The CARES Act impacting Real Estate: Landlords, tenants and homeowners
Our clients have asked if the CARES Act provides financial relief for Landlords, homeowners or tenants. The CARES Acts is designed to provide relief to individual and impacted businesses. The monetary reliefs provided includes emergency cash and tax benefits. Some of the relevant provisions of the CARES Act impacting real estate are below:
Requests for Mortgage Forbearance by borrowers-Relief for homeowners:
Pursuant to the CARES Act § 4022(b) (C) (1) a borrower (1–4 family properties) of a federally backed loan  may request for forbearance under up to 180 days (and shall be extended for an additional period of up to 180 days at the request of the borrower). During a period of forbearance described in this subsection, no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract, shall accrue on the borrower’s account.
Foreclosure Moratorium-Relief for homeowners:
Pursuant to the Act commencing March 18, 2020 and for 60 days thereafter, a servicer of a "federally-backed loans," (loans for 1–4 properties) may not initiate any foreclosure, foreclosure-related eviction, or foreclosure sale. The moratorium bars the filing of any evictions. CARES Act § 4022(b) (c) (2)
Requests for Forbearance by Multifamily Borrower-CARES Act §4023:
A borrower of a residential mortgage loan secured by “federally backed mortgage loan” against a property comprising 5 or more dwelling units may be able to temporarily forbear payments.
The multifamily borrower may submit an oral or written request for forbearance affirming that the multifamily borrower is experiencing a financial hardship during the COVID–19 emergency. The borrowershall document financial hardship.
The borrower may request of up to 90 days (initial request of 30 days, and can request two additional 30-day extensions) of forbearance for the covered period. The covered period is defined as the period beginning on the date of enactment of this Act and ending on the sooner of (A) the termination date of the national emergency concerning the novel coronavirus disease or (B) December 31, 2020.
During the forbearance period, a multifamily borrower cannot evict the tenant for nonpayment of rent, or charge late fees or other penalties as a result of COVID-19.
Temporary Moratorium on Eviction Filings:
CARES Act § 4024 provides protection for covered dwellings against eviction. During the 120-day period beginning on the date of enactment of this Act, the lessor of a covered dwelling may not file a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges; or (2) charge fees, penalties, or other charges to the tenant related to such nonpayment of rent. See CARES Act § 4024(b).After that 120-day period, the lessor cannot require the tenant to vacate until it gives the tenant a thirty-day notice to quit. See §4024(c).
A covered dwelling is one where the building is secured by a federally backed mortgage loan or participates in certain federal housing programs. See §4024(a).
Credit Protection During COVID-19- CARES Act Section 4021:
Section 4021 of the CARES Act amends the Fair Credit Reporting Act (15 U.S.C. 1681s-2(a)(1)) by adding a provision concerning reporting of consumer credit information to credit reporting agencies during the Coronavirus emergency. The Act provides from January 31, 2020 until 120 days after the end of the national state of emergency, if a creditor has made an accommodation (such as a forbearance or workout), the creditor shall report that account with the same status as prior to the accommodation to a consumer reporting agency. For instance, a current account shall continue to be reported as current while a delinquent account shall continue be reported as delinquent. The exceptions are (1) the provision does not apply to charged-off accounts and (2) if the account was delinquent and the consumer manages to bring the account current during the period of accommodation, the account shall be reported as current.
Depreciation of Qualified Improvement Property.
Pursuant to the CARE Act Section 2307 “qualified improvement property” is eligible for 100% depreciation. This change to the previous code is retroactive and applies not only for 2020 but also to 2019 and 2018 tax years. However, an amendment to rax returns must be done to take advantage of the depreciation.
Five-Year Carryback for Net Operating Losses (NOLs).
Prior to the CARES Act Section 2303 net operating losses (NOLs) were capped at eighty percent (80%) of a business’ taxable income and could not be carried to previous years. The CARES Act also allows taxpayers to use their NOLs to offset hundred percent (100%) of taxable income in tax years 2018, 2019, and 2020. Additionally CARES Act allows the NOLs incurred in 2018, 2019 and 2020 to be carried back five taxable years.
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 The term ‘‘Federally backed mortgage loan’’ includes any loan which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from 1- to 4- families that is securitized, owned, insured, or guaranteed by Fannie Mae or Freddie Mac, or owned, insured, or guaranteed by FHA, VA, or USDA. See § 4022(a)(2).
 The CARES Act §4023 specifically excludes temporary financing such as a construction loans. See §4023 f (2)  There is no guidance available at this time regarding the specifics of the requested documentation required for the forbearance.  To qualify for forbearance, the loans have to be current as of February 1, 2020.