The Soldiers and Sailors Relief Act of 1940 should be read “with an eye friendly to those who drop their affairs to answer their country’s call.” The purpose of this federal Act, that dates from World War II, is to postpone or suspend some of the obligations of military personnel to allow them to give full attention to their military duties.

The Act applies to all active duty military personnel in every branch of the Armed Forces, including reservists called to active duty and National Guard members in federal service. Under certain conditions, the Act even protects dependants, co-signers and guarantors of military members’ obligations.

In this time of war, the Act can have real and important implications on real estate agreements.

Lease Termination

Section 534 of the Act allows a service member to terminate a lease of residential or commercial property when that lease was entered into prior to entry into active duty military service and the rent does not exceed $1,200.00 per month. That is, a lease may be lawfully terminated by the service member entering active duty or by his or her dependent in their own right, whether or not the leased premises were occupied for dwelling, professional, business, agricultural, or similar uses by the service member or the service member and his or her dependents.

To terminate the lease, the service member must deliver written notice to the landlord after entry of active duty or upon receipt of orders for active duty. Oral notice is not sufficient. The effective date of termination is the last day of the month after the month in which proper notice is delivered. For example, if the lease calls for a yearly rental and notice of termination is given on July 20th, the effective termination would be August 31st.

If a security deposit was required, it must be refunded to the service member upon termination of the lease (and not in the time provided by state law). The service member is required to pay rent only for those months before the lease is terminated.

Landlord May Not Evict

Additionally, a landlord may not evict a service member or his or her dependents from a dwelling while that service member is on active duty. (Section 530.) Monthly rent for a qualifying dwelling may not exceed $1,200.00. A court must, upon application of the service member or eligible dependent, and may on its own motion stay an eviction proceeding for up to three (3) months or make any other “just” order. There are criminal sanctions including a fine of up to $100,000.00 for a landlord exercising self-help in evicting a service member.

Stay of Proceedings

Aside from landlord-tenant proceedings, in any civil action in which a service member is a party, a court must on motion of the service member, and may on its own motion, stay proceedings if the ability of the service member to meaningfully participate in the suit is materially affected by military duty. (Section 521.) The stay may remain in effect for the entire period of the member’s military service and for sixty (60) days thereafter.

This stay of obligations is applicable to any type of obligation from a residential lease to a home mortgage to an automobile loan.

Statute of Limitations

It is also the general rule that statutes of limitation do not run against service members during a period of their active military duty (Section 525).

Default Judgments

Often default judgments are entered in landlord-tenant matters. Recall that when a suit is filed, notice must be served on the defendant. When no response is filed on time or in the event the defendant does not appear at trial, a default is usually entered against the defendant. The Act requires the plaintiff to sign and file an affidavit with every court proceeding stating that the defendant is not in the military service before default can be taken. When the affidavit shows that the defendant is in the military, no default can be taken until the court appoints an attorney to represent the service member defendant. Filing of a false affidavit subjects the filer to a criminal prosecution that may include a punishment of up to one year’s imprisonment.

Interest Rates on Debts and Mortgage Payments

One of the most significant provisions of the Act places a six percent (6%) cap on interest for certain obligations incurred before entry on active duty unless the creditor (i.e., the bank, finance company, credit card issuer, etc.) can prove in a court proceeding that the service member’s ability to pay was not materially affected by military service. The term “interest” includes service charges and recurring fees. (Section 526.)

Additionally, there are protections against foreclosures of mortgages, deeds of trust, and similar security devices for obligations entered into prior to active duty when the property is owned by the service member or dependant and the financial obligation is “materially affected” by the service member’s active duty obligation.

Although beyond the scope of this article, be aware that there are provisions of the Act that impact upon income taxes, life insurance premiums, and other financial obligations of service members.

Conclusion

In this time of war, property owners must understand the limitations that the Soldiers and Sailors Civil Relief Act imposes on their efforts to enforce remedies against military service members.