do the same, because it its the right thing.
In WI you cannot evict or give notice for nonpayment to any tenant until 5/27/2020. The rent is, however, still due.
I will argue that it is in not only the tenants’, but also your best interest to work on payment plans for tenants who fell behind because of loss of income when you factor in the costs of unit turns.
Try mediation if you are having trouble working out a reasonable repayment plan. Maybe try meditation too. đ€
