May 6, 2020
The COVID-19 virus pandemic is having, and will continue to have, a significant effect on foreclosures, evictions, and other collection and possessory actions throughout the United States and the world in an unprecedented way. Although most states have imposed temporary moratoriums on foreclosures and evictions, the restrictions will eventually be lifted, at which time foreclosures and evictions are expected to spike rapidly.
A mortgage and a lease are contracts. Thus, contract-related defenses such as force majeure and impossibility of performance become important if in fact a homeowner or renter was not able to make their payments due to the effects of the virus which then caused the foreclosure or eviction. These are very fact-specific defenses and require proper notice, documentation, and recording of events, and depend on individual circumstances.
As the COVID-19 pandemic is something that has not affected us in modern times, there is a dearth of case law on the force majeure and impossibility of performance defenses outside of the commercial sales/sale of goods arena (where, for example, the defenses come up due to a livestock plauge, revolution or governmental action in the seller’s or buyer’s destination country, etc.). Thus, an entire new area of case law will be developed in the coming months (and probably years) as to how these defenses work in the mortgage loan and rent areas of the law.
Mr. Barnes has already developed several theories of defense for the upcoming onslaught of foreclosures and eviction filings, and is actively engaged in CLE courses on the issues. One thing is for certain: these defenses are very complex, so they should not be randomly asserted without the benefit of an attorney, especially as doing so improperly will lead to bad case law decisions as took place across the nation after the 2008 crash when homeowners tried to advance securitization-related defenses on their own without the assistance of an attorney. Force majeure and impossibility of performance issues, like securituzation, are “rocket science”, and cannot be learned by surfing the internet over a weekend.
We will continue to provide information as to the force majeure and impossibility of performance issues as more information becomes available.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com