Details Matter: The Importance of Proper Notice in Summary Ejectment Proceedings by Melanie Crenshaw

In a series of recent decisions from the Court of Appeals, tenants in federally subsidized and federally funded properties have challenged whether the notice they received from their landlords was effective to terminate their leases. (See L.I.C. Assoc. I, Ltd. P’Ship v. Brown, __ N.C. App. __, 904 S.E.2d 822 (2024); see also Rosewood Estates I, LP v. Drummond, 290 N.C. App. 366 (2023) (unpublished); and Oxford Housing Authority v. Glenn, 290 N.C. App. 243 (2023) (unpublished). In all three cases, the landlords failed to comply with lease provisions mandated by federal regulations, including requirements for notice of lease termination and the Violence Against Women Act (VAWA). While these cases arose in the context of federally funded housing, the lessons they teach about proper notice to terminate a lease are applicable more broadly. Using facts from these cases, this post will trace a scenario where notice is at issue and explore what the law requires. A Few Facts to Start Tom Tenant lives in an apartment complex owned by City Housing Authority (CHA), a federally funded entity. Tom’s girlfriend, Carol, visits Tom on the weekends, but when she has had too much to drink, she yells at Tom, disturbing other tenants. CHA has sent Tom multiple warnings about disturbing the peaceful enjoyment of other residents. The last time Carol came to visit, she and Tom got into a fight, and she stole his keys and threatened to assault him and to damage his property. Tom has called and emailed the CHA office several times to request that the locks on his apartment be changed because he’s worried Carol will show up and assault him or vandalize his apartment. The CHA office is only staffed from 8:00am-4:00pm on Tuesdays and Thursdays, but Tom works during those hours. After a week, Tom decides to hire a locksmith to change the locks. He stops by the office to give CHA the new key, but he never finds anyone in the office. Tom’s lease with CHA includes a prohibition on changing the locks without prior consent of CHA. The lease also requires Tom to pay the rent in full on the first of the month. The lease states that Tom is entitled to 14-days’ notice in the case of failure to pay rent and 30-days’ notice for all other lease violations (except violations for criminal activity). What will happen when CHA learns that Tom changed the locks? What Is in the Lease Matters When a tenant breaches the lease, the landlord may be entitled to terminate the lease and retake possession. A judgment for possession to the landlord is only possible if the landlord has followed all the procedures in the lease for terminating it. All landlords must comply with any notice requirements set out in their leases, but public housing authorities (PHAs) and landlords who receive rental assistance from covered federal housing programs, such as the Housing Choice Voucher Program (Section 8) and the United States Department of Agriculture (USDA) Rural Development program, must also comply with notice of termination requirements set out by federal regulations. Additionally, the U.S. Department of Housing and Urban Development (HUD) and a number of state courts have concluded that the provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requiring a 30-day notice to vacate for nonpayment of rent did not include an expiration date and is still in effect for “covered properties,” which are properties that participate in certain federal housing programs or that have a federally backed mortgage loans. 