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By Josh Kattenberg
Please note: this blog post is for educational purposes only. This post is not legal advice. Always seek legal counsel before making legal and investment decisions.
The CARES Act, Section 4024 applies to rental real estate properties that are tenant-occupied and have federally secured loans (FHA, VA, Fannie Mae, Freddie Mac). Section 4024 applies to any size real estate rental property, no matter how many units that property has. In other words: this section applies the same to a duplex as to an apartment building with 50 units.
The purpose of this section of the CARES Act is to help residential tenants. Note that Section 4024 does not apply to commercial tenants like a business in a strip mall.
The big idea: residential tenants cannot be evicted for nonpayment of rent for the next 4 months, until late July 2020. This does not protect tenants who are breaking the law or otherwise breaking the lease. You can still evict for any reason other than nonpayment of rent. You also cannot evict renters for failure to pay any type of fee during this time. In summary: you can evict a tenant for any type of misbehavior except non payment.
CARES Act, Section 4024, also addresses no-fault evictions. A no-fault eviction is when you do not go to court to file the eviction, you just give someone a 30-day notice saying you no longer wish to rent to them and they have to find a new place to live when 30 days are up. For example, say you are renting out a house, and you want to stop renting that house so you can move into it. The 30-day notice allows you to do this. The CARES Act Section 4024 still allows no-fault evictions, but prohibits 30-day notices before July 27, 2020. So if the 30-day notice is given on July 27, the resident must move out by August 27, 2020.
The CARES Act, Section 4024, does not apply to properties that are 100% paid for, or properties backed by private (non-government) loans.
In summary, residential properties secured by a federal loan may not evict, charge late fees, or give a 30-day notice to residents until after July 27, 2020.
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