As we live through the crisis of the COVID-19 pandemic, many families have struggled to pay rent. As tenants have been unable to pay their rents, landlords have struggled to maintain their properties. To help deal with this issue, the US Department of Treasury (“DOT”) introduced the Emergency Rental Assistance program, in two waves. The DOT introduced the first wave of the Emergency Rental Assistance Program (ERA1) under the Consolidated Appropriations Act, 2021 on December 27, 2020. This wave set aside $25 billion to be paid to eligible grantees for fiscal year 2021. The second wave of the Emergency Rental Assistance Program (ERA2) was introduced under the American Rescue Plan Act of 2021 on March 11, 2021. The second wave added an additional $21.55 billion to be paid to eligible grantees until September 30, 2027.
The funds were distributed to states, local governments, US territories and (for the first wave) Indian tribes. 90% of the funds must be used for rent, rental arrears, utilities, and other costs related to housing. The remaining 10% is able to be used for housing stability services that help serve the homeless community. As stated above, the ERA funds are distributed to state and local governments, not directly to landlords or households. In order to qualify for ERA funds, those in need must contact a state- or locally-run ERA program.
What is the process to apply for funds? The Consumer Financial Protection Bureau website has a guide to show available ERA programs. Please visit the CFPB site to inquire about available ERA programs.
For tenants, depending on the locality, the landlord may need to submit an application first. All local programs cover rent, utility costs, and home energy costs. However, some local programs are more flexible than others and may also cover reasonable late fees, internet service, moving expenses, or other expenses related to moving such as security deposits, application fees, housing counseling, case management, and, in some cases, legal representation. The ERA program allows local programs to grant eligible participants 18 months of help with rent. However, if there is overdue rent, the grant must first pay off the rent owed to the landlord. The ERA program also allows a recipient to receive money for utilities or other costs even if assistance is not needed to pay rent. For people who have lost their house due to the pandemic and are living in a hotel or motel room, the ERA program can help cover these costs as well.
Who is eligible to receive emergency rental assistance? A landlord’s eligibility is based on the tenant’s household needs. Here are the eligibility requirements.
- There must be an agreement to pay rent for a home, apartment, or mobile unit. (This agreement doesn’t necessarily need to be a signed lease agreement, but some type of agreement is needed to verify the liability for rent). At least one member of a household has qualified (or should qualify) for unemployment, lost income, owed a large expense, or had other financial hardships.
- Household income must be below a certain amount based on where an individual is living. The general rule of thumb is that household income must be below 80% of the Area Median Income (AMI) in the area. However, the ERA program prioritizes households below 50% of the AMI and unemployed workers.
- At least one member in the household is at risk of being homeless or would have trouble finding a stable place to live (housing instability).
Each local ERA program distributes money differently. Some may contact a landlord or utility provider directly to accept the payment from the Emergency Rental Assistance programs to pay off what is owed. If the landlord/utility provider does not respond within seven days, the ERA program will distribute the money to the individual, but the proceeds must be used to pay what is owed to the landlord or utility provider.
Anyone struggling with financial hardship due to the pandemic should check if there are any ERA programs in the area to determine eligibility for assistance.