15 U.S.C. 9058 (a)(2). A lease is a contract, and the damages for breach of a contract are ordinarily the amount of money necessary to compensate the non-breaching party for the losses suffered as a result of the breach. In other words, the law tries to put the injured party in the position they would have been in had the other party fully performed under the contract. Leases are unique in the world of contract law because the law allows for the termination of a lease if the lease includes a forfeiture clause. A forfeiture clause identifies any breaches by the tenant that may result in the landlord terminating the lease and retaking possession of the property. For example, the lease may provide that the tenant’s failure to pay rent entitles the landlord to terminate the lease or the tenant’s right of possession. So, if the tenant fails to pay rent, the landlord can declare a forfeiture of the tenant’s right to possession and seek possession of the property through the judicial process of summary ejectment. Even though G.S. 42-26 allows lease forfeitures, “[o]ur courts do not look with favor on lease forfeitures.” Stanley v. Harvey, 90 N.C. App. 535 (1988) (holding landlord’s failure to provide tenant with a decisive and unequivocal notice to vacate deprived landlord of authority to proceed with summary ejectment). “When termination of a lease depends upon notice, the notice must be given in strict compliance with the contract as to both time and contents.” Id. Returning to the example above, if the lease says that the landlord must provide tenant with written notice of the failure to pay rent and give the tenant five days to cure the breach, then the landlord cannot file for summary ejectment until the landlord has strictly complied with this provision. This requirement of strict compliance is why I often and adamantly remind judicial officials that they must start any summary ejectment action by reading the lease. Returning to the scenario involving Tom Tenant, because CHA is a public housing authority, it must comply with federal regulations for the notice to terminate a lease, including a requirement to state the specific grounds for termination. Tom’s lease includes a notice to terminate provision that complies with many, but not all of the requirements set out in 24 C.F.R. 966.4. The next section will address what is required and how the lease falls short. A Few More Facts Since Tom paid to have the locks changed on his apartment, Tom cannot pay his rent in full for the month of September. When he fails to pay the full amount of rent on the first of the month, he receives a termination notice from CHA that states he breached the lease by failing to pay the rent in full and that he has 10 days to cure the default or be evicted. The notice informs him of his right to reply and to examine and copy documents related to the termination. The notice also states that Tom has the right to request a hearing in accordance with CHA’s grievance procedure and to defend himself in the summary ejectment proceedings in court. When Tom fails to pay the rest of September’s rent by September 11^th, CHA files an action for summary ejectment in small claims court. At the hearing, CHA offers oral testimony of the notice to terminate. Although the complaint identifies the breach as the failure to pay rent, CHA also offers evidence of Tom changing the locks as a breach for which CHA wants to terminate the lease. Tom responds that he tried to pay but no one was ever in the office to take his payment and that he asked for help with his locks and never received a response. He also testifies that he received warnings about the noise complaints, but he never received a written notice to terminate. How does the judicial official know whether the landlord gave the tenant the notice required to terminate the lease? Where the Rent Comes from Matters Private landlords are free to include any type of notice provisions they choose in their leases, but PHAs and landlords who participate in federal housing programs must comply with federal regulations about the contents and delivery of their notices and with VAWA protections. Additionally, owners and landlords of “covered properties” under the CARES Act must comply with the 30-day notice provision for cases involving nonpayment of rent. This section will analyze the federal requirements for the content and delivery of notices in public housing, but the judicial official will need to ensure the landlord has complied with Contents. Section 966.4 of Title 24 of the Code of Federal Regulations sets out the requirements for termination of a lease by a PHA, such as CHA. 24 C.F.R. 966.4(l)(3)(ii). The written notice must:

