Monday, June 5th, 2005

For those that plan on or are currently renting to member(s) of the Armed Services, you should know there has been substantial changes to the law that could have an impact on your landlord ship. On December 19th, 2003, President Bush signed into law the “Service members Civil Relief Act” (SCRA). This law is a complete revision of the old law called the Soldiers’ and Sailors’ Civil Relief Act (SSCRA).

The old law (SSCRA) provided a number of significant protections to service members. These include: staying court hearings if military service materially affects service members’ ability to defend their interests; reducing interest to 6% on pre-service loans and obligations; requiring court action before a service member’s family can be evicted from rental property for nonpayment of rent if the monthly rent is $1,200 or less; termination of a pre-service residential lease; and allowing service members to maintain their state of residence for tax purposes despite military relocations to other states.

The old law (SSCRA) was largely unchanged from its enactment in 1940. The new law (SCRA) was written to (1) clarify the language of the SSCRA (2) to incorporate many years of judicial interpretation of the SSCRA; and to update the SSCRA to reflect new developments in American life since 1940.

The new law (SCRA):

1. The new law extends the application of a service member’s (or dependent) right to stay court hearings to administrative hearings. It now requires a court or administrative hearing to grant at least a 90-day stay if requested by the service member. Additional stays can be granted at the discretion of the judge or hearing official.

How this may impact a landlord? This applies to suits for eviction, damage or unpaid rents.

2. Clarifies the rules on the 6% interest rate cap on pre-service loans and obligations by specifying that interest in excess of 6% per year must be forgiven. The absence of such language in the SSCRA had allowed some lenders to argue that interest in excess of 6% is merely deferred. It also specifies that a service member must request this reduction in writing and include a copy of his/her orders.

How this may impact a landlord? Contract for Deed, Land Contracts, Deeds of Trusts, and Notes held as carry-backs.

3. Modifies the eviction protection section by precluding evictions from premises (residential and commercial) occupied by service members or their dependents for which the monthly rent does not exceed $2,400 for the year 2003 (an increase under the old law of $1,200). The Act provides a formula to calculate the rent ceiling for subsequent years.

How this may impact a landlord? Basically applies to rents of $2,400 or less whereby the items listed here apply.

4. Extends the right of the tenant(s), NOT the landlord, to terminate real property leases to active duty soldiers moving due to permanent change of station (PCS) transfer orders or deployment orders of 180 days or more OR individuals entering into a military service for their initial or subsequent enlistments. This eliminates the need to request a military termination clause in leases.

How this may impact a landlord? If a service member or their dependent (i.e. spouse) receive transfer orders of 180 days or more the landlord MUST allow the tenant(s) to legally terminate the lease agreement with at least 30-days written notice from the tenant(s)WITHOUT PENALTY (i.e. retaining the security deposit for breach of lease). The landlord MUST return any unpaid rents and security deposits if proper notice is given. Landlords are allowed to keep portions of the security deposits for physical damage done to the dwelling. This applies even if there is a fixed expiration lease signed by the tenant(s). Landlords CANNOT include legal provisions in their leases that require or ask tenant(s) to waive these requirements. Use caution, the U. S. Department of Justice has the legal authority to bring landlords up on criminal charges for gross failure to follow these rules.

The new law protections were also extended to members of the National Guard called to active duty for 30 days or more pursuant to a contingency mission specified by the President or the Secretary of Defense.

Email Author: Paul Vojchehoske