What Are Landlord Rights During COVID-19?
Learn about your specific rights as a landlord during the COVID-19 pandemic and when you should seek professional legal help.
The Toll on Landlords
COVID-19 has created significant financial strain for a large portion of the population, many of which are renters. Due to mass shutdowns, stay-at-home orders and social distancing policies, many renters’ places of business either closed entirely or are operating at reduced capacity. As a result, they are earning a fraction of what they used to make, or they are not earning anything at all.
To help renters during these tough times, states, cities, counties and courts have placed moratoriums on evictions. What landlords can and cannot do under these bans vary greatly. Some moratoriums ban eviction actions entirely, while others merely postpone them until the courts can hear a case. Either way, the suspensions leave landlords in tough financial predicaments. When renters default on loans, landlords may not be able to meet their own financial obligations, such as making mortgage payments on the rental properties.
Should You Terminate a Rental Agreement or Evict a Tenant?
As of Aug. 25, 18 states, the District of Columbia and 120 jurisdictions throughout California still had bans on evictions in place. Those 18 states are as follows:
- New Jersey
- New Mexico
In most other states, the moratoriums expired in June, July or early August. Few states, such as Wyoming, Louisiana and South Dakota, did not have bans in place at all. In addition to jurisdictional bans, the federal CARES Act protected renters who live in properties with government-backed mortgages from eviction. However, that protection expired on Aug. 24. If you are a landlord in one of the jurisdictions with continued suspensions, eviction is not an option. However, what if you rent out a property in a state, city or county without any bans in place? Should you proceed with the eviction process?
Eviction Process During a Global Pandemic
Though a law may not prevent you from proceeding with the eviction process, good sense says you should not. Aside from the damage that doing so could do to your reputation (Do you want to be that landlord who evicted a tenant during the global COVID-19 pandemic?), though you are well within your rights, removing tenants now may do you more financial harm than good. On the one hand, the eviction process is expensive and time-consuming. According to TransUnion data, the average eviction costs $3,500 and takes three to four weeks to complete. Then there is the cost of vacancy to consider.
Once you remove a tenant, you must invest in a thorough cleaning and disinfectant by professionals. Next, you must advertise the property, screen prospective tenants, sign the new rental agreement and move the new tenant into the unit — all while abiding by current emergency guidelines and safety measures. This latter part of the process is all assuming you will receive responses to your ad from qualified tenants, which is very unlikely in today’s climate.
What Does Your Current Financial Situation Look Like?
Ideally, you should have a reserve in place for times when tenants do not pay rent, as non-payment is a common issue. However, nearly six months into the COVID-19 pandemic, it is understandable if you do not have much left, if anything, and that it may be time to take drastic measures. To determine what your next steps should be, assess your own financial situation first:
- Your financial situation is grim. If this is the case, and if you are to the point where you rely on renters’ monthly payment to meet your own upcoming financial obligations, you need to take immediate action to prevent default.
- