The Association has received a number of questions regarding foreclosures, forbearance, eviction and property management issues in Alabama arising from the COVID-19 pandemic. The information below has been prepared to help provide answers to frequently asked questions in this area.
 

Foreclosure Moratorium & Forbearance

Does the foreclosure moratorium affect my mortgage? Maybe. HUD and the FHFA have issued a federal foreclosure moratorium on mortgages backed by Fannie Mae, Freddie Mac, FHA, VA and RHS. This does not apply to the roughly 35% of mortgages held by banks or other private label security portfolios. The HUD notice only applies to FHA single-family mortgage borrowers and Home Equity Conversion Mortgage (HECM) borrowers. Since being announced on March 18, 2020, the foreclosure and eviction moratoriums have been extended three times and will now stay in effect until at least December 31, 2020.

The foreclosure and eviction moratorium issued by Governor Ivey during the state of Emergency expired on June 1. Therefore, only the federally backed mortgages mentioned above are subject to a foreclosure moratorium at this time.

Does the foreclosure moratorium mean that non-payment will be forgiven? No, individuals are still obligated to make mortgage payments or comply with any other obligation that an individual may have under a mortgage.

Are there additional resources available for homeowners to protect my home and investment? Yes, the National Association of REALTORS® has provided a comprehensive brochure to help at risk homeowners.

The CFPB has also issued guidance to homeowners encouraging any homeowner experiencing difficulty, to call their mortgage servicer immediately. Do not wait until you fall behind to seek help.

What if I have difficulty paying my mortgage once the moratorium is over?Through the CARES Act, borrowers of federal government backed mortgages can request forbearance. Fannie Mae, Freddie Mac, HUD, VA and USDA Rural Housing are requiring lenders to approve 180-days forbearance for any borrower whose income has been adversely affected by COVID-19, and another 180-days forbearance may be available upon request. Lenders are to waive all late charges, fees, and penalties during the forbearance period.

Individuals must contact their servicers to request this forbearance, which freezes payments during the specified time period. Hardship can be direct or indirect, and proof of hardship is based solely on attestation of hardship by the borrower. There are no fees during and after the forbearance period, and requests can be made to have the missed payments extended onto your payment term.  Forbearance can be applied to mortgages on single family properties that are owner-occupied, second home, and investor properties. After the forbearance period, servicers will work to modify the loan so that you can afford your payments if needed. 

Owners of multifamily properties who were current on their mortgage payments as of February 1, 2020, and have federal loans (Fannie Mae, Freddie Mac, FHA or any loans backed or assisted by any branch of the federal government, including the Low Income Housing Tax Credit Program) may request forbearance for 30 days due to financial hardship, with extensions of up to a total of 90 days. Borrowers receiving the forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.

If your mortgage is not federally backed, some private banks are offering forbearance on loans that they hold. Individuals should contact them directly to learn more about their programs.
 

Eviction Moratorium

How does the federal CARES Act impact evictions and late fees for residential tenants? The federal CARES Act enacted by Congress on March 27, 2020 offers broad eviction protections to covered properties. It halts eviction filings, fees and penalties for tenants for nonpayment of rent of covered properties for 120 days from enactment, regardless of whether the landlord receives forbearances. Covered properties include properties insured, guaranteed, supplemented, protected or assisted in any way by HUD, Fannie Mae, Freddie Mac, FHA, VA or RHS. Landlords that receive forbearances of federally backed multifamily mortgage loans must respect the same renter protections for the duration of the forbearance. The federal CARES Act also requires that after the end of the moratorium, a landlord cannot evict a tenant unless the landlord provides 30 days written notice. Therefore, the earliest that a tenant in a covered property could be required to leave for nonpayment of rent or other fees due under the lease is August 24, 2020 (30 days after notice if given after the federal CARES Act moratorium expires on July 24, 2020).  Although the CARES Act moratorium expired on July 24, 2020, the HUD and FHFA eviction moratoriums will remain in effect until at least December 31, 2020.

Does the federal CARES Act impact evictions that are not based on nonpayment of rent or other amounts due under the lease? No, the moratorium under the CARES Act impacts evictions that are based only on nonpayment of rent or other amounts due under the lease. If the tenant does not comply with other provisions of the lease, i.e. destruction and property damage, unlawful criminal activity, creation of a dangerous condition that endangers other residents, or a material breach of the lease, the CARES Act does not prohibit the landlord from filing for an eviction at that time.

Does the eviction moratorium mean that non-payment will be forgiven? No, individuals are still obligated to pay rent and comply with any other obligation that an individual may have under a rental agreement. If a renter has experienced economic distress due to the COVID-19 pandemic, landlords and property managers may work with renters and explore payment plans or accommodations during the pandemic. Any accommodations, payment plans, or extenuating circumstances should be made in writing, clearly outline those terms, and be signed by both parties. A landlord or property manager is under no legal obligation to enter into a payment plan or other modification of a lease with a renter.

