DC Council Requires Residential and Commercial Landlords to Establish Rental Payment Plans

The bill, among other things:

1. requires landlords of residential and commercial retail properties to develop a rent payment plan for their residential and retail tenants who cannot pay rent due as a result of the public health emergency (Section 9); and
2. changed Section 203 of the COVID-19 Supplemental Act by allowing the rent increase prohibition to apply to commercial retail tenants (Section 11).

Because the Council passed this bill on an emergency basis pursuant to the District’s Home Rule Act, the bill is not subject to congressional review. The bill will become effective as soon as Mayor Bowser signs it, which she is expected to do, and will remain in effect for 90 days after enactment. The Council also gave preliminary approval to a temporary version of the legislation, which would last for 225 days. This alert provides an overview of the above-referenced sections of the Coronavirus Omnibus Emergency Amendment Act and new landlord requirements that may be of import to the real estate community.

Section 9 – Creation of Rental Tenant Payment Plans

The Coronavirus Omnibus Emergency Amendment Act has called for commercial and residential landlords, referred to as housing and non-housing providers (defined below), to develop a rent-payment-plan program for eligible tenants (also defined below).

The program permits an eligible tenant to enter into a payment plan for rent that comes due during the covered time period (during the public health emergency and for the lesser of one year thereafter or the cessation of tenancy, whichever occurs first). Notably, the program does not require a rent reduction at the moment, although it does require the provider to:

1. Waive any fee or penalty arising out of the entering into the payment plan; and
2. Not report to a credit bureau as delinquent the rent that is subject to the payment plan or report the payment plan as derogatory information; and
3. Notify all eligible tenants of the availability, terms, and application process for the program.

Providers are given some discretion in the development of their program’s procedures but must require eligible tenants to submit supporting documentation. The provider must also make the application available online and by telephone.

Further, the Act requires that the eligible tenant’s application be approved when the following criteria are met:

1. Eligible tenant demonstrates to the provider evidence of a financial hardship resulting directly or indirectly from the public health emergency;
2. Eligible tenant demonstrates that the financial hardship is in addition to any delinquency or future inability to make rental payments in existence prior to the start of the public health emergency;
3. Eligible tenant would be unable to qualify to rent the unit based on application of the same qualification criteria that were applied to the eligible tenant at the time he or she was approved to rent the unit; and
4. Eligible tenant agrees in writing to make payments in accordance with the Payment Plan.

Regardless of whether the application is approved or denied, a provider who receives an application for a payment plan must retain the application for at least 3 years. The provider is also required to, upon request, make an application for a payment plan available to:

• For residential tenants, the Rent Administrator and Office of the Tenant Advocate
• For commercial retail tenants, the Department of Consumer and Regulatory Affairs (the DCRA)

Should a residential eligible tenant’s application be denied, that tenant may file a written complaint with the Rent Administrator, which will be forwarded to the Office of Administrative Hearings for adjudication.

Should a commercial eligible tenant’s application be denied, that tenant may file a written complaint with the DCRA, which will be forwarded to the Office of Administrative Hearings for adjudication.

The definitions of “providers” and “eligible tenant” are as follows:

• “Providers” include both housing and non-housing providers.
  • A “housing provider” is a person who is a residential landlord, residential owner, residential lessor, residential sublessor, residential assignee, or their agent, or any other person receiving or entitled to receive the rents or benefits for the use of occupancy of any residential rental unit within a housing accommodation within the District who also has 5 or more residential units currently rented or available for rent.
  • A “non-housing provider” is a person who is a non-residential landlord, non-residential owner, non-residential lessor, non-residential sublessor, non-residential assignee, a non-residential agent of a landlord, owner, lessor, sublessor, or assignee, or any other person receiving or entitled to receive rents or benefits for the use or occupancy of a commercial unit.
• An “eligible tenant” is a tenant of a residential or commercial retail property that has notified the landlord of an inability to pay all or a portion of the rent due as a result of the public health emergency, is not currently receiving a rent reduction pursuant to Section 202 of the COVID-19 Supplemental Act, and is not a franchise, unless the franchise is owned by a District resident and operated in the District.

Section 11 – Rent Increase Prohibitions Expanded to Commercial Retail Tenants

As described in a previous alert, Section 203 of the COVID-19 Response Supplemental Emergency Amendment Act of 2020 (signed into law May 4, 2020, by Mayor Bowser) expanded tenant protections so that rent increases for “residential property” and “commercial property” were prohibited during a period for which a public health emergency has been declared, and for 30 days thereafter. The new Coronavirus Omnibus Act amended this concept by changing “commercial property” to “commercial retail property.”

This change may be beneficial to commercial retail tenants. Although the Coronavirus Omnibus Emergency Amendment Act did not define “commercial retail property,” it seems that (i) tenants of retail space in an office building may receive the Section 203 protections, while (ii) office tenants may not.

Other Landlord Requirements

1. Eviction Clarification – Residential and commercial landlords cannot file complaints for eviction during the health emergency and for 30 days thereafter (Section 12).

1. Landlord Amenity Refunds – If a residential landlord temporarily stops providing an amenity that a tenant pays for, in addition to the rent charged, the landlord is required to refund any fees charged for that amenity during the public health emergency. The term “amenity” is not defined. (Section 13).

1. Residential Accommodation Cleaning Requirements – Residential landlords (with one or more units) are required to clean common areas of the housing accommodation on a regular basis. Housing accommodation includes any apartment, efficiency apartment, room, accessory dwelling unit, cooperative, homeowner association, condominium, multifamily apartment building, nursing home, assisted living facility, and group home in the District containing one or more residential units that are not occupied by the owner (Section 14).