When there is wartime activity, it is important for investors to realize the existence and impact of legislation that affects rental housing and the military, particularly those in National Guard units. The Servicemember’s Civil Relief Act of 2003, (SCRA), replaced the previous Soldiers and Sailors’ Civil Relief Act of 1940 (SCCRA). This federal law is extensive and covers such issues as rental agreements, security deposits, prepaid rent, eviction, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosure, civil judicial proceedings, and income tax payments. It also provides many important protections to military members while on active duty. Therefore, this law can have a definite influence on property management issues.
This act does not automatically excuse military members from paying rent or ignoring their rental obligations. The law is specific and to receive protection, service members are required to show the military service has had a “material effect” on the legal or financial matter involved. Military members must request protection under the SCRA during the member's military duty, or within 30 to 180 days after military service ends, depending on the protection requested.
Some of the significant changes that affect property management are the following:
Delay of Court and Administrative Proceedings
One provision of the SCRA is that it permits active duty service members, who are unable to appear in a court or administrative proceeding due to their military duties, to postpone the proceeding for a mandatory minimum of ninety days upon the service member's request. The request must be in writing and:
- Explain why the current military duty materially affects the service member’s ability to appear
- Provide a date when the service member can appear
- Include a letter from the commander stating that the service member’s duties preclude his or her appearance and that he is not authorized leave at the time of the hearing
- This letter or request to the court will not constitute a legal appearance in court. The court can grant further delays, and if the court denies additional delays, it is required an attorney represent the service member
Termination of Leases
The Service Members Relief Act also allows termination of leases by active duty service members who subsequently receive orders for a permanent change of station, or a deployment for a period of 90 days or more.
Eviction for Nonpayment of Rent
The law does not automatically excuse military personnel from paying rent. However, if the military service creates payment difficulties, it does provide some relief. Additionally, as with the previous act, landlords must obtain a court order to evict military members and/or their dependents. Then the court will decide if there is a “material effect,” or if the service member cannot earn sufficient income to pay the rent. If the court does decide there is reason for material effect, then it may stay the eviction three months unless the court decides less.
To justify an eviction, a property owner must:
- Attempt eviction during the period of military service, or after receipt of orders to report for duty
- Show the rental unit is used for housing by spouse, children, or other dependents of the service member
- The rent does not exceed $2,400 (this amount if subject to change in future years, but not to exceed $2465)
Default Judgment Protection
If military personnel receive a default judgment during their active duty service, or within 60 days thereafter, the SCRA allows the service member to reopen that default judgment and set it aside. In order to set aside a default judgment, the service member must show the inability to appear in person, providing good and legal defenses to the claims against them. The service member must apply to the court for relief within 90 days of the termination or release from military service.
It is important to remember that the law is to protect both service members and property owners alike. Working with our military personnel to work out reasonable solutions is the key to resolving rental issues, avoiding unnecessary litigation, and supporting our service members.