Articles Tagged with Coronavirus

On April 13, 2020 at 9:00am, the NJ Economic Development Authority’s Small Business Emergency Assistance Loan program will go “live” for online applications. NJ landlords and property managers suffering from or anticipating an immediate reduction in rental income should seriously consider applying for a loan. These loans have fairly straightforward eligibility criteria and favorable repayment terms. The following is a basic primer on the borrower qualifications and loan terms.

Who Can Apply: Eligible small businesses check all of the following boxes:

  1.  Have a physical commercial location in NJ (no home offices);

While the CARES Act imposes an eviction moratorium on landlords of “covered properties” the Act is not without relief to landlords. Landlords/borrowers with “federally backed mortgage loans” or  “federally backed multi-family mortgage loans” are entitled to monthly mortgage payment forbearance for up to 90 days.

Section 4022 (1-4 family mortgage loans) and Section  4023 (5+ family mortgage loans)  of the CARES Act provide some relief to multi-family borrowers. To qualify,  a borrower/landlord must fall into any of the below categories:

  1. Borrowers with “Federally Backed Mortgage Loan” meaning, a 1-4 family property with mortgage bought by Fannie/Freddie (above) or involving FHA, VA or other related federal agency. This is the overwhelming majority of 1-4 family mortgage loans. Or;

On March 27, 2020, President Trump signed the COVID-19/Coronavirus Rescue bill or “CARES Act” into law.  The CARES Act has important implications for borrower/landlords of properties identified as “Covered Properties.” In short,  CARES Act “Covered Properties” are subject to specific eviction restrictions lasting until the end of July 2020. These restrictions are identified in Sections 4022 through 4024 of CARES.

“Covered Properties” are:  (1) properties that participate in a federal housing program or (2)  properties that have a “federally backed mortgage  loan” or “federally backed multi-family mortgage loan”.  The below table identifies the types of covered properties. The bolded terms are more common federal programs or “backed” loans.

Federal Housing Program

Federally Backed Mortgage Loan/Multi-Family Loan

•              Public housing (42 U.S.C. § 1437d)

•              Section 8 Housing Choice Voucher program (42 U.S.C. § 1437f)

•              Section 8 project-based housing (42 U.S.C. § 1437f)

•              Section 202 housing for the elderly (12 U.S.C. § 1701q)3

•              Section 811 housing for people with disabilities (42 U.S.C. § 8013)

•              Section 236 multifamily rental housing (12 U.S.C. § 1715z–1)

•              Section 221(d)(3) Below Market Interest Rate (BMIR) housing (12 U.S.C. § 17151(d))

•              HOME (42 U.S.C. § 12741 et seq.)

•              Housing Opportunities for Persons with AIDS (HOPWA) (42 U.S.C. § 12901, et seq.)

•              McKinney-Vento Act homelessness programs (42 U.S.C. § 11360, et seq.)

•              Section 515 Rural Rental Housing (42 U.S.C. § 1485)

•              Sections 514 and 516 Farm Labor Housing (42 U.S.C. §§ 1484, 1486)

•              Section 533 Housing Preservation Grants (42 U.S.C. § 1490m)

•              Section 538 multifamily rental housing (42 U.S.C. § 1490p-2)

•              Low-Income Housing Tax Credit (LIHTC) (26 U.S.C. § 42)

•              The Rural Housing Voucher Program (42 USC § 1490r)

• Federally Backed Mortgage Loan, 1-4 Family purchased or securitized by Fannie/Freddie (Note: Fannie and Freddie purchase the overwhelming majority of 1-4 family mortgages on the secondary market)

 

• Federally Backed Mortgage Loan, 5+ family  purchased or securitized by Fannie/Freddie

 

• Federally Backed Mortgage Loan or Multi-Family Loan insured, guaranteed, supplemented, or assisted in any way by the Federal Government.

 

 

 

For 120 days, measured from March 27, 2020 (in other words until July 25, 2020), landlords of covered properties cannot:

  1. Initiate/file any non-payment of rent proceedings against Tenants in covered properties;
  2. Charge/collect late fees from tenants.

This federal law preempts any state law or executive action which may have permitted the filing of non-payment cases but stayed the execution of a judgment for possession. Where New Jersey Governor Murphy’s EO106 permitted the filing of a nonpayment case, the CARES Act does not. The CARES Act specifically prohibits “any filing” or “initat[ion] of legal action to recover possession.

In short, if you are a landlord of a “Covered Property” you cannot initiate a nonpayment of rent case against a tenant, nor can you collect late fees for unpaid rent, during the time period March 27, 2020 to July 25, 2020.

If you a landlord of a property which does not meet the definition of a “Covered Property” (in its entirety) but you have tenants who receive Section 8 voucher assistance, those tenants who receive the voucher are protected by the eviction moratorium–even if other tenants are not.

Offit Kurman, P.A., maintains a broad-based landlord and property owner representation practice. In New Jersey, Offit Kurman represents landlords and property managers in maximizing return, resolving disputes and avoiding unnecessary and costly delays. The Firm’s New Jersey geographic practice area includes: Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County, Paterson, Passaic County, Hackensack, Bergen County and other points across New Jersey.

Executive Order 107 imposes uniform restrictions on certain activities in New Jersey. Many media outlets covered the generic requirements of this Order. This post focuses on the effective of Executive 107 on the multi-family property industry.

As a general matter, EO107 requires that all New Jersey employees remain home or at their “place of residence” unless a specific exception applies. One of these exceptions is travel necessary to report to or perform a job.  The Order further requires that business “whether closed or open to the public” “accommodate’ the workforce for “telework or work-from-home arrangements.” Multi-family properties rely on the hard and essential work of porters, building maintenance staff and service technicians. It is impossible for these workers to perform their jobs remotely.

EO17 requires that businesses with workers who cannot work remotely “reduce the staff on site to the minimal number necessary to ensure operations can continue.” For the remaining minimal staff, it is required that business operations “abide by social distancing practices” and engage in the “frequent use of sanitizing products on common surfaces.”

On March 21, 2020, Governor Murphy signed Executive Order 108. The purpose of this Order is to create statewide uniformity of COVID-19/Coronavirus related restrictions. The Order invalidates “all county or municipal restriction imposed in response to COVID-19…” that any in way “will or might conflict” with the statewide restrictions imposed by Executive Order 107.  This is an important, though unfortunately necessary, Order.  During uncertain times, multi-family property owners and managers will benefit from this uniformity.

Unless specifically permitted by the Governor, municipal restrictions imposed in response to COVID-19 are invalidated. Varying curfews and county-specific bans on “worldly employment or business” are not enforceable. The only COVID-19/Coronavirus related restrictions to be followed are those imposed by the federal government and Executive Order 107. A subsequent post will address the specific effects of Executive Order 107 on the multi-family property industry. For now, the takeaway is: Make business decisions according to State-wide guidance, not local authority.

Offit Kurman, P.A., maintains a broad-based landlord and property owner representation practice. In New Jersey, Offit Kurman represents landlords and property managers in maximizing return, resolving disputes and avoiding unnecessary and costly delays. The Firm’s New Jersey geographic practice area includes: Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County, Paterson, Passaic County, Hackensack, Bergen County and other points across New Jersey.

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