DC Council Passes Coronavirus Support Emergency Amendment Act of 2020
What to Know
- Mortgage lenders required to develop a deferment program for all residential and commercial mortgage loans “in the District”
- Housing providers cannot issue a rent increase notice to any residential tenant during the public health emergency
- Residential foreclosures are prohibited during the public health emergency, not commercial foreclosures.
- The commercial rent increase prohibition has been expanded to include all commercial tenants of less than 6,500 square feet (not just commercial retail tenants).
For more detailed information regarding the real estate portions of the four previous emergency acts, please see our previous alerts covering the development of this legislation, which detail the programs and protections that are available to certain mortgage holders and tenants during the COVID-19 pandemic.
Set forth below are the pertinent additions and modifications to the real estate provisions of the four previous emergency acts.
Mortgage Relief (Section 401)
- The requirement for mortgage lenders to develop a deferment program for borrowers has been broadened to apply not just to loans under the jurisdiction of the Commissioner of the Department of Insurance, Securities, and Banking, but instead to all residential and commercial mortgage loans “in the District.”
- The borrower application approval requirements for the deferment program have been changed with respect to the period in which the borrower must pay the deferred payments: if no reasonable time can be agreed to by the applicant and the mortgage lender, then the deferred payments must be paid three years from the end of the deferment period (amended from five), or the end of the original term of the loan, whichever is earlier.
- A mortgage lender is now prohibited not just from requiring a lump sum payment from any borrower making payments, but also from requesting a lump sum payment from any borrower making payments.
- The Act clarifies that the mortgage relief provisions do not apply to a mortgage loan that is a “Federally backed mortgage loan” or a “Federally backed multifamily mortgage loan” as defined by the CARES Act. Previously, the legislation provided that the mortgage relief provisions did not apply to a mortgage loan that is “guaranteed or insured by the United States government.”
- The Act also clarifies that the mortgage relief provisions do not apply to lenders of commercial loans in the District that are national banks or federally chartered credit unions. Previously, the legislation provided that the mortgage relief section applied to any lender who makes or holds a commercial loan in the District.
Tenant Payment Plans (Section 402)
- Housing providers are now prohibited from requiring or requesting lump-sum payments from tenants under a payment plan.
- During the program period, unless the housing provider offered a rent payment plan and approved a rent payment plan, the housing provider is prohibited from filing any collection lawsuit or eviction for non-payment of rent, provided the tenant does not default on the terms of the payment plan.
- Eligible tenants of the payment plan are no longer prohibited from receiving a rent reduction under the mortgage relief section of the Act (Section 401).
- The definition of “housing provider” has been clarified to include not just an individual, but also an entity (emphasis added) that is:
- a landlord, an owner, lessor, sublessor, assignee, or their agent, or any other person receiving or entitled to receive rents or benefits for the use or occupancy of any rental unit within a housing accommodation within the District; and
- Has five or more residential units currently rented or available for rent.
Residential Tenant Protections (Section 405)
- A housing provider cannot issue a rent increase notice to any residential tenant during the public health emergency.
- Any rent increase… shall be null and void… and shall be issued anew… if… the effective date of the rent increase as stated on the notice of rent increase occurs during a period for which a public health emergency has been declared (emphasis added).
- The Act added requirements and penalties regarding rent adjustment notices:
- The Rent Administrator (head of the Rental Accommodations Division (“RAD”) under the Department of Housing and Community Development) shall review all notices to tenants of rent adjustments that are filed by a housing provider with RAD.
- The Rent Administrator will subsequently inform the housing provider that:
- Rent increases are prohibited during the public health emergency plus 30 days;
- Housing provider shall withdraw rent increase notice;
- Housing provider shall inform tenants in writing that any rent increase is null and void;
- Housing provider shall, within seven calendar days, file a certification with RAD that the notice letter (informing tenants that the rent increase was null and void) was sent to tenants, along with a sample copy of the notice and a list of each tenant name and corresponding unit numbers; and
- If it is determined that the housing provider (i) knowingly demanded or received any rent increase prohibited by the Act or (ii) substantially reduced or eliminated related services previously provided for a rental unit, then the housing provider may be subject (x) to treble damages and (y) for a rollback of the rent.
Rent Increase Prohibition (Section 406)
- As we noted in our May 7 alert of this developing legislation, tenant protections were expanded so that the prohibition on rent increases during the public health emergency, and for 30 days thereafter, applied to “commercial retail tenants.” This language has caused some consternation for commercial tenants who were unsure of whether their businesses qualified as “retail.” While the Act still does not define “retail,” it has expanded the applicability of the rent freeze to include “commercial retail property or a commercial property that is less than 6,500 square feet in size” (emphasis added). This does not solve the retail issue, but it does provide relief to commercial tenants inhabiting a smaller space. We will continue our coverage of this issue as further developments arise.
Foreclosure Moratorium (Section 408)
- Instead of prohibiting all foreclosures during the period of time for which the Mayor has declared a public health emergency and for 60 days thereafter, the Act now specifically prohibits “residential foreclosures.” Therefore, commercial foreclosures are excluded from this prohibition.
- Section 313(e) of the Condominium Act initially provided that a lien for assessments against units would lapse if foreclosure, discharge, or other proceedings to enforce the lien have not been instituted within three years. The Act extends this timeline by changing “3 years” to “3 years, not including any period of time for which the Mayor has declared a public health emergency… and for 60 days thereafter (emphasis added).”