April 3, 2020 – In recent weeks, federal, state, and local governments and public officials have implemented a multitude of sweeping measures in connection with eviction and foreclosure proceedings in an attempt to negate the adverse economic impact of the COVID-19 pandemic and provide economic relief to tenants and landlords. The measures affect various types of tenants and landlords, and can be almost impossible to keep up to date with due to ever-changing and newly promulgated actions, executive orders, and legislation. While the situation is fluid, below sets forth measures taken with respect to eviction and foreclosure proceedings at the federal level, state-specific actions in Ohio, actions taken by local Ohio courts, as well as measures taken by some other states and jurisdictions.
Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”)
On March 27, 2020, the CARES Act was enacted to provide economic relief to U.S. citizens. Title IV, Subtitle A of the CARES Act sets forth the Coronavirus Economic Stabilization Act of 2020, which, among other things, established a 120-day moratorium prohibiting landlords of certain residential buildings secured by federally-backed mortgage loans from initiating new eviction proceedings against their tenants for non-payment of rent or other charges. In addition, landlords are prohibited from assessing penalties, fees, or other charges for non-payment (or late payment) of rent during the period the moratorium is in effect.
The U.S. Department of Housing and Urban Development (“HUD”) Announces Suspension of All Evictions and Foreclosures
On March 18, 2020, HUD announced that it will immediately suspend all evictions and foreclosures for the next 60 days. The moratorium applies to single-family homeowners with Federal Housing Administration (FHA)-insured mortgages and Home Equity Conversion (reverse) mortgages.
According to HUD Press Release No. 20-402, the HUD-issued guidance directs all mortgage servicers of single-family, HUD-insured mortgages to: 1) cease all new foreclosure actions and suspend all foreclosure actions currently in process; and 2) cease all evictions of persons from FHA-insured single-family properties. Additionally, the FHA is encouraging that mortgage servicers offer options to distressed borrowers to prevent them from going into foreclosure, including short and long-term forbearance options, mortgage modifications, and other mortgage payment relief options on a case-by-case basis.
Federal Housing Finance Agency (“FHFA”) Offers Relief to Multi-Property Owners
On March 23, 2020, FHFA announced its plan to soothe the concerns of both owners and renters of multifamily properties adversely impacted by COVID-19 that have Fannie Mae or Freddie Mac financing. The implemented measure provides that Fannie Mae and Freddie Mac will offer owners of multifamily properties a temporary forbearance if monthly debt service cannot be paid as a result of the COVID-19 crisis. The goal of the program is to help multifamily property owners bridge what is hopefully a temporary disruption to rental streams and therefore the ability to service their debt. In exchange for forbearance, multifamily property owners must suspend all evictions for those renters who are unable to pay rent as a result of financial hardship due to COVID-19. In addition, for a multifamily property owner to be and remain eligible for mortgage forbearance, the suspension of all evictions must be in effect for the entire period that a property owner remains in forbearance. To initiate the program, borrowers are asked to contact their loan servicer.
The above plan is in addition to measures implemented on March 18, 2020, in which Freddie Mac suspended all foreclosure sales and evictions of borrowers living in single-family homes owned by Freddie Mac.
Ohio has also taken steps with respect to eviction and foreclosure proceedings to limit the economic impact of virus on tenants and landlords. Below sets forth some of the actions taken in Ohio in response to the COVID-19 pandemic.
Executive Order 2020-08D
On April 1, 2020, Governor Mike DeWine issued Executive Order 2020-08D, effective immediately. The order will remain in place for 90 days (unless modified or rescinded before that time) and attempts to dampen the negative economic impact of COVID-19 for commercial real estate landlords and small business commercial tenants. While the intent of the order is admirable, it seems to fall short of its goal as it merely requests certain actions by landlords and lenders.
Pursuant to the order, landlords are requested to suspend rent payments for small business commercial tenants for at least 90 days if those tenants are facing financial hardship due to the spread of COVID-19. Landlords are also requested to halt evictions of small business commercial tenants for a minimum of 90 days. The term “small business commercial tenant” is not defined in the order, so it is unclear what constitutes a “small business.”
Lenders, on the other hand, are requested to give those commercial real estate borrowers with a commercial mortgage loan for a property in Ohio an option to forbear the mortgage due to financial hardship attributable to COVID-19. Under the order, the term “lender” includes any banking organization, bank holding company, credit union, mortgage broker, mortgage loan service, master or special servicer, mortgage revenue bond issuer, mortgage revenue bond holder, or mortgage loan originator that owns or holds a mortgage loan secured by property in Ohio. “Forbearance” is defined to mean an agreement to forbear from: (1) enforcing any remedies resulting from any defaults (monetary or otherwise) arising due to COVID-19; (2) sweeping and/or seizing cash by reason of cash sweep trigger events (an event triggering the mandatory use of excess cash flow to pay down outstanding debt) notwithstanding a default or existence of other circumstances that may give rise to a cash sweep trigger event as a result of COVID-19; and (3) any requirement that a party waives any legal rights or admits to any defaults due to COVID-19.
