Iowa Supreme Court Finds the CARES Act No Longer Applies to Landlord-Tenant Relations in Iowa

A VERY SPECIAL THANKS AND RECOGNITION GOES OUT TO: MONARCH INVESTMENT AND MANAGEMENT GROUP, CONLIN PROPERTIES, GREATER IOWA APARTMENT ASSOCIATION, LANDLORDS OF IOWA, IOWA MANUFACTURED HOUSING ASSOCIATION, AND THE NATIONAL APARTMENT ASSOCIATION

Today, the Iowa Supreme Court issued its ruling in MIMG CLXXII Retreat on 6th, LLC v. Miller (No. 23-0670) unanimously finding that the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s requirement that tenants of “covered properties” be issued a 30-day notice to vacate (in addition to the standard three-day nonpayment notice) has effectively lapsed and is no longer applicable to landlord-tenant relations in Iowa. This is a major victory for landlords across the state. Iowa is the first to find that these COVID-19-era statutes are now inapplicable, diverging from decisions in Colorado, Ohio, Connecticut, Washington, Indiana and Virginia, all of which found the opposite.

With this ruling, landlords in Iowa will no longer be required to serve a 30-day notice to vacate but instead may proceed with serving the standard three-day notice of nonpayment of rent otherwise required under Iowa law. Undoubtedly, this decisive order from the Iowa Supreme Court brings an end to years of confusion and uncertainty in the eviction process in Iowa.

The Order represents an across-the-board victory for MIMG, the landlord in that case, and the amici curiae parties who also submitted a brief in support, i.e. the Greater Iowa Apartment Association, the Iowa Manufactured Housing Association, Landlords of Iowa, and Conlin Properties, Inc., represented by Jodie McDougal and Jack O’Brien, the authors of this article.

Further details on the decision are below.

The CARES Act

In response to the COVID-19 pandemic in 2020, Section 9058(b) of the CARES Act implemented a 120-day moratorium wherein landlords of covered property (as defined specifically in Section 9058(a)) could not evict tenants for non-payment of rent. The federal moratorium was set to and did expire on July 25, 2020. Section 9058(c) further provided that once the moratorium period expired, a landlord could not “require a tenant to vacate” until 30 days after the landlord provided the tenant with a written notice, and such notice could not be provided any sooner than after the end of the moratorium. Per the express language of this provision, when dealing with nonpaying tenants, landlords of covered properties were to provide an additional 30-day notice to vacate in addition to the standard Iowa three-day notice of nonpayment of rent before commencing an eviction action in court. In Miller, The Iowa Supreme Court weighed whether this 30-day notice to vacate requirement still applied years later.

The Court’s Decision

The Iowa Supreme Court unanimously found that the 30-day notice to vacate provision only applied to evictions affected by the 120-day moratorium in 2020. Thus, it no longer applies to evictions in Iowa, and landlords are no longer required to serve a 30-day notice to vacate or otherwise comply with the CARES Act to proceed with an eviction.

In reaching its decision, the Court found that the notice provision in Section 9058(c) must be read as relating to the immediately preceding moratorium provision in Section 9058(b) and the broader context of the CARES Act. When viewed in that context, the Court found that Congress clearly intended the CARES Act and this notice provision to be a temporary emergency measure in response to the COVID-19 pandemic not a permanent superseding of Iowa law.

Thus, the Court fundamentally rejected the argument from Iowa Legal Aid (arguing on behalf of the tenants) that 9058(c) should be read in isolation, and the provision itself does not have an express end date. “But no statutory provision is an island,” the Court wrote, particularly here where Section 9058(c) fundamentally intruded into landlord-tenant law, an area of law traditionally left to the state to oversee. Critically, the Court found that reading Section 9058(c) in complete isolation would lead to other untenable and unintended consequences. For example, Section 9058(c) does not explicitly state that it only applies to evictions for non-payment of rent, while Section 9058(b) is explicitly limited to non-payment evictions. If Section 9058(c) is read in complete isolation, all tenants, regardless of the basis of their eviction, are entitled to a 30-day notice to vacate, even if they are being evicted for violence, commission of a crime, harassing other tenants, and so on. This could not have been what Congress intended. Thus, the Court reasoned, Section 9058(c) must be read as intertwined with the immediately preceding Section 9058(b), meaning it is also inextricably tied to the end of the 120-day moratorium period in July 2020. As the Court put it, Section 9058(c) performs “an ensemble role” rather than a “solo role” and must be read in context.

Although it found Section 9058(c) to unambiguously be tied to the 120-day moratorium period that had already expired, the Court went one step further. Even if the statute were ambiguous and subject to multiple different interpretations, the Court concluded that it must be read to avoid a conflict between federal and state law under principles of preemption. Thus, the statute must be interpreted to conclude that the 30-day notice to vacate provision was temporary and has already effectively expired instead of continuing to conflict with Iowa’s three-day notice requirement.

Impact

As a result of the Iowa Supreme Court’s Order in Miller, the CARES Act no longer applies to evictions in Iowa, and landlords and property managers can resume serving the three-day notice of nonpayment of rent required by Iowa law as opposed to the 30-day notice enacted as an emergency measure during the COVID-19 pandemic.

If you have questions regarding anything addressed in this article, please contact Fredrikson attorneys Jodie McDougal or Jack O’Brien.

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FAQs

1) Since FEDs are in State/ County court, does this negate the ability of a tenant (or group of) to file a federal civil case claiming we are not following federal law? 

Essentially, yes. As of today, the Iowa Supreme Court has held that Iowa landlords do not have to follow the federal law because it no longer applies. As such, any argument that Iowa landlords are not following federal law is baseless as of today’s ruling. That said, it is conceivable that someone could try to file a federal complaint asking for a declaratory judgment on the CARES Act (i.e., interpretation of the statute) from a federal district court and see if a federal judge would weigh in despite the Iowa Supreme Court already making a ruling; the chance of that is exceedingly low.

2) Is this immediately applicable and can we start acting on this NOW?

Yes.

3) What should Iowa landlords do for January 3/30-day nonpayment payments served earlier this month?

It would be ill-advised for landlords to attempt to rescind those prior notices or otherwise require that tenants vacate earlier than the date given in the previously served notice. Instead, landlords should act pursuant to any previously served 3/30-day nonpayment payments, but going forward to stop serving 3/30-day notices and go back to serving our standard 3-day notice of nonpayment of rent.