SCRA Guidelines for Real Estate Creditors: A Practical Guide
Landlords, lenders, banks, and any entity renting to or holding a mortgage for active duty service members should familiarize themselves with the Servicemembers Civil Relief Act (SCRA). It’s vital they follow SCRA guidelines, specifically if they’re doing business with service members based in the continental United States.
Those who violate SCRA guidelines for real estate creditors risk getting hefty fines. We’ll explain the protections eligible individuals are entitled to, as well as how creditors can comply with the SCRA.
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Servicemembers Civil Relief Act for Real Estate Creditors
Formerly the Sailors Civil Relief Act, the SCRA stipulates that active duty service members are protected from eviction, can terminate contracts without penalties, and are entitled to a 6% interest rate reduction on pre-service debt. These are the most relevant SCRA protections creditors should consider when doing business with people covered by the SCRA.
Protection Against Eviction

The SCRA provides active duty personnel from the Air Force or any other service branch protection against eviction due to nonpayment. This is provided that the rent falls under a certain ceiling amount, which varies every year. This is explained further in the Text of the Act.
Essentially, the SCRA permits the eviction hearing to be delayed for at least 90 days. The judge can extend this delay or arrange a payment adjustment so the service member can afford to reside in that property.
The eviction of someone from the Marine Corps or public health service can only proceed with a court order. However, this protection applies to eviction due to nonpayment only. Material breach of one’s contract is grounds for eviction.
This particular SCRA protection applies not only to service members but also to their spouses, children, and other dependents. This SCRA right is provided so they can focus on serving their military unit without worrying about getting evicted.
Terminating Contracts Without Penalties
A servicemember’s military service permits them to cancel contracts early without penalties. This protection extends to lease agreements, vehicle leases, gym memberships, and phone connections. This is provided that the eligible party submits a written notice citing their right to SCRA protections.
This particular SCRA protection applies to contracts signed before the service member entered active duty service. It also protects those who have already entered military service but have received permanent change of station orders.
Interest Rate Adjustments
The SCRA states that active duty service members can have pre-service debt interest rates reduced to six percent. This interest rate reduction includes mortgage loans. While most interest rate limits cover only one’s active duty period, the SCRA interest rate protection for mortgage loans extends up to a year after the member leaves active duty.
This interest rate reduction is debt forgiveness, not delay. The creditor can’t charge the service member extra for the savings they made from the SCRA protection. A service member may request this SCRA protection anytime while on active duty and up to 180 days after they leave active duty service.
Consequences of SCRA Violations
Violators of the SCRA face hefty penalties, which may be trivial for big companies but can affect small businesses tremendously. Recently, a real estate development and management company had to pay $200,000 for violating the SCRA when it evicted four active-duty service members because of nonpayment. It was not shared if this violation was made out of ignorance or an attempt to bypass this federal law.
What if there’s a Military Waiver?
A military waiver is a written agreement that certifies that a service member has waived their SCRA rights. The waiver must’ve been signed after the member entered active duty. It isn’t binding if the waiver was signed before entering military service.
Moreover, the waiver mustn’t be part of the lease agreement. If the service member didn’t have a choice but to sign the contract, the waiver isn’t legally binding.
How To Comply With the SCRA
Violating the SCRA can mean exorbitant fines for companies and people. Fortunately, there are practical steps they can take to avoid this potentially expensive mishap.
Understand SCRA Provisions Concerning Real Estate Creditors

Creditors who must comply with the SCRA need to understand its provisions. For example, eviction protection applies to eviction due to nonpayment only. Other material breaches of the lease agreement aren’t covered by the SCRA. If a service member damages the property beyond the normal wear and tear, they can be evicted.
SCRA protections are not perpetual. They’re limited to a person’s active duty service period. While mortgage loan interest rate reduction extends to a year after leaving active service, most debts are covered during the person’s active duty service only.
Confirm the Servicemember’s Military Service
While a written notice is required for SCRA protections to be honored, creditors are permitted to be discerning. In most cases, the SCRA covers only those rendering active duty service. Creditors can request proof that a person is covered by the SCRA or conduct their own investigation.
SCRACVS can help creditors confirm if the tenant is eligible for SCRA protections. It can help them identify if the person they’re conducting business with is on active duty. SCRA rights are time-bound, and it’s only fair for creditors to confirm if the SCRA still covers a person.
Obtain a Court Order
Just because someone is on active duty doesn’t mean the creditor can’t evict them due to nonpayment. Legal action can still be taken if the creditor secures a court order. This process may take a while, but there are cases wherein the creditor deems it necessary.
Conclusion
Understanding the SCRA can spare real estate creditors from potential penalties. It can also help them guard their best interests. Fortunately, SCRACVS can help creditors confirm if a person is eligible for SCRA rights. Check the service member’s active duty status by clicking here.
FAQs
Can you evict an active duty service member?
Yes, the SCRA only covers eviction due to nonpayment. Material breach of one’s lease agreement is legal grounds for eviction. It also depends on the service member’s active duty status.
How long do SCRA protections last?
It depends on the SCRA protection. Some protections are exclusively for when a person is rendering active duty service, while some extend until after they finish active duty service.
What are military waivers?
Military waivers are legally binding documents that certify that a military member has waived military rights for a particular contract. SCRA military waivers entail the signee forfeiting their SCRA rights for a specific arrangement.
Who is provided SCRA protections?
SCRA protections are provided to active duty service members and, in some cases, their dependents. Reservists and National Guard members are covered by the SCRA as long as they render active duty service for at least 90 days straight.