CARES Act: What Real Estate Legal Proceedings Are Stopped During This Time (And Which Ones Are Not Covered?)

Posted on: May 28th, 2020 by dintinolaw

Real Estate Law Philadelphia

The impact of the COVID-19 pandemic has hit everyone hard. It has caused businesses to lose, workers to get laid off, and the entire United States economy to come to a halt.

Many families have lost their livelihoods due to government restrictions, loss of customers, or even their own illnesses or death.

Yet bills continue to roll in. As people worry about how to feed their kids, they also are faced with looming rent or mortgage payments. How can you keep a roof over your head in these perilous times?

The government has taken some measures to protect people from losing their homes. How can people go to work when they are told they cannot leave the house? State and federal laws have implemented some protections.

Also, many proceedings have been halted due to social distancing requirements.

Here is what you need to know if you are concerned about legal proceedings affecting your housing situation in the wake of this crisis.

Current Eviction Moratorium

Once the gravity of COVID-19 became apparent, state and federal governments put a pause on legal proceedings which could oust families from their homes.

The federal government passed The CARES Act (Coronavirus Aid, Relief, and Economic Security) to ease financial pressures.

It placed a 120-day moratorium on evictions on properties covered by government programs or backed by federal funding.

However, it is unclear what will happen once that moratorium is up.

HUD or public assistance housing has special protections. Foreclosure and eviction proceedings in respect of HUD housing were temporarily suspended.

State Law Protections

In Pennsylvania, both owners and renters were protected from eviction or foreclosure immediately after the pandemic hit. The state Supreme Court passed an order protecting people and extended it when conditions continued. Police and landlords were prohibited from carrying out any eviction orders.

Thus, if you were behind on payments prior to the pandemic, your proceedings were temporarily suspended.

However, now there may be an avalanche of evictions notices and foreclosures in places like Philadelphia. People who were in arrears prior to COVID will now face proceedings. Newly unemployed people may now also be at risk.

The courts will be inundated with legal proceedings forcing people from their homes because of their inability to pay.

Landlord-Tenant Court

Although certain laws may expire, it is still unclear how certain legal proceedings will go forward.

The landlord-tenant court, like many other judicial forums, is closed due to fear of infection. Some proceedings are being held virtually. However, this may pose issues for people without internet access and other barriers.

The large number of cases will also surely cause massive backlog and delays.

What Are Your Options if You Can’t Pay the Rent?

If you run a commercial business and you cannot pay the rent, you have different challenges than a homeowner. Residential tenants usually get more protection under the law.

If you are a small, women- or minority-owned business or a nonprofit, you may be eligible for government relief. The Small Business Association has a loan program for which you may apply. You may even get money which you do not have to pay back.

Even if you are behind on rent, you have rights. For example, it is a crime for your landlord to lock you out. If your landlord locks you out, call the local police right away.

If you fall behind on your rent payments, you can try speaking with your landlord. You may be able to work out a payment plan to avoid getting evicted.

You can also ask your landlord to apply your security deposit to the rent.

Under the CARES Act, if the landlord has a federally backed mortgage, the landlord may not file an eviction action against you for nonpayment of rent until July 25, 2020. The landlord must give you 30 days’ notice before he files an eviction action.

You always have a right to safe and decent housing. If you are late with the rent, your landlord may not withhold services or fail to fix problems like inadequate heat, exposure to lead, infestations, leaks, crumbling walls and ceilings, or other hazardous conditions.

It is always best to work with a real estate lawyer when you are negotiating with your landlord. He or she will be able to protect your rights and possibly negotiate a way for you to get back on your feet without getting kicked out of your home.

What if You Cannot Pay Your Mortgage?

You cannot be removed from your house if you miss one mortgage payment. Foreclosure actually takes a while.

You will not be forced out until a judgment of foreclosure is entered and a sheriff’s sale of your property has taken place.

If you have a federally backed mortgage, you have the right to ask your mortgage servicer for forbearance to relieve financial hardship arising from the pandemic. The CARES Act requires servicers of federally backed mortgages to give struggling borrowers a 180-day grace period on payments.

A real estate lawyer should also speak on your behalf to a bank which holds your mortgage. He or she may be an effective negotiator to help you get some concessions in order to avoid foreclosure.

Eviction or Foreclosure Legal Proceedings: It Is Not Business as Usual

Even in the best of times, it is very stressful to be unable to pay your rent or mortgage. At least you may have an understanding of the legal proceedings.

Now we are in what is being called “the new normal,” but there is little “normal” about it! Laws are changing rapidly. Courts are closed or functioning at limited capacity.

Whether you are familiar with financial trouble, or all of this is new for you, you need assistance in negotiating this new world.

If you are worried about losing your home, talk to a lawyer who understands real estate law Philadelphia and proceedings like evictions and foreclosures. They will be able to explain to you your options. They can tell you what the government is offering in terms of protection in these uncertain times.

With so much in flux, you need someone you can trust.

For more information on the changing real estate environment and the latest status of legal proceedings affecting you, check out our blog.