• State specific grounds for termination;
• Inform the tenant of the tenant’s right to reply;
• Inform the tenant of the right to examine the PHA documents directly relevant to the termination or eviction; and
• Inform the tenant of the tenant’s right to require a hearing in accordance with the PHA’s grievance procedure.

Delivery. The PHA must give notice to the tenant either by delivering the written notice to an adult member of the tenant’s household residing in the dwelling or by sending the notice by prepaid first-class mail properly addressed to the tenant. 24 C.F.R. 966.4(k). Amount of Notice. The amount of notice that a PHA must give a tenant of a lease termination is set out in 24 C.F.R. 966.4(l)(3). However, in the event of failure to pay rent, 24 C.F.R. 966.4(l)(3)(i)(A) states that the amount of notice is 14 days, which is inconsistent with the continuing requirements of the CARES Act. Section 9058 of the CARES Act includes separate subsections:

• Subsection (b) that sets out a moratorium on eviction filings that expired 120 days after March 27, 2020; and
• Subsection (c) that requires landlords to give tenants 30-days’ notice before requiring them to vacate.

Noticeably absent from the relevant section of the CARES Act is an expiration date. Although there is no North Carolina case law interpreting subsection (c) and whether it remains in effect, courts in other states have held that the notice provision did not expire with the moratorium and have refused to insert an expiration date where Congress omitted one. See Arvada Village Gardens LP v. Garate, 529 P.3d 105 (Colo. 2023) (holding that a landlord of a property covered by the CARES Act must give 30-days’ notice before filing for eviction in Colorado); see also Hazelwood v. Common Wealth Apartments, 231 N.E.3d 284 (Ind. Ct. App. 2024) (holding that a landlord who receives federal subsidies to house eligible residents must comply with 30-days’ notice requirement in the CARES Act). Additionally, HUD has proposed a rule to amend its regulations and to require that tenants in public housing and in properties with project-based rental assistance receive 30-days’ notice prior to a lease termination for nonpayment of rent. VAWA Protections. In addition to the contents, delivery, and notice requirements discussed above, PHAs and landlords who receive federal rental assistance payments must comply with VAWA. VAWA protects victims from being evicted solely on the basis of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking. 24 C.F.R. 5.2005. To ensure that tenants are aware of their rights under VAWA, covered housing providers are required to provide tenants with a “Notice of Occupancy Rights under the Violence Against Women Act” and a certification form approved by HUD to be completed by the victim to document the qualifying criminal act. Id. The notice of occupancy rights and the certification form must be provided with any notification of eviction. Id. Covered housing providers include PHAs, project-based Section 8 programs, housing choice voucher Section 8 participants, the USDA’s Rural Development housing programs, and the Low-Income Tax Credit Program. This list is not exhaustive and additional HUD programs are identified in the definition of “covered housing program.” 24 C.F.R. 5.2003. Bringing It All Together: Assessing Notice and VAWA Issues in Tom Tenant’s Case The judicial official hearing a case involving a public housing property or property that participates in federal housing programs should:

1. Determine if the written notice strictly complies with the requirements in the lease and the federal regulations as to contents and delivery;
2. Determine whether the property is a “covered property” under the CARES Act;
3. Determine if the amount of notice is sufficient; and
4. Determine if the covered housing provider complied with VAWA and provided the tenant a “Notice of Occupancy Rights under the Violence Against Women Act” and a certification form approved by HUD with the notice to terminate the lease.

In Tom’s case, CHA is a PHA, so its property is a “covered property” under the CARES Act and a “covered housing program” under VAWA. While there was oral testimony in small claims court that a written notice to terminate the lease was delivered to Tom, such written notice was never presented to the court. Further, CHA is trying to evict for a breach of the lease (disturbance of the peace) in addition to the failure to pay rent, which is the only breach that CHA offered any evidence of giving notice to the tenant about. CHA only gave Tom 10 days’ notice of the lease termination when he was entitled to 30 days’ notice for termination due to nonpayment of rent under the CARES Act. CHA failed to offer any evidence that it provided Tom with a “Notice of Occupancy Rights under the Violence Against Women Act” and a certification form approved by HUD with the notice to terminate the lease. What is the effect of defective notice? The N.C. Court of Appeals Weighs In In L.I.C. Assoc. I, Ltd. P’Ship v. Brown, __ N.C. App. __, 904 S.E.2d 822 (2024), the Court of Appeals followed the steps set out above and began by reviewing the lease and whether the notice provided by the landlord was in strict compliance with the lease. As in Tom’s case, the landlord in L.I.C. Assoc. I, Ltd. P’Ship v. Brown provided a termination notice that only addressed the failure to pay rent and did not address noncompliance with the lease by changing the locks, rendering the notice defective under the lease. Id. Next, the court analyzed whether the landlord’s failure to comply with VAWA rendered the notice to terminate defective and concluded that it did. Id. The court held that the landlord’s failure to comply with the lease and with VAWA required a reversal of the trial court’s grant of summary judgment in favor of the landlord and remanded the case to the trial court for dismissal. Id. Conclusion The landlord’s authority to enforce a forfeiture clause and terminate a lease is dependent upon the landlord’s strict compliance with the lease as to time and contents. Public and federally subsidized housing providers must also strictly comply with notice requirements set out by federal regulations. For the landlord to commence the summary ejectment action and to have a claim based on breach of a lease condition, the landlord first must make certain the notice of termination of the lease is effective.  When the notice of termination fails to comply with VAWA and other notice requirements, a summary ejectment action initiated on the basis of a defective notice of termination should be dismissed, as evidenced by relevant case law.