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FAQ: What should I do if my tenant can’t pay rent during the Covid-19 crisis?

Information for landlords

Please note: This FAQ is current as of June 5, 2020. Nothing in this FAQ should be construed as legal advice.

Has the law changed my tenant’s obligation to pay rent?

No, as of the date of this writing, the law has not canceled or forgiven your tenant’s rent obligation.

However, you have the ability with the consent of your tenant to amend your lease to forgive or reduce your tenant’s rent obligation for one or more months during the Covid-19 crisis. You do not need to redo your entire lease, you can just make an agreement that modifies your lease by text message or email (make sure the exchange shows the consent of both parties) or in writing on a piece of paper (make sure the writing has signatures from you and your tenant). Under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed on March 27, 2020 you may qualify for loan forbearance or other relief if your mortgage is federally backed. You may have a forbearance option to extend the term of your loan without interest or penalties, so that you have no mortgage payment due during a particular month. Especially if you have this relief, you may consider forgiving or reducing your tenant’s rent obligation.

You also have the ability to extend the deadline for rent payment or let the tenant catch up on their rent using a payment plan. Many tenants have lost jobs due to Covid-19, but will eventually be receiving stimulus payments from the IRS or expanded unemployment benefits in the coming weeks. The City of New Orleans and other local governments may have rental assistance funds. It is unpredictable when these payments will hit, but it may be in your best interest to wait for your tenant to get relief so that you can ultimately get paid.

Can I charge late fees under my lease if my tenant does not pay rent on time?

It depends on whether your property is covered by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, more commonly called the Stimulus bill or third federal coronavirus Act. The CARES Act prohibits charging late fees or other penalties for rent that is late between March 27, 2020 and July 25, 2020. It applies to you if your property is:

1. Your property has a federally-backed mortgage such as an FHA insured mortgage, a mortgage assisted or guaranteed by HUD, VA, or USDA, or a mortgage that Fannie Mae or Freddie Mac are involved in.
2. Your property “participates in” a federal subsidy program covered by the Violence Against Women Act (“VAWA”) including:

• The Housing Choice (“Section 8”) Voucher program
• Public housing
• Section 8 project-based housing
• HUD-subsidized housing for seniors or people with disabilities
• Permanent Supportive Housing or Shelter + Care
• Housing Opportunities for Persons with AIDS (“HOPWA”)
• HOME Investment Partnership Program
• S. Dept. of Agriculture multifamily housing subsidy programs
• Low-Income Housing Tax Credit (“LIHTC”) Program

3. Your property “participates in” the U.S. Department of Agriculture Rural Housing Voucher Program.

You can read Section 4024 of the CARE Act at https://www.congress.gov/bill/116th-congress/house-bill/748/text.

How do I know what kind of mortgage I have and therefore if I am covered by the CARES Act?

 You might not know whether your mortgage is owned by Fannie Mae or Freddie Mac, but you can look it up at one of these websites or numbers:

Fannie Mae: https://www.knowyouroptions.com/loanlookup

Freddie Mac: https://ww3.freddiemac.com/loanlookup/

Fannie Mae (FNMA): 1-800-2FANNIE (1-800-232-6643)

Freddie Mac (FHLMC): 1-800-FREDDIE (1-800-373-3343)

You are likely to know if you have a loan mortgage backed by any of these federal programs, but if you are unsure you can check your loan paperwork and/or call:

FHA: 1-877-622-8525

USDA direct or guaranteed loan: 1-800-414-1226

VA loan, direct or guaranteed loan: 1-877-827-3702

If you have a multifamily property you can look the property up on this database (but it lists only some of the covered multi-family properties): https://nlihc.org/federal-moratoriums

Can I evict my tenant if they do not pay rent? 

Currently, there is a statewide moratorium on evictions until June 15, 2020. No matter what kind of property you have, you cannot evict your tenant until after that date. Note that per the Governor’s proclamations, all legal deadlines are suspended from March 16, 2020 until at least June 15, 2020. This means if you gave your tenant a notice to vacate after March 16, or if the notice period was interrupted on March 16, you cannot file right away because the notice period was suspended, or frozen, on March 16. Remember that the 5-day notice to vacate period does not include weekends or holidays.

For example, if you gave your tenant a 5-day notice to vacate on March 15, only one day of the notice period ran before the Governor’s suspension. So you need to allow four more legal days after the suspension lifts on June 15 before you can file the eviction. This means the first day you can file the eviction at court would be June 19.

Similarly, if you gave a 5-day notice to vacate any time on or after March 16, the notice period does not begin to run until June 15. Since weekends don’t count, the first day you can file the eviction at court would be June 22.

If your property is covered by the CARES Act, as discussed above, you are barred from filing an eviction against your tenant for nonpayment of rent or fees until after July 25, 2020. After July 25, 2020 you must provide a 30-day notice under the federal law.

You can read Section 4024 of the CARES Act at https://www.congress.gov/bill/116th-congress/house-bill/748/text.

Can I issue my tenant a Notice to Vacate if they do not pay rent?

If your property is a “covered property” under the CARES Act, as defined above, you are barred from issuing a Notice to Vacate until after July 25, 2020. After July 25, 2020 you must provide a 30-day notice under the CARES Act.

You can read Section 4024 of the CARES Act at https://www.congress.gov/bill/116th-congress/house-bill/748/text.

Can I put my tenant out by other means since I can’t file an eviction right now?

Absolutely not. “Self help” or extrajudicial evictions are illegal in Louisiana. You must get a court judgment of eviction and a Warrant for Possession (sometimes called a Writ of Ejection) unless your tenant voluntarily leaves. If you take any action to force your tenant out or disturb their use of their lease through changing the locks, cutting off utilities, physically removing their belongings, or harassing them until they leave, you may be liable for substantial damages for wrongful eviction. Law enforcement officers do not have jurisdiction to put your tenant out without an eviction judgment.

How should I communicate with my tenant if they cannot pay rent?

Keep lines of communication with your tenant open and amicable if possible. These are stressful times for everyone. Your tenant may get financial relief soon and be able to start making payments. Since you cannot evict right now, it’s in everyone’s best interest to work together. Be sure that any agreement you and your tenant come up with is in writing and something written or electronic shows it was agreed to by both parties.

What if I can’t pay my mortgage because my tenant doesn’t pay their rent?

Luckily, there are forbearance and other relief options available to you, too. Foreclosures are temporarily halted for many homeowners under the CARES Act. For detailed information about relief options for homeowners see https://slls.org/covid_foreclosure_prevention/

Property owners with lost rental income may also be able to qualify for assistance from the Community Support Fund of the Finance Authority of New Orleans. To apply for FANO’s CSF assistance, residents should call (504) 524-5533, (504) 354-0904, or email: csf@financeauthority.org. Applicants will be pre-screened to determine basic eligibility and will receive notice of the documentation needed to qualify for the program.