The Property Owner’s Guide to the CARES Act

cares act for property owners
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As the pandemic continues to grip the US and you hear startling statistics related to death toll and unemployment, one lesser addressed issue is how the pandemic impacted housing across the country.

Whether you’re a property owner or a renter, much hardship was faced as a result of the pandemic. Some estimates have 30 to 40 million people who were at risk of potential eviction.

The federal government passed the CARES Act to help many groups facing hardship due to the pandemic. 

From small business owners to property owners, an attempt was made to offer assistance. 

How does the Cares Act affect property owners both from their own perspective and the perspective of the people they rent the property to?

Read on to learn more about the impact the pandemic has had on property owners.

What Is the Cares Act?

The Cares Act or the Coronavirus Aid, Relief, and Economic Security Act was legislation passed into law on March 27, 2020.

This relief package worth an estimated $2 trillion provided financial aid and protection for Americans, businesses, workers, and property owners. Its goal was to slow down or stop the impact the coronavirus pandemic was having on all sectors of the US economy.

The CARES Act provided the following:

  • $367 billion loans and grant program to assist small businesses
  • Expansion of unemployment benefits 
  • Direct payments to families of $1,200 per adult and $500 per child
  • $130 billion to hospitals, healthcare systems, and providers
  • $500 billion funds for loans to corporations 
  • $25 billion for airlines 
  • $150 billion to state and local governments

This act always allowed for mortgage forbearance to protect homeowners and property owners. It also put in place an eviction moratorium. Landlords were not allowed to charge late fees, penalties, or other charges for paying rent late. 

Status of the Cares Act Now

The CARES Act worked to protect property owners who were going to struggle to pay their mortgages while the impact of the pandemic raged on. 

It also protected renters, preventing the property owners from evicting them for nonpayment of rent. 

Now though, the protections have expired. What’s left now is the impact of it all for both property owners and their renters.

In many ways, by protecting one group like renters, additional challenges arose for the people they rented from. 

The long-term impact will be felt for a long while, without the previous protections in place. 

Let’s take a look at what the CARES Act did for property owners and renters and its long-term impacts.

How Does the Cares Act Affect Property Owners?

With millions of workers either unemployed or furloughed from work during the pandemic, there was no doubt that millions were struggling to make their monthly mortgage payment

You could be a property owner of your own home and struggling to make a monthly mortgage payment. Likewise, you could be a property owner who rents out the properties but is suddenly not getting the rent paid to them because their tenants are unemployed. 

Let’s take a look at some of the features of the CARES Act and how it worked to help property owners.

 Forbearance of Mortgage Payments

For property owners who have Fannie Mae or Freddie Mac loans, you could request a mortgage forbearance. 

This forbearance could be requested for 30 days and then two additional 30 days periods were eventually allowed. If you rented the property, the forbearance came with some restrictions though.

Cares Act Eviction Prevention

Property owners were prevented from evicting those properties because the rent was not paid.

The property owners were also restricted from charging any late fees, penalties, or other charges for late payment of rent.

Finally, the property owner was not allowed to issue a notice to vacate to their renters. 

Regulates Credit Reporting

The property owners also had some requirements related to what they reported to the credit agencies.

When property owners made accommodations for rent, they were not allowed to report nonpayment or late payment during the 120-day window. 

One exception was if the renter was already delinquent in payment prior to the passage of the CARES Act. 

Cares Act for Property Owners 

Property owners and the CARES Act provided assistance for renters which in some cases acted as a detriment to them. 

While the property owner could seek a forbearance, it didn’t mean their mortgages went away. It also didn’t mean they were gathering interest on those loans. 

As moratoriums on evictions have expired, property owners are faced with challenging decisions with their renters who are behind on rent. 

Do they opt to write off any back rent and begin collecting rent from tenants going forward?

Do they allow their tenants to stay put and spread out back rent over time?

Do they opt to evict those tenants who are very behind on rent payments?

Each option comes with challenges and expenses. It also means they have to consider how to make their own mortgage payments on the properties in question.

Cares Act  for Renter’s Perspective

The CARES Act did provide housing assistance for renters, too. The eviction moratorium was extended several times, preventing property owners from pursuing eviction. It finally expired on August 26, 2021.

As these moratoriums expire, many renters are now faced with significant uncertainty about their future. 

Covid and the US Housing Crisis

The CARES Act did provide some protections for renters and property owners. What many communities are now seeing is though is the double-edged sword that comes with all the financial hardship. 

You have property owners who struggled with mortgages and property upkeep when rents weren’t coming in and you have renters who are faced with the real possibility of eviction if the property owners move forward. 

Surviving the Pandemic as a Property Owner

As you consider how does the CARES Act affect property owners, you must also consider the interconnectedness of the renters who live in those properties. 

Both groups were offered government support through the CARES Act and now must move forward as their aid expires. 

The government also offered significant employee retention tax credits for business owners. Would your business benefit from such aid? Contact us today to learn more about the help it can provide.

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