I am a renter, do I still need to pay rent if I cannot be evicted during the pandemic? Yes. No state or federal laws have changed which would stop rental payments and rental obligations. Renters are contractually obligated to make rent payments according to the terms of their lease. 

I am a renter experiencing economic uncertainty, what should I do? You should communicate with the landlord or property manager as soon as possible. Both HUD and the CFPB have encouraged renters who are experiencing economic distress to communicate with landlords and property managers about a change in circumstances or difficulty in paying rent on time. Clearly communicate about any difficulties you are experiencing.  Your landlord or property manager may be able to make accommodations, set up a payment plan or other extenuating circumstances. Do not wait until you fall behind to seek help. A landlord or property manager is under no legal obligation to enter into a payment plan or other modification of a lease with a renter.

I am a renter, can I terminate a lease due to COVID-19? No. A global heath pandemic cannot be attributed to the failure of any landlord or property manager which would support the breach of a lease agreement due to COVID-19. 

Further, Governor Ivey’s Eighth Supplemental Emergency Order issued on May 8, 2020 deals specifically with causes of action based in whole or in part from the COVID-19 pandemic, and provides a safe harbor for businesses and individuals from frivolous lawsuits who comply with or reasonably attempt to comply with public health guidance during the pandemic.  Specifically, a business, health care provider or other covered entity shall not be liable for the death or injury to persons or for damage to property in any way arising from any act or omission related to, or in connection with, COVID-19 transmission or a covered COVID-19 response, unless the claims shows by clear and convincing evidence that the claimant’s alleged death, injury, or damage was cause by the business, health care provider or other covered entity’s wanton, reckless, willful or intentional misconduct. The Eighth Supplemental Emergency Order issued on May 8, 2020 is effective as of March 13, 2020.

Can utility services be disconnected for nonpayment during the pandemic? There are no protections afforded in the CARES Act for disconnection of these services. However, the Alabama Public Service Commission issued a statement on March 17, 2020 that they have been working with Alabama Power and Spire, who confirmed they will suspend disconnection of services due to non-payment for those impacted by the pandemic. Many city utility providers are also offering the same protections. If you are having trouble paying your bill due to the COVID-19 crisis, contact your utility provider to work with them on how to handle obligations to ensure there is no service disruption.

What is the status of the state court system? The Supreme Court of Alabama recently issued an order extending the suspension of jury trials until September 14, 2020 and authorizing the resumption of in-person hearings after May 15, 2020. The Presiding Circuit Judge can extend the restriction of in-person proceedings further by written order up until August 15, 2020. Therefore, each judicial circuit may have differing restrictions moving forward so check with your local jurisdiction regarding when in-person hearings will recommence. If your local court is not open for in-person hearings yet, please note that the statewide electronic court filing system is active, and there will likely still be hearings occurring through video conferencing.

Property Management Issues

The tenant(s) in my client’s property do not want prospective tenants to view the property out of concerns for coronavirus. Can they prohibit that? No, under Alabama law,  a landlord may show the premises at any reasonable time by giving the tenant at least two days’ notice of the intent to enter.

A tenant shall not unreasonably withhold consent to the landlord to enter into the dwelling unit in order to inspect the premises, make necessary or agreed repairs, decorations, alterations, or improvements, supply necessary or agreed services, or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workmen, or contractors.

However, under the circumstances the use of virtual tours in lieu of in-person showings is encouraged if possible. If an in-person showing is required, take all hygienic precautions such as wearing a face mask, gloves and/or booties (if available) and hand sanitizer. Implement disinfecting protocols before and after the prospect has viewed the property. To ensure health and safety, you may institute a screening process for prospective tenants for potential symptoms or direct exposure to COVID-19. If a screening and disclosure process is implemented for prospective tenants, be sure the process is uniformly applied and adheres to all fair housing guidelines.

The tenant(s) in my client’s property is under quarantine and the lease is ending. What can we do? If a tenant or anyone living in the property is under quarantine for COVID-19 illness or exposure to the coronavirus, a conservative practice would be to allow the tenant, if the tenant desires, to remain in place for the duration of their quarantine, which is currently a 14-day period. The landlord and tenant could agree to an additional 14 days of rent or however long the holdover is.

May I show a property if the tenant is in quarantine? No. If the tenant is quarantined, self-isolating at the request of medical professionals due to having been exposed to the coronavirus, it is in everyone’s best interest to allow the 14-day quarantine period to end before showing the property. Under the circumstances, the use of virtual tours in lieu of in-person showings is encouraged if possible.

