When Governor Tim Walz issued Executive Order 20-14 on March 23, 2020 placing a moratorium on certain actions by owners and managers of residential rental properties, it was much clearer what conduct was allowed and prohibited during the peacetime emergency. Since that time, Minnesota Executive Orders, the Federal CARES Act, Minnesota Court Orders and Minnesota legislation have made it more difficult to determine what options owners and managers have as it relates to managing their properties during the COVID-19 pandemic. To understand this, you need to know what orders and legislation affect your properties, how these orders and legislation affect your properties and the timeline for when you can expect your management responsibilities to more closely resemble what they were before this pandemic.
Executive Order 20-14 placed a moratorium on owners and managers of residential rental properties sending notices to vacate, and under most circumstances terminating a lease or filing an eviction. In addition, officers will not execute a writ unless it has been designated a priority writ by the court. At this time, based on Executive Order 20-53 dated May 13, 2020, the peacetime emergency and the moratorium are set to expire June 12, 2020. It is uncertain at this time whether the moratorium will be extended upon its expiration. There are still options when dealing with serious misconduct from residents, or when providing options for tenants who are struggling during the COVID-19 pandemic until the moratorium expires.
When a tenant commits certain offenses on the premises or seriously endangers the safety of other residents, an eviction can still be filed on an expedited basis. These hearings will take place between five to seven days from when the court issues the summons. An order from the court for the tenant to vacate the premises should include issuance of a priority writ.
While owners and managers cannot terminate leases during the peacetime emergency, they can provide options for residents who have fallen on hard times, including agreements to terminate leases without early termination fees and/or forgiving some or all of an outstanding balance. If approaching tenants with options such as the ones stated above, it is very important to make clear that you are not providing notice to vacate or attempting to terminate their lease. Making this point clear will help avoid confusion on behalf of residents, and questions as to whether your actions violated the moratorium under Executive Order 20-14.
The CARES Act
The CARES Act further delays many of the items discussed above when certain qualifications are met by your rental property. This includes properties that participate in a covered housing program (Section 8, Vouchers, Section 42, etc.) or rural housing voucher programs, or have a federally backed mortgage loan. If your property falls under any of these categories, you must abide by the terms of the CARES Act.
The conditions of the CARES Act includes a moratorium on filing evictions and charging late fees for nonpayment of rent for 120 days from March 27, 2020. Additionally, you may not issue a notice to vacate until the moratorium concludes, or require a tenant to vacate until 30 days after providing the tenant with the notice to vacate. The moratorium is set to end July 24, 2020.
Minnesota Court Orders
Many court proceedings, including housing court matters, were originally suspended by Minnesota Chief Justice Gildea’s order on March 13, 2020, and have just recently resumed as of May 18, 2020. Since restarting hearings, counties have been converting a significant amount of hearings to virtual appearances or appearances by phone. Housing Court has continued to hear expedited evictions throughout the pandemic, and resumed hearing rent escrow, commercial eviction and expungement matters as of May 18, 2020.
Once the peacetime emergency ends, the courts will start by hearing residential evictions that were filed just prior to issuance of Executive Order 20-14, and then the evictions filed afterwards. All Minnesota courts have 60 days from the end of the peacetime emergency to catch up on timelines for backlogged cases. With procedures being put in place to promote social distancing by smaller calendars and virtual hearings, this likely means a lengthy delays for many cases from the ordinary timelines for scheduling evictions.
The Minnesota legislative session concluded recently without any laws relating to evictions, late fees, termination or non-renewal of rental agreements and assistance for tenants. However, both the House and Senate considered all these issues at times since the start of the pandemic, and will likely consider some, if not all, during a special session. One residential rental housing factor that will almost certainly be passed is assistance for tenants towards rent, utilities and other expenses. This will likely involve assistance payments directly to owners or managers of rental properties to aid residents struggling to pay past due balances.
One bill that passed the House included a postponement on most lease terminations and non-renewals during the peacetime emergency, which is already a requirement of Executive Order 20-14. This bill also prohibited charging late fees for late payment of rent for 90 days following the declaration of an emergency, and required 30 day written notice prior to filing an eviction following the conclusion of the emergency. It remains to be seen what the final law will look like as it relates to rental properties.
For additional information on the above legislation and orders, and specific questions related to your properties, contact Bernick Lifson today.