On October 14, HUD issued updated guidance on COVID-19 as it relates to HUD-assisted properties. Following is some of the new guidance issued by HUD.
On-Site COVID Testing
HUD will permit the temporary use of property common areas, parking lots, and vacant offices by providers of healthcare services to provide flu shots and/or COVID-19 testing for residents. The services must not affect property operating costs beyond budgeted and approved supportive services funds. Owners and agents should ensure that the testing site has a Clinical Laboratory Improvement Amendments (CLIA) certificate of waiver or is covered by another facility’s CLIA certificate. Owners and managers are encouraged to consult with their legal counsel before hosting healthcare services on site.
Update on the CDC’s Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19 Notice and Order
This CDC order of September 4, 2020, imposed a temporary halt in residential evictions to prevent the further spread of COVID-19 and is in effect until December 31, 2020. The order applies to all tenants, lessees, or residents of residential property in the United States who are subject to eviction for nonpayment of rent and who sign and submit a declaration, as described in the Order, under penalty of perjury. The CDC does have a sample declaration form on its website.
The Order only applies in areas that do not already have a moratorium on residential evictions in place that provides the same or greater level of public health protection than the CDC’s Order.
The Order applies to all HUD-assisted housing programs. Under the Order, HUD-assisted residents must sign and submit a declaration to become a “covered person” and receive the Order’s protection. The signed declaration must be submitted to the owner or management agent of the residential property where they live or to another person who has a right to have them evicted or removed from where they live. A resident cannot be required to complete the declaration. However, without the declaration, residents are not protected from eviction under the Order. This means that until the declaration is signed and submitted to the owner or agent, the CDC eviction protection is not in place.
The Order is separate from the now-expired eviction moratorium in Section 4024 of the CARES Act, the active eviction moratorium related to the forbearance required under Section 4023 of the Act, and any other eviction moratoriums afforded to federally insured or guaranteed loans.
HUD Encourages – but Does Not Require – Owners to Notify Residents of the CDC Protection
While the Order does not mandate resident notification, HUD is encouraging owners and agents to notify their residents that the CDC eviction moratorium is in place and that execution of the declaration in the Order is required in order to be covered by the CDC order. If owners choose to make such notification, they should document that the notice has been made.
Owners and agents should also review their state and local laws, as some may have different notification requirements regarding the moratorium and providing the Declaration to tenants.
Covered Residents May be Evicted for Reasons Other than Nonpayment of Rent
Covered persons may still be evicted for reasons other than not paying full rent or making a full housing payment. The Order does not prevent eviction for (1)engaging in criminal activity while on the premises; (2)threatening the health or safety of other residents; (3)damaging or posing an immediate and significant risk of damage to the property; (4)violation of applicable building codes, health ordinance, or similar health & safety regulation; or (5)violating any other contractual obligation of a lease, other than the timely payment of rent (including nonpayment or late payment of fees, penalties, or interest).
The Order is not a “Waiver” of Rent
Covered persons still owe rent to the landlord. The Order halts residential evictions only temporarily. Covered persons still must fulfill their obligation to pay rent and follow all other terms of the lease and policies of the property in which they live. Covered persons must use best efforts to make timely partial payments that are as close to the full payment as their individual circumstances permit. When the order expires at the end of 2020, a covered person will owe unpaid rent and any fees, penalties, or interest as a result of their failure to pay rent or make a housing payment on a timely basis during the period of the Order.
The CDC eviction moratorium differs from the CARES Act eviction moratorium in this regard: fees for nonpayment of rent from March 27, 2020 – July 24, 2020, could not be charged. The prohibition on charging fees or related penalties for nonpayment of rent continues to apply to properties in forbearance under Section 4023 of the CARES Act.
HUD is encouraging (but not requiring) O/As to consider entering into repayment agreements for all outstanding payments with residents facing financial difficulties during the pandemic.
What is required of residents in order to be eligible for the protection?
A resident must provide a completed and signed declaration to their landlord, owner, agent, or another person who has a right to have them evicted or removed from where they live. The declaration may be signed and transmitted either electronically or by hard copy. Each adult listed on the lease, rental agreement, or housing contract should complete the declaration. In certain circumstances, such as individuals filing a joint tax return, it may be appropriate for one member of the household to provide an executed declaration on behalf of other adult residents party to the lease.
Evictions Initiated Prior to the Order are Subject to the Order
Any evictions for nonpayment of rent that were initiated prior to September 4, 2020, but have yet to be completed, are subject to the Order. Any eviction that occurred prior to the Order is not covered.
Other October 14 Guidance
Hazard pay has historically been included in income for HUD programs and is not broadly excludable under 24 CFR §5.609. O/As should examine whether the pay increase is temporary or recurring in determining whether it will trigger an income reexamination. My recommendation in this area is that unless the Hazard Pay has a specific end date that is no more than 180 days after the start of the pay, the pay should be counted as income. If the pay will absolutely end (i.e., may not be extended) within 180-days of the start of the income, it should be considered temporary and excluded.
Lease Execution After Closing a RAD Deal
In order to provide PHAs and owners additional time to execute individual leases with tenants in light of social distancing measures, HUD will permit the HAP effective date to be the first day of the third full month after closing upon request (rather than the first day of either of the first two months following closing). E.g., RAD closing occurs on November 15. The HAP effective date may be December 1, January 1, or February 1. This option will be available for any closing that occurs through March 31, 2021.