Emergency Rental Assistance Is Now Available To Residential Landlords
As part of the $2.3 trillion Consolidated Appropriations Act of 2021, adopted on December 27, 2020, Congress created a $25 billion Emergency Rental Assistance ("ERA") program to combat the economic effects of the Coronavirus pandemic. The ERA provides funds for rental assistance and for housing stability. Subject to certain federal guidelines, Congress delegated the administration of the ERA to state and local governments. Many of these state and local governments are just now announcing their administrative processes. In some cases, the ERA will pay up to one year’s delinquent rent and up to three months of perspective rent. Notably, under the ERA, residential landlords can apply directly for this assistance on behalf of eligible tenants. Furthermore, payments can be made directly to landlords.
An “eligible household” is defined as a rental household in which at least one or more individuals meets the following criteria: (1) Qualifies for unemployment or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship due to COVID-19; (2) Demonstrates a risk of experiencing homelessness or housing instability; and (3) has a household income at or below 80 percent of the area median. Landlords should consider adopting programs to encourage their tenants with delinquencies to certify their income levels to the landlords and also to authorize their landlords to apply, on their behalf, for state or local assistance under the ERA.
If a landlord submits an application for rental assistance on behalf of an eligible tenant, the landlord must: (1) Have the tenant sign the application, either physically or electronically; (2) provide the tenant with a copy of the application; and (3) apply any rental assistance payments awarded by the state to the rental obligations of the tenant. Also, landlords are required to establish data privacy guidelines when gathering this information on their tenants.
Funding will be distributed by state or local government bodies, depending on how each state wishes to establish its programs. In other words, a state or local government body that receives funding will establish its own rules regarding the application process and disbursement of funding. This will mean that landlords in different jurisdictions will be entitled to different benefits. For instance, in Arizona an eligible household can only receive up to $3,500 per month for combined rent and utility assistance while in some areas of Wisconsin, monthly assistance is capped at of 115% of fair market rents.
Applications for rental assistance will be given priority if either (1) an eligible household's income is at or below 50% of the area median income or (2) one or more members in the household is unemployed for 90 days or more before the submission date of the application. Many states are still in the process of creating their application process for the rental assistance program. Funding is expected to be available under the ERA until December 31, 2021, however, beginning September 30, 2021, the Treasury Secretary is directed to recapture any excess unobligated funds.
If you have any questions on rental assistance and how residential landlords can take advantage of this program, please do not hesitate to contact your Quarles & Brady attorney or: