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By Josh Kattenberg
Please note: this blog post is for educational purposes only. This is not legal advice. Always seek legal counsel before making legal and investment decisions.
The CARES Act, Section 4023 covers multi-family rental real estate properties with 5 or more units, and are backed by a federal loan (HUD, Fannie Mae, or Freddie Mac). This section covers an apartment building with 6 units and an apartment complex with 150 units, but not a quadplex with 4 units.
Section 4023 allows mortgagees approximately 90 days of forbearance, requested in 30-day increments. These are the requirements to qualify:
There are some rules to abide by if you implement Section 4023 with your multi-unit real estate property. While in forbearance, you may not evict your tenants for nonpayment of rent or fees. You may not charge fees or penalties for late rent payments. You must wait until the forbearance period is over before giving any tenant a 30-day notice to vacate.
The time period you can request forbearance, under Section 4023, is from March 13, 2020, until December 31, 2020. It is also possible for the President to end this program at any time.
Here are some additional thoughts on the tenant eviction moratorium in Section 4023:
Owners of multifamily properties with 5 or more units with federally backed loans can receive up to 90 days forbearance (no payment on loan) for that property. Tenants in the same properties are protected from non-payment evictions and late payment fees for 120 days, even if the owner does not apply for loan forbearance. If the owner does apply for loan forbearance, the owner cannot give a 30-day eviction notice until after the forbearance period is over. So it may be advisable for multifamily rental property owners to ask for forbearance during the initial 120 days of tenant eviction protection.
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