Year-End Appropriations Bill Provides Emergency Rental Assistance and Extension of Eviction Moratorium | Practical Law

Year-End Appropriations Bill Provides Emergency Rental Assistance and Extension of Eviction Moratorium | Practical Law

On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021, a $2.3 trillion appropriations bill. The legislation includes emergency residential rental assistance and an extension of the Centers for Disease Control and Prevention (CDC) eviction moratorium. It was signed into law by President Trump on December 27, 2020.

Year-End Appropriations Bill Provides Emergency Rental Assistance and Extension of Eviction Moratorium

by Practical Law Real Estate
Published on 27 Dec 2020 • USA (National/Federal)
On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021, a $2.3 trillion appropriations bill. The legislation includes emergency residential rental assistance and an extension of the Centers for Disease Control and Prevention (CDC) eviction moratorium. It was signed into law by President Trump on December 27, 2020.
On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260) (Act), a $2.3 trillion, 5,593-page omnibus appropriations bill. The Act includes relief designed to aid residential tenants and landlords suffering financial hardships resulting from the COVID-19 pandemic by:
Following passage, President Trump expressed disapproval of several provisions in the Act and initially indicated that he would not sign it without certain changes, although none expressly related to rental assistance. On December 27, 2020, President Trump finally signed the bill.

Emergency Rental Assistance

The Act's Emergency Rental Assistance provisions (Act, Div. N, Title V, Subtitle A, § 501) provide approximately $25 billion to state and local governments, US territories, and tribal communities for distribution to eligible households.

Eligible Households

An eligible household consists of one or more individuals who occupy a residential dwelling, are obligated to pay rent, and:
  • At least one of the tenants:
    • has qualified for unemployment benefits; or
    • has experienced financial hardship caused by the COVID-19 pandemic.
  • At least one of the tenants can demonstrate a risk of homelessness.
  • Their household income does not exceed 80% of the area median household income.
(Act, Div. N, Title V, Subtitle A, § 501(k)(3).)
Applications from eligible households are given priority consideration if either:
  • Their household income does not exceed 50% of the area median household income.
  • At least one of the household members has been unemployed for at least 90 days before the date of the application.
(Act, Div. N, Title V, Subtitle A, § 501(c)(4)(A).)

Financial Assistance

Eligible households qualify for financial assistance, including the payment of current or past due:
  • Rent.
  • Utilities.
  • Other housing expenses related to the COVID-19 pandemic as identified by the Treasury Secretary.
(Act, Div. N, Title V, Subtitle A, § 501(c)(2)(A).)
Generally, financial assistance is paid directly to the applicant's landlord, utility provider, or other qualifying creditor. Where the landlord or utility provider will not accept direct payments, the rental assistance may be given to the eligible household for the purpose of making the payments. (Act, Div. N, Title V, Subtitle A, § 501(c)(2)(C).)
Landlords may:
  • Help tenants apply for rental assistance.
  • Apply for rental assistance on behalf of their tenants, provided:
    • the tenant signs the application;
    • the landlord provides a copy of the application and accompanying documentation to the tenant; and
    • any payments received by the landlord are applied to the tenant's rental obligations.
(Act, Div. N, Title V, Subtitle A, § 501(f).)
Financial assistance generally cannot be provided to an eligible household for longer than 12 months. An additional three months of assistance may be available based on a finding of housing instability as defined by the Treasury Secretary, provided that funding is available. (Act, Div. N, Title V, Subtitle A, § 501(c)(2)(A).)
An eligible household may receive financial assistance for both past due rent and prospective rent payments. Prospective rent assistance is limited to three months, after which a subsequent application must be submitted for additional assistance. If a household owes past due rent, assistance for prospective rent payments may only be made if assistance is provided for those arrears. (Act, Div. N, Title V, Subtitle A, § 501(c)(2)(B).)
Financial assistance provided to eligible households:
  • Is not considered taxable income to any household member. (Act, Div. N, Title V, Subtitle A, § 501(f)).
  • Is not to be considered in determining whether any household member qualifies for any other federally funded (whether in whole or in part) assistance program.
(Act, Div. N, Title V, Subtitle A, § 501(j)).