Tenants and landlords should be aware that the order expressly provides that it does not cancel the obligation of a small business commercial tenant to pay rent or restrict a landlord’s ability to collect unpaid rent at a future date. Thus, small business commercial tenants that are unable to meet their rent obligations during the pandemic must be prepared to make their landlord whole upon expiration of the order. If either a tenant or landlord expects to have issues meeting past rent or mortgage obligations, they are encouraged to contact their landlord or lender, as applicable, to establish a payment plan or other alternative to avoid eviction or foreclosure.
Supreme Court of Ohio Administrative Actions 2020-Ohio-1166
On March 27, 2020, the Supreme Court of Ohio issued an administrative order by way of Administrative Action 2020-Ohio-1166. The order is retroactive to March 9, 2020, and expires on the earlier of: (1) the date the state of emergency ends, or (2) July 30, 2020. In the order, the Court tolled, or “froze,” all deadlines established by the rules issued by the Supreme Court (i.e., the Ohio Rules of Civil Procedure, Ohio Rules of Evidence, etc.) to coincide with Ohio Am. Sub H.B. 197, which tolled all statutory time requirements. Notwithstanding the foregoing, nothing in either Ohio Am. Sub H.B. 197 or the order prevents the filing of an eviction action while the state of emergency is in effect. The Court defers to the discretion of local courts in determining how to proceed with respect for evictions, and asks that courts take all relevant factors and circumstances into consideration, including Am. Sub. H.B. 197, the potential application of the CARES Act, and the orders and recommendations of the Ohio Department of Health and local health departments.
Ohio House Bill No. 562
On March 23, 2020, state representatives introduced House Bill No. 562 (“H.B. No. 562”). The proposed legislation prohibits foreclosure activity and the eviction of both residential and commercial tenants during the state of emergency declared by Executive Order 2020-01D. In other words, H.B. No. 562 prohibits all foreclosures and evictions against residential and commercial tenants, regardless of when the cause of action for foreclosure or eviction arose or when a proceeding for such an action was initiated, until the state of emergency declaration is terminated. For purposes of application, the proposed bill does not attempt to distinguish between those foreclosures or evictions arising as a direct result of COVID-19 and those arising for a reason unrelated to COVID-19. Therefore, H.B. No. 562 does not require that a residential or commercial tenant be facing financial hardship as a result of the virus, or the restrictions imposed in response thereto, to share in the benefit of the prohibition.
Specifically, H.B. No. 562 prohibits a state court from issuing a writ of execution for the restitution to the plaintiff of possession of residential and commercial rental properties, and further prohibits the removal of a tenant from such properties until the state terminates the state of emergency order. That same prohibition also extends to constables, police officers, sheriffs, and bailiffs. Moreover, any plaintiff that files a complaint for the restitution to the plaintiff of possession of residential and commercial rental properties prior to or during the state of emergency and receives a writ of execution to that effect after the state of emergency terminates would not be entitled to receive rent unpaid during the state of emergency.
Under Section 2, a court is not permitted to conduct any proceeding pertaining to foreclosures on either residential or commercial property during the state of emergency. The proposed bill provides some guidance on how the courts should proceed for the duration of the state of emergency, stating that courts shall: (1) refuse to accept complaints and other pleadings that seek to commence foreclosure actions; (2) stay all pending foreclosure actions; (3) refuse to accept all motions or other pleadings that seek writs of execution on judgments in foreclosure actions; (4) stay all judicial sales and sales by private selling officers; and (5) defer confirming any pending judicial sales.
Once the state of emergency is terminated, any forcible entry and detainer or foreclosure actions initiated due to a default on a mortgage or failure to pay rent for either a residential or commercial property while the state of emergency was in effect and for 60 days following the termination of the state of emergency will be stayed and referred to mediation. Costs of any mediation will be paid by the courts.
Ohio courts have been active in their attempt to combat the spread of COVID-19 by keeping the number of people in courthouses to a minimum. To do so, many courts have limited court operations while simultaneously suspending certain court proceedings, including, but not limited to, evictions. Below sets forth measures implemented by some of the major Ohio cities with respect to eviction proceedings.
On March 13, 2020, the Hamilton County Court of Common Pleas, General Division and the Hamilton County Municipal Court issued a Joint Administrative Order in response to the COVID-19 outbreak. Per the order, all civil (including eviction) and criminal matters scheduled before any judge or magistrate in the Court of Common Pleas, General Division or Municipal Court, and any related deadlines, are continued at the discretion of the assigned judge for at least 30 days, pending further guidance from the court.
