As April rent came due, we armed you with what District of Columbia, Maryland, and Virginia landlords and property managers need to know to formulate their business strategy. (Click here to see Part 1.) Payment of rent on April 1 turned out to be a mixed bag, with some properties experiencing a high level of payment or partial payment and some not. Payment of May rent is expected to be worse than April.
In this Part 2, we update you as the pandemic continues.
Moratorium on Evictions
District of Columbia
- Mayor Bowser has extended the period of coronavirus emergency to May 15, 2020, which has the effect of extending the forms of relief, such as the moratorium on commercial and residential evictions and late fees that we reported in Part 1. The prohibition does not stop landlords from issuing rent reminders or notices of default, although a form notice should be reviewed to ensure it does not reference late fees.
- In its second COVID emergency relief bill, which became law on April 10, 2020, the District of Columbia Council temporarily froze increases in residential rents (but not commercial rents).
- Pending eviction cases in D.C. Superior Court are stayed through the duration of the emergency, and no new summonses can be issued. However, the courts are open for filing new complaints, including landlord/tenant complaints for summary possession.
- Governor Hogan's executive order prohibiting courts from entering judgment for possession in residential eviction cases where the tenant can demonstrate a substantial loss of income due to COVID-19 has been extended to commercial and other non-residential leases. The order states that it does not excuse the non-payment of rent or the failure to perform other lease or loan obligations. The order does not expire until the state of emergency ends.
- Maryland state courts are operating on a minimal status until June 5, 2020. The moratorium on evictions does not stop landlords from issuing rent reminders or notices of default.
- The Montgomery County, Maryland Council is considering a bill to freeze rents during the emergency.
- Governor Northam's Order suspending most court proceedings in Virginia state until April 26, 2020, including in the courts that would hear landlord/tenant summary possession cases, remains in effect. The suspension of proceedings does not stop landlords from issuing rent reminders or notices of default.
Tenant Access to Capital
- CARES Act Loans. Funds made available to small businesses by Congress through its CARES Act forgivable loan program are now spoken for. All eyes are on Congress for the next round of stimulus funds.
- Maryland Economic Relief. On April 6, the Maryland Department of Commerce stopped accepting new applications for loans and grants to Maryland businesses.
- Landlords should be preparing for the inevitable tenant bankruptcy filings. Resolving the issue of possession with a tenant before it files a bankruptcy petition can give a landlord a significant advantage. Many landlords will have questions about applying cash security deposits and drawing letters of credit. Consult a real estate bankruptcy lawyer.
- If the tenant has already filed its bankruptcy petition, the automatic stay is in place and prohibits most landlord self-help actions.
Mortgage Loan Relief
- District of Columbia. As part of the second COVID emergency relief bill, the D.C. Council has created a mandatory 90-day-minimum mortgage deferment program for certain residential and commercial borrowers who apply to their mortgage servicer for a deferral. During the period of deferral, no late fees or penalties shall accrue. Repayment of the deferred amount would be by installment payments, not a balloon payment unless at note maturity. Any landlord that receives mortgage relief through this program must proportionately pass through relief to its tenants, but tenants must repay the rent within 18 months or by the end of the lease term, whichever is sooner. This program applies only to residential or commercial mortgage loans that fall under the jurisdiction of the Commissioner of the Department of Insurance, Securities, and Banking.
- Maryland. Governor Hogan has ordered a halt to the initiation of residential foreclosures. The order does not extent to commercial or other non-residential property.