Legal Issues

Congress Extends CDC Eviction Order and Provides Additional Rental Assistance - December 29, 2020

Jodie Clark McDougal

Signed into law by President Trump on December 27, Congress’s Coronavirus Response and Relief Supplemental Appropriations Act 2021 has several provisions affecting Iowa landlords.

CDC Eviction Order Extended Through January 31, 2021

Importantly, Section 502 of the Act extends the September 4 CDC Order, which temporarily halted certain residential nonpayment evictions, through January 31, 2021.

Details on the CDC Order and the CDC’s subsequent non-binding guidance in the form of a series of FAQs are shown in the below list of resources. As a reminder, the CDC Order, now extended through January 31, is not an automatic stay of all evictions and does not relieve any tenant of paying rent. Instead, the CDC Order allows certain tenants to invoke the protections of the CDC Order in regard to nonpayment evictions if they properly submit a CDC Hardship Declaration. When the Order’s protections are properly invoked by a covered tenant, the tenant cannot be evicted and removed from their leased premises until after the expiration of the CDC Order, which is now January 31, 2021.

Importantly, the Iowa Supreme Court previously entered an Implementation Order setting forth how Iowa courts should implement the CDC Order, and such state Implementation Order generally prevails over the CDC’s non-binding guidance in the state of Iowa. More details on this topic are in a prior October 5 blog post. The Iowa Supreme Court will likely issue an updated Implementation Order in the near future, as soon as later this week. If and when one is issued, you will receive an update. 

Additional Federal Rental Assistance Relief

Section 501 of the Act, “Emergency Rental Assistance,” provides $25 billion in additional rental assistance funds. The Act contains various guidelines regarding the distribution of funds, but in short, the rental assistance funds are being provided by U.S. Treasury and will be distributed to states in varying amounts for each state’s use within the parameters set forth in the Act. Each state shall receive no less than $200 million.

Local jurisdictions with a population greater than 200,000 may also apply directly to the Treasury for funds under the Act; any amounts granted to local jurisdictions shall be reduced from the amount granted to the state in which that jurisdiction is located.

In general, the Act directs that states should provide applicable funds directly to landlords (and/or utility service providers) after approval of an eligible tenant’s application for funds.

The Emergency Rental Assistance program and its parameters are detailed below, and we will provide an update once Governor Reynolds details her plans for use of these additional funds.

Details of the Emergency Rental Assistance

The Emergency Rental Assistance section provides $25 billion through the U.S. Treasury to states, U.S. territories, and large cities in order to provide assistance to struggling renters. Details of this program are provided below, courtesy of Dentons’s COVID-19 All Bill Summary.

While this is a new program, the formula distribution is modeled after the concept established in the Coronavirus Relief Fund (CRF) enacted in the CARES Act. Of the $25 billion, $800 million is reserved for tribes and/or tribal designated housing entities, $400 million is reserved for U.S. territories, and each state (as well as the District of Columbia) shall receive no less than $200 million.

Grantees shall use funds to provide direct financial assistance or housing stability services to eligible households. No less than 90 percent of funds shall be used for direct financial assistance, including rent, rental arrears, utilities and home energy costs, utilities and home energy costs arrears, and other expenses related to housing. No more than 10 percent of funds shall be used for housing stability services, including case management and other services intended to keep households stably housed. Grantees may use up to 10 percent of funds received to cover administrative costs.

Eligible households may receive up to 12 months of assistance, plus an additional 3 months if necessary to ensure housing stability. Grantees can only commit to assistance in 3-month increments, after which an eligible household must re-apply for funds. Grantees may not make commitments for prospective rent payments to an eligible household unless assistance has also been provided to reduce that household’s rental arrears.

An application for rental assistance may be made directly to a grantee by either an eligible household or by a landlord on behalf of that eligible household. In general, grantees will provide funds directly to landlords and/or utility service providers. If a landlord does not wish to participate, the grantee may provide funds directly to the eligible household.

Grantees shall prioritize consideration of applications for eligible households that are at or below 50 percent of the area median income, or where one or more members of the household have been unemployed for 90 days or longer. Grantees have the flexibility to devise additional eligibility criteria.

An “eligible household” is defined as a renter household that meets all of the following criteria:

  1. Qualifies for unemployment or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship related to COVID-19
  2. Demonstrates a risk of experiencing homelessness or housing instability
  3. Has a household income at or below 80 percent of the area median

In determining a household’s income for purposes of this section, grantees shall consider either the household’s total income for the calendar year 2020 or the household’s monthly income at the time of application for assistance. For household incomes determined using the latter method, grantees must redetermine income eligibility every 3 months. A household receiving other forms of federal housing assistance shall not be eligible to receive assistance under this section.

Funds provided to an eligible grantee expire on December 31, 2021. Starting on September 30, 2021, Treasury shall begin to recapture unspent funds from grantees and shall reallocate such funds to grantees who have obligated at least 65 percent of their original allocation. Grantees receiving a reallocation may be approved for a 90-day extension on the expiration date (through March 31, 2022) at the discretion of the Secretary.

The Treasury Office of Inspector General (OIG) shall conduct oversight of the program and may recoup funds from any grantee that fails to comply with the use of funds rules. The Department of the Treasury must meet quarterly and program-length reporting requirements to Congress.

The Big Picture

Landlords with questions about nonpaying renters or how to proceed in the midst of numerous federal and state programs and guidelines should contact an experienced landlord/tenant attorney to discuss their specific situation.

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