Landlords Accepting Partial Rent or Allowing a Tenant to Skip Rent Must Send Written Notice of Enforcement of Terms
On March 1, 2021, the Georgia Court of Appeals issued a decision impacting both residential and commercial landlords/property owners. The ruling has a potentially broad impact, and is especially noteworthy for landlords in the current pandemic environment. Specifically, in The Hatchett Firm, P.C. et al. v. Atlanta ME-006 Life Financial Group, Inc., the tenant was allowed to partially pay rent for ten (10) months and then stopped paying rent for six (6) months. After over fifteen (15) months of an adjustment of rent payments, which was accepted by the landlord, the landlord provided notice to the tenant demanding rent and compliance with the lease. The Georgia Court of Appeals held that by repeatedly accepting less rent than as required by the lease or no rent at all, the door was opened to a “de facto” new agreement having been created between the parties and that the parties had mutually agreed to suspend the terms of the written lease. Further, the Georgia Court of Appeals noted that while the lease contained an anti-waiver clause, the anti-waiver clause could not be enforced due to the repeated acceptance of less rent or no rent.
Bureau of Consumer Financial Protections Interim Rule Supporting the CDC Eviction Moratorium for Nonpayment of Rent
On April 16, 2021, the Consumer Financial Protection Bureau (CFP) issued a new pandemic-related Interim Rule applicable to those who act as “debt collectors.” The Interim Rule goes into effect on May 3, 2021. The CFP Interim Rule amends Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA), by requiring a new form of notice from the debt collector in connection with the eviction moratorium for non-payment of rent issued by the Center for Disease Control and Prevention (CDC) in response to the COVID-19 pandemic. The CDC Order is currently in effect until June 30, 2021 and the Interim Rule is effective while the CDC Order is in effect, including any extension thereof.
The State of Georgia Rental Assistance Program
Optimism is warranted, but as the country and the world progress in the fight against the COVID-19 pandemic, substantial uncertainties abound. Those uncertainties include bridging the gap for landlords, renters, and utility providers seeking to maintain a most basic social need – roofs over renters’ heads. Renters around the country are on the brink of eviction and the demand for rental assistance programs throughout American communities is soaring. Fortunately, in Georgia some relief is in sight.
Lawyers have been trained to avoid using a general warranty deed when representing a client in a real estate transaction or when conveying property between related entities or individuals. In instances of dissolution, merger, a transfer from individuals to a majority owned entity or a transfer between other related parties, where there is not a concern of a claim to title, a Quit Claim Deed is erroneously believed to be the type of deed of choice. While not intending to cause an issue with the client’s title insurance, the use of a Quit Claim Deed, in these situations, may void any existing Owner’s Title Insurance Policy in Georgia by canceling the “continuation of insurance.” Even for this seemingly minor assistance to a client, it is critical to ask a knowledgeable real estate attorney and check the jacket of the client’s Owner’s Title Insurance Policy to determine how “continuation of insurance” is applied and how the “Insured” is defined. For example, “Continuation of Insurance” can only be maintained if the “Insured” shall have liability by reason of warranties in any transfer or conveyance of the Title.”
As part of the Florida legislature’s effort to raise awareness of human trafficking – labor and commercial sex trafficking – it passed legislation requiring “public lodging establishments” to post signage regarding human trafficking in a conspicuous location accessible to employees. While subject to some exclusions, public lodging establishments include apartment buildings along with other property types.
A lender that forecloses a security deed on Georgia real property, realizes at the public sale a price less than the debt, and wants to pursue the borrower for the deficiency, must go before a court in a “confirmation action.” If the judge “confirms” the foreclosure sale by finding that the lender followed the rules and that the foreclosure brought the fair value for the property, then the lender may legally go against the borrower for the deficiency. The Georgia Supreme Court in 2016 confirmed that a lender must also confirm a foreclosure sale before pursuing a deficiency against a guarantor. PNC Bank, Nat'l Ass'n v. Smith, 298 Ga. 818, 819, 785 S.E.2d 505, 507, 2016 Ga. LEXIS 267, 2016 WL 1276376.
In response to surging case numbers and crowded hospitals, Governor Kemp last week updated the requirements of the statewide Executive Order for the first time in several weeks. The update explicitly adopts a quarantine requirement for Georgians exposed to COVID-19 and imposes an obligation on certain businesses regarding such persons. The requirement does not apply to all businesses in Georgia, and it imposes different requirements on different kinds of businesses.
This Alert will describe the quarantine protocol and its general application to businesses in Georgia. We will publish additional guidance later this week regarding specific application of the quarantine protocol to children’s Camps, Live Performance Venues, and gyms and fitness centers.
The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 was signed into law by President Trump on December 27. Section 502 of the Act extended the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) Order of September 4, 2020 which temporarily halts residential evictions for failure to pay rent until January 31, 2021. The original order is discussed in more detail in a law alert from September 3rd, which can be found here.
The City of Atlanta recently adopted a new ordinance – called by some “Renter’s Choice” – requiring landlords, in certain circumstance, to provide residential tenants with choices about how they pay security deposits.
On October 2, 2020, the Small Business Administration (SBA) issued a Procedural Notice to provide information concerning required procedures for a “change in ownership” of an entity that has received a paycheck protection program (PPP) loan. Prior to issuance of this Procedural Notice, the SBA regulations that govern PPP loans did not expressly address asset acquisitions/sales or even provide a detailed definition of “change of ownership” for borrowers. Further, while most PPP loan documents required the PPP lender to consent prior to a “change of ownership,” the term “change in ownership” was not defined. This lack of guidance and undefined language in the PPP loan documents left PPP borrowers who wanted to accomplish an asset acquisition/sale, sale of common stock or ownership or merger at risk of defaulting on their PPP loan covenants, which would require immediate repayment of their PPP loan.
- Kyle M. Baker
- Alexandra Rason Coons
- Clinton “Tres” Dye, III
- George C. Gaskin
- Mitzi L. Hill
- Lauren Parsons Langham
- Kevin P. Langley
- LaTise Miller
- Christina L. Moore
- Gregory G. Schultz
- John Taylor