On March 23, 2020, Cleveland City Council approved legislation aimed at providing relief measures for residential tenants. Among other things, the legislation would put into effect a 60-day moratorium on evictions in Cleveland Housing Court for those cases that arise as a result of financial hardship or loss of income due to the virus and corresponding measures taken to contain the outbreak. On the other hand, evictions already in process (and not as a result of COVID-19) will be permitted to proceed. The moratorium will take effect once signed by Cleveland Mayor Frank Jackson. At this time, it is unclear whether additional steps will be taken to protect property owners and commercial tenants.
On March 17, 2020, the Franklin County Municipal Court issued Administrative Order No. 05-2020 to provide its operational plan during the COVID-19 pandemic. With respect to eviction proceedings, the order provides that any pending eviction matters in which the plaintiff is seeking restitution of the premises will be continued for a period of at least eight weeks, beginning March 17, 2020. Eviction actions filed between March 16, 2020 and eight weeks from the date of the order will be set for hearing eight weeks from the filing date. Furthermore, for the eight weeks following the March 17, 2020 effective date, no writ of possession will be executed if the property subject to the judgment for restitution of premises remains occupied. However, if five days have passed since the bailiff issued a notice to vacate a premises subject to the eviction and the property is vacant, the plaintiff may be restored to possession via execution of the writ of possession.
Per its website, the Dayton Municipal Court has suspended all eviction cases until April 30, 2020. New eviction filings may be submitted in person or by mail, but filers of new actions should expect the hearings to be set for a date sometime in July.
Beginning March 20, 2020, Toledo Municipal Court issued an order limiting hearings only to cases where the defendant is in jail. All other cases will be scheduled after May 4, 2020. In addition, housing cases with second causes of action hearings and hearings regarding monetary damages will be reset for a date to be determined, while newly filed matters will be scheduled after June 1, 2020. New eviction filings may be filed online, but hearings will be scheduled in accordance with the order.
Effective on March 17, 2020, and until further notice, Youngstown Municipal Court is operating pursuant to its Emergency Operations Plan. Pursuant to that plan, the court has suspended eviction hearings for three weeks beginning March 17, 2020, and provides that it will contact parties with new hearing dates. While the suspension of eviction hearings is currently only in effect for three weeks from the date of March 17, it is likely that the court will extend its Emergency Operations Plan beyond the three-week period.
Other States Taking Steps to Suspend Evictions and Foreclosures
Like Ohio, many, if not most, states have taken steps to soften the impact of COVID-19 on renters and landlords. The information set forth below provides a brief overview of some of the measures taken by other states and jurisdictions in response to the COVID-19 pandemic. Please note that this list is not exhaustive.
On March 16, 2020, Governor Gavin Newsom issued an executive order that authorizes local governments to suspend evictions for renters through May 31, 2020. Tenants remain responsible for rent payments, and landlords can still recover rent that is due. The order also requests that financial institutions holding home or commercial mortgages implement an immediate moratorium on foreclosures and evictions arising from a decrease in household or business income due to COVID-19.
Governor J.B. Pritzker issued an executive order instructing all state, county, and local law enforcement officers in Illinois to cease enforcement of orders of eviction for residential premises through April 7, 2020. Currently, no state-level measures have been instituted for commercial property renters and owners. In Chicago, the Circuit Court of Cook County has suspended orders for an eviction or foreclosure for 30 days, through April 15, 2020.
Through an executive order, Governor Andrew Cuomo has enacted a 90-day moratorium of all commercial and residential evictions, in effect through June 20, 2020. The state will also suspend mortgage payments for people who are out of work due to COVID-19 for the same 90-day period.
For those in New York City, questions regarding these new measures can be directed to the Housing Court hotline run by Housing Court Answers at (212) 962-4795.
The D.C. Superior Court has suspended evictions of all tenants and foreclosed homeowners occurring on or before May 15, 2020.
Ulmer’s Real Estate Practice Group is tracking and reporting on rapidly occurring changes in the real estate industry as a result of COVID-19. Please visit the Real Estate Update page on ulmer.com for current updates that may affect you as a commercial property owner, landlord, tenant, developer, or borrower. You can also access our Real Estate Advisor Law Blog for other posts and commentary on the effects of COVID-19 in the real estate industry.
The information provided in this client alert speaks only to the information and guidance we have available as of the date of publication and is subject to change. We will continue to follow further issued guidance and regulations and endeavor to post those updates via our website. Please continue to follow these updates at ulmer.com. This legal update was created by Ulmer & Berne LLP, and is not intended as a substitute for professional legal advice. For any questions, or for further information, please contact Kristin W. Boose at firstname.lastname@example.org or Robert L. McEvoy at email@example.com.