Effect of the CARES Act on Residential Leases

If you’re a landlord with a tenant not paying rent during the COVID-19 crisis, you may not be able to file a dispossessory action, even after the courts reopen, under Section 4024 of the new Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

For starters, the new federal law only applies to “covered dwellings”, which mostly means dwellings subject to a federally backed mortgage. Roughly half of all mortgages are backed by either Fannie Mae or Freddie Mac – you can check whether your mortgage is included here and here (be sure to check both). If your property’s mortgage is not covered, Section 4024 does not apply to you.

However, if your property is subject to Section 4024, there is a moratorium against all dispossessory filings for non-payment of rent for the 120-day period beginning March 27, 2020 (the date the Act was passed), which will end on July 25, 2020. You are also not allowed to charge penalties, fees, or anything else related to rent being late or unpaid during the moratorium period, although it is an open question if you may accrue those charges and then charge the tenant with them once the moratorium is over (probably not).

But there’s hope, right? The moratorium only prevents you from filing a dispossessory action for non-payment of rent, but not for some other reason, right? Well, maybe not, at least under Georgia law. Under Section 4024(c), a landlord may not require a tenant to vacate unless the landlord “provides” a notice to vacate to the tenant at least 30 days in advance of the date on which possession is demanded – and Section 4024(c) also provides the landlord may not provide a notice to vacate during the moratorium period. Worse yet, Section 4024(c) is not limited to dispossession for non-payment of rent; rather, it appears to apply to dispossession for any reason.

Adding to the uncertainty is that while Georgia law would (under normal circumstances) allow an immediate demand for possession, this new federal law – which presumably preempts Georgia law in this regard – now requires such notices to be given at least 30 days in advance. Since the summary dispossessory process in Georgia described at O.C.G.A. §§ 44-7-50 et seq. requires a demand for possession as a condition precedent to any dispossessory filing, it would seem federal law now requires 30 days’ notice before filing for an eviction.

Again, if your property is not subject to Section 4024, then you can proceed as you normally would. But if you have a federally-backed mortgage secured by your rental property, proceed with caution.