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Leases, Rental Agreements, and Mortgages during the Coronavirus Pandemic – FAQ Sheet on the new Oregon and Federal Rules

By April 23, 2020Uncategorized

What is Oregon’s eviction moratorium?

On April 1, 2020, Governor Kate Brown imposed a temporary moratorium In Oregon on residential or commercial evictions based upon a failure to pay rent, or based on a no-fault eviction notice (Executive Order 20-13). This temporary moratorium follows the March 23, 2020 “Stay Home, Save Lives” executive order and is intended, in part, to protect “against residential evictions, so tenants can remain home” during the novel infectious coronavirus (COVID-19) emergency.

How long is the Oregon moratorium?

Unless extended or amended by the Governor, the moratorium will remain in effect for 90 days – through June 30, 2020.

What is the federal residential eviction moratorium and what properties are affected?

Under the federal CARES Act, there is also a 120-day federal moratorium on residential evictions and fees. During this 120-day period, which ends on July 25, 2020, lessors of properties with federally backed mortgage loans or federally backed multifamily mortgage loans may not initiate an eviction proceeding or other action to recover possession of a unit from a tenant for nonpayment of rent or other fees or charges. Lessors also may not charge fees, penalties, or other charges to a tenant related to nonpayment of rent. Finally, a notice to vacate may not be issued during this period, and once a notice is able to be issued, tenants must be given at least 30 days to vacate from the date of the notice.

How do I know if I have a federally backed mortgage loan?

There are several options for determining whether your loan is backed by the Federal Government. The first is to review your mortgage or closing documents to see if it contains language indicating it is a federally backed mortgage loan or a federally backed multifamily mortgage loan. You can also call or write your mortgage servicer who will inform you whether or not it is. Online search tools provided by Fannie Mae, Freddie Mac, or the Mortgage Electronic Registration Systems (MERS) can provide additional information about your loan or who your servicer is.

What is restricted by the Oregon moratorium?

Under the moratorium, a landlord cannot terminate a residential rental agreement or commercial lease for nonpayment of rent, late charges, utility charges or any other charges or fees, nor can a landlord base an eviction on a “no fault” notice. A landlord is also forbidden from pursuing a judicial action for eviction – by filing, serving, delivering or acting on any notice, order or writ of termination or the equivalent – or by taking any non-judicial action that would interfere in any way with the tenant’s right to possess the dwelling unit. Late fees and other penalties arising from nonpayment are also specifically waived during the moratorium.

Can a residential tenancy be terminated and a tenant evicted for another cause under the Oregon moratorium?

Yes, but . . . The moratorium does not prevent the termination of a tenancy for a reason other than “nonpayment” or a termination without cause – for instance, evictions based upon destruction of the premises or illegal activity on the premises. In these cases, a landlord may file and serve an action for eviction following termination of the tenancy. Bear in mind, however, that Oregon courts are not currently hearing eviction actions by order of Chief Justice Martha L. Walters. Eviction actions for permitted reasons may be filed and served in the ordinary course, but the first appearance and any trial won’t happen before June 1, 2020, unless special dispensation is granted by the local presiding judge. Still, if a residential eviction is not prohibited by the Governor’s order, then it is generally advisable for a landlord to file and serve an action for eviction – understanding there will be delay before the case is heard.

Under the Oregon moratorium, must tenants notify a landlord if they won’t be able to pay their rent?

Yes.  If a residential or commercial tenant is unable to pay all rent on the due date, the tenant is required to notify the landlord as soon as reasonably possible. In addition, a commercial tenant must provide to the landlord, within 30 calendar days of unpaid rent being due, with documentation or other evidence that nonpayment is caused by, in whole or in part, directly or indirectly, the COVID-19 pandemic. Acceptable documentation or other evidence includes, without limitation, proof of loss of income due to any governmental restrictions imposed to mitigate the spread of COVID-19. Documentation might include a commercial tenant’s internal financial statement.

Commercial landlords might consider negotiating a partial lease payment based on the revenue shortfall documented for the month just ended. Negotiations may, but need not, include terms of repayment of rent deferred pursuant to the moratorium order. Finally, any party to a commercial lease should contact his or her insurance broker to inquire whether an existing policy might have lost-rental or business interruption coverage.

Under the Oregon moratorium, must a tenant pay partial rent, and pay whatever rent is unpaid, eventually?

Yes. Even if a residential or commercial tenant is unable to pay all of their rent on the date due, the tenant must make partial rental payments to the extent that the tenant is financially able to do so. Moreover, the moratorium does not permanently relieve the tenant from the obligation to pay rent, utility charges, or any other service charges or fees, and the tenant will remain liable for any unpaid amounts of rent or other charges. NOTE: Late charges are permanently waived.

Under the Oregon moratorium, is the rental agreement or commercial lease still in effect if the tenant is unable to pay their rent?

Yes. Even if a tenant is unable to pay the full amount of their rent when due, the rental agreement or commercial lease will remain in effect throughout the moratorium and both parties are obliged to conform to the rental agreement during the period of the moratorium.

What if a party fails to comply with the Oregon moratorium?

Knowing violation of the order is subject to the penalties at Oregon Revised Statute §401.990 and upon conviction is a Class C misdemeanor, punishable by imprisonment for up to 30 days and a fine of up to $1,250, and potentially other penalties.

Are there provisions in the CARES Act that can help with my mortgage payments if residential tenants are unable to pay their rent due to the COVID-19 emergency?

Yes, but only if you have a federally backed mortgage loan. Private lenders are not required under the CARES Act to provide extra assistance during this time, but some might. If your loan is federally backed and you are experiencing a financial hardship, directly or indirectly, due to the COVID-19 emergency, you may request forbearance on the loan by submitting a request to your loan servicer.

The length of the forbearance depends on the type of property you own. If the property is designed principally for the occupancy of 1 to 4 families, the forbearance may be granted for up to 180 days, and may be extended for an additional 180 days. During the period of forbearance, no fees, penalties, or interest will accrue beyond the amounts scheduled or calculated. As long as the property is not vacant or abandoned, the loan servicer may not foreclose on the property within a 60-day period starting on March 18, 2020. That period ends on May 17, 2020.

If you own a multifamily property (a property comprising of 5 or more dwelling units), the payments must be current before the request for forbearance may be made. The forbearance may be granted for up to 30 days, and may be extended twice for an additional 30 days each time. The request for an extension must be made at least 15 days before the end of the current forbearance period.

I own a multifamily property and requested a forbearance, but I have a tenant who is in violation of their lease. May I evict the tenant or take other actions to enforce the lease?

If you own a multifamily property and you are currently in the forbearance period, you may not evict a tenant from a unit on the property during the forbearance period solely for nonpayment of rent or other fees or charges. Additionally, you may not charge any late fees, penalties, or other charges to the tenant for late payment of rent. Finally, you must wait until the forbearance period ends before you can issue a notice to vacate to a tenant, and the tenant may not be required to vacate the unit until 30 days after the date of the notice.

What are my options if I do not have a federally backed mortgage loan?

Some lenders and loan servicers may have adopted policies similar to the ones provided under the CARES Act. Contact your loan servicer and ask what programs they have to help property owners affected by the COVID-19 emergency.

If you have questions about this information, please contact one of our real estate attorneys at Hutchinson Cox (541/686-9160 or www.eugenelaw.com).

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