Can a tenant request accommodation to not allow viewings under the ADA and Fair Housing Act (FHA) requirements if the tenant may be at higher risk of developing severe illness due to COVID-19 exposure? HUD has issued preliminary guidance treating COVID-19 as a protected class. It is unclear if a person with a previously diagnosed compromised immune system could be considered to have a disability for FHA purposes. A reasonable accommodation in the rules, practices, or services may be requested to afford the person equal opportunity to use and enjoy a dwelling. A property owner must grant a tenant’s request for a reasonable accommodation unless the request is: 1) unduly burdensome, a fundamental alteration of the landlord’s program, or there is another accommodation that is just as reasonable; or 2) the tenant poses a direct threat to the health or safety of other residents or when the tenancy would result in substantial physical damage to the property of others.

Should such a request be made, there may be other reasonable accommodations available to the tenant, such as using virtual tours of a property- especially if the tenant is concerned about showings during the occupancy. Generally, the tenant does not have the ability to prevent showings as defined by the terms of the lease agreements. However, in this unique circumstance and in the absence of greater clarity, the conservative path to limit showings to virtual means may be in the interest of everyone’s safety.

You may also make arrangements for a photographer to access the property to create a virtual tour, taking all necessary hygienic precautions. The tenant should make accommodations for the photographer for this purpose at any reasonable time by giving the tenant at least two days’ notice of the intent to enter. This would allow virtual tours of the property in lieu of public showings until the health crisis is over.

As a landlord or property manager, what should I do if a tenant in a building I manage is diagnosed with COVID-19? If a landlord or property manager believes or has confirmation that a resident is ill with COVID 19, they should follow CDC guidance and can contact the local health department and national health agency for guidance on how to proceed.  In conjunction with the health authority and guidance, notify anyone in the building who may have been exposed (had close contact with the sick person) while maintaining the confidentiality of the sick person as required by the Americans with Disabilities Act (ADA) and, if applicable, the Health Insurance Portability and Accountability Act (HIPAA).

A tenant is not under an obligation to inform their landlord or property manager of an affirmative COVID-19 diagnosis. The landlord or property manager cannot publish and broadcast a tenant’s private health or medical condition to other tenants.

If you are notified that a tenant has a positive COVID-19 diagnosis, you should attempt to communicate with the tenant to ascertain that they are taking appropriate quarantine and other prevention measures. Be sure not to inquire about any medical conditions that could be perceived as a disability under FHA. Under current law, you are not obligated to disclose to other residents, but many landlords & property managers are issuing broad generic information to residents when a case of COVID-19 surfaces in a building so other residents can take extra precautions. Due to the unprecedented nature of COVID-19, the legal ramifications of disclosure, especially if against the wishes of a resident who was infected, are uncertain, but many argue that the public health risk and duty to public should allow you to take more proactive measures. If a diagnosis in one of your buildings is disclosed, you should not reveal who contracted the virus or where exactly they live in the building. Due to the ADA, you should keep all communications with an infected tenant confidential to make sure you are following all privacy guidelines and regulations.

As a landlord or property manager, what steps can be taken to clean common areas and communicate with tenants?Generally, a landlord or property manager should take affirmative steps to frequently clean and wipe down common areas and shared spaces such as handrails, doorknobs, hard surfaces, stairwells, elevators, security keypads, laundry facilities, clubhouses, community rooms, fitness centers and pools. Also consider placing hand sanitizer stations in high traffic common areas and signage to help educate tenants on tips to prevent the spread of infection. 

A landlord or property manager should also frequently communicate with tenants about important news, bulletins or information, take personal responsibility to wash hands frequently, wear masks in public, follow public health orders, wipe down common areas before and after each use, maintain social distancing at all times and consider going one at a time if they observe people in small areas such as elevators and stairwells.

I am concerned about liability from frivolous lawsuits and the COVID-19 pandemic being exploited and used as a basis for lawsuit abuse? Your viewpoint is shared by many small businesses in Alabama and across the country. Widespread fear exists that the economic recovery may be slowed due to endless meritless lawsuits and the associated costs and liability from fighting the litigation in court.

Governor Ivey issued an Eighth Supplemental Emergency Order on May 8, 2020 that deals specifically with causes of action based in whole or in part from the COVID-19 pandemic and provides a safe harbor from frivolous lawsuits for businesses and individuals who comply with or reasonably attempt to comply with public health guidance during the pandemic.  Specifically, a business, health care provider, or other covered entity shall not be liable for the death or injury to persons or for damage to property in any way arising from any act or omission related to, or in connection with, COVID-19 transmission or a covered COVID-19 response, unless the claims shows by clear and convincing evidence that the claimant’s alleged death, injury, or damage was caused by the business, health care provider, or other covered entity’s wanton, reckless, willful, or intentional misconduct. The Eighth Supplemental Emergency Order issued on May 8, 2020 is effective as of March 13, 2020.

More information on the Executive Order can be found here.