Funding Mechanism

The Act's Emergency Rental Assistance program is funded by the US Department of the Treasury (Treasury Department) and administered by state and local governments (Act, Div. N, Title V, Subtitle A, § 501(a)). State and local governments must use at least 90% of funds received for direct financial assistance to eligible households (Act, Div. N, Title V, Subtitle A, § 501(c)(2)(A)).
The Act's Emergency Rental Assistance program ends on December 31, 2021, subject to one 90-day extension for those state and local governments that have received funds reallocated to them by the Treasury Department (Act, Div. N, Title V, Subtitle A, § 501(d),(e)).

Extension of CDC Eviction Moratorium.

On September 1, 2020, the CDC announced an order imposing a temporary moratorium on residential evictions to halt the further spread of COVID-19 (the Order) (85 Fed, Reg. 55292). The Order prohibited residential evictions of qualifying tenants through December 31, 2020. Evictions following a residential foreclosure are specifically excluded from the moratorium.
The Act extends the Order through January 31, 2021 (Act, Div. N, Title V, Subtitle A, § 502).

Qualified Tenants

The Order applies to residential tenants who provide their landlord with a declaration (Declaration) under penalty of perjury indicating that the tenant:
  • Has used best efforts to obtain all available government assistance for rent or housing.
  • Satisfies one of the following income qualifications because the tenant:
  • Is unable to pay the full amount of its rent due to:
    • a substantial loss of household income;
    • a reduction in work hours or wages;
    • a lay-off; or
    • extraordinary out-of-pocket medical expenses.
  • Is using best efforts to pay as much of its rental obligation as possible, after considering other nondiscretionary expenses.
  • Would be rendered homeless or forced to move into a shared-living setting as the result of an eviction.
The sample form of the Declaration is attached to the Order on page 33.

Covered Jurisdictions

The Order does not apply in any state, local, territorial, or tribal jurisdiction that has an existing eviction moratorium providing equal or greater public health protections than are set out in the Order. Further, the Order does not prohibit any jurisdiction from imposing stricter or additional public health protections than those set out in the Order.
For more information on state and local eviction moratoriums, see Practice Note, COVID-19: Commercial and Residential Tenant Eviction Moratoriums Select State and Local Laws Tracker (US).

Definition of Residential Property

Residential property subject to the Order is broadly defined as any property leased for residential purposes, including any:
  • House.
  • Building.
  • Mobile home or land in a mobile home park.
  • Similar dwelling.
The Order is not applicable to any hotel, motel, or guest house or other lodging rented on a temporary or seasonal basis.

Limited Scope of Moratorium

The Order prohibits eviction resulting from non-payment of rent. A tenant's other obligations under the lease or other occupancy agreement remain in effect and subject to enforcement by the landlord, including eviction of the tenant for:
  • Engaging in criminal activity on the premises.
  • Threatening the health or safety of other residents.
  • Damaging or posing an imminent risk of significant damage to the premises.
  • Violating any codes, ordinances, or regulations related to health and safety.
  • Breaching any contractual obligation of the tenant regarding the premises, other than the non-payment of rent or penalties.

Continuing Rent and Other Lease Obligations

The moratorium is a temporary measure in which the tenant's rent obligations are deferred, not waived. On the expiration of the moratorium, landlords have the right to:
  • Collect the full amount of tenant's unpaid rent.
  • Charge any fees, penalties, or interest due for the failure to timely pay rent, to the extent provided in the lease or other occupancy agreement.
  • Pursue all remedies available to the landlord under the occupancy contract or available under applicable law.
For more background on the Order, see Legal Update, COVID-19: CDC Announces Four-Month Residential Eviction Moratorium.

Practical Implications

The Act's Emergency Rental Assistance provisions provide much needed economic relief to tenants currently unable to meet their rent obligations due to the impact of the COVID-19 pandemic. It may also assist landlords impacted by their tenants' inability to pay rent to meet their own financial obligations. Allowing landlords to assist tenants in applying for this financial assistance may streamline the process for both parties.
For a continuously updated collection of resources addressing COVID-19, see Practical Law's Real Estate Global Coronavirus Toolkit.