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CLARK BARS UPDATE - JULY 7TH 2020

Clark & Walker, P.C. - Attorneys at Law
Date: July 7, 2020

COVID-19 - EXPIRATION OF CARES ACT - Changes to Non-Payment of Rent Notice
By: Christopher R. Walker

On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law (hereinafter “Act”). The Act includes important, immediate protections for tenants and homeowners. The federal eviction moratorium for tenants living in certain types of housing is summarized below.

The eviction moratorium applies to "covered dwellings," which includes those dwellings on or in "covered properties." See Sec. 4024(a). The Act defines a "covered property" as a property that: (1) participates in a “covered housing program” as defined by the Violence Against Women Act (VAWA); (2) participates in the "rural housing voucher program under section 542 of the Housing Act of 1949"; (3) has a federally backed mortgage loan; or (4) has a federally backed multifamily mortgage loan. See Sec. 4024(a)(2). Category 4 is the most common of the categories that has resulted in a landlord's inability to commence an eviction proceeding for non-payment of rent.

Pursuant to Section 4024(b) of the Act landlords of covered properties are prohibited from initiating eviction proceedings or charging late fees, penalties, or other charges against a tenant for the nonpayment of rent. The eviction moratorium was to last 120 days and is due to sunset on July 25, 2020. However, Section 4024(c) of the Act sets forth another requirement that extends the Eviction Moratorium an additional thirty (30) days.

Section 4024(c) of the Act prohibits a landlord of a covered property from issuing a non-payment of rent notice prior to the expiration of the Act. Further, Section 4024(c) requires that any notice to vacate issued after the expiration of the Act must not demand the tenant vacate the dwelling unit for at least thirty (30) days following the issuance of the notice. It is in this new requirement that landlords must adjust their approach to any non-payment of rent eviction notice issued during the time period of July 26, 2020 through August 31, 2020.

RECOMMENDATION

Pursuant to Section 4024(c), a landlord of a covered property cannot demand a tenant to vacate the dwelling unit prior to the expiration of a thirty (30) day period after the service of the notice to vacate. While Arizona law does not label a non-payment of rent notice a “notice to vacate” the intent of the drafters of the Act is clear that Section 4024(c) is to apply to matters related to non-payment of rent. Accordingly, landlords of covered properties will need to use revised notices that provide for the five (5) day cure period set forth in A.R.S. § 33-1368(B) as well as the thirty (30) day vacate period required by the Act. In reality, since Arizona is a cure jurisdiction, that means that a tenant will have thirty (30) days to cure the non-payment of rent breach. The cure payment must include payment, in full, of the rental delinquency along with any late fees owed starting July 26th as set forth in the lease agreement. The landlord is not compelled to waive its right to full payment and may reject any partial payment as authorized by A.R.S. § 33-1371.