Fannie and Freddie End CARES Notice Enforcement
What Does This Mean for Operators?

As many of you painfully know, the CARES Act was drafted in March of 2020 to address the COVID-19 pandemic and provided for a cessation of eviction activities for covered properties for a 120-day period (hereinafter “Moratorium”). During the Moratorium, landlords of covered properties (i.,e. properties with federally backed loans from Fannie Mae or Freddie Mac, subsidized and low-income tax credit properties, and other properties covered under Section 504 of the Rehabilitation Act) were prohibited from filing evictions. As of July 27, 2020, landlords of covered properties were able to resume eviction proceedings, provided they issued a 30-day notice to their tenant. The 30-day notice has been interpreted to have survived the Mortarium and, therefore, is required to be in place for any non-payment of rent eviction.

In the years that have lapsed, the court has interpreted and considered the CARES Act and, with the exception of Pima County Justice Courts, has concluded that the landlord of a covered property must have either issued a 30-day notice of non-payment of rent or must delay the execution of the writ of restitution to the 30th day following the service of the non-payment of rent notice to comply with the CARES Act’s notice requirement.

The National Apartment Association has worked to address and resolve the lingering notice requirement, with bills in both the Senate and House. Unfortunately, neither bill has moved through the chambers, resulting in the CARES Act notice requirement’s continued survival. While the CARES Act remains the law of the land, the Trump Administration has been working to remove what it believes to be unnecessary enforcement actions for various COVID-era laws.

Recently, Fannie Mae and Freddie Mac issued a notification in which it provided notice that it will no longer enforce the CARES Act notice requirements. The agencies were clear that its decision not to enforce the notice requirements does not the Borrowers' ongoing obligation to comply with all provisions of applicable Loan Documents, including provisions regarding compliance with all laws applicable to the Property; or the Borrower’s obligation to continue enforcing Borrower compliance with all applicable Loan Document terms per the Guide.

WHAT DOES THIS MEAN FOR ME?

Unfortunately, there is no change in the way operators need to operate with respect to non-payment of rent evictions for tenants that reside at covered properties. Such landlords will need to continue to either issue the CARES Act non-payment of rent notice or have the writ date adjusted to the 31st day following the date of service of the state mandated non-payment of rent notice. Any deviation from the current practice or belief that the CARES Act notice requirements are no longer required would subject the operator to a voidable judgment and potentially civil liability. Unless and until the CARES Act is amended by Congress, operators must continue to issue notices and evict tenants for non-payment of rent in the fashion we have been doing for now five years.

Should you have any questions regarding this update, please do not hesitate to reach out to our office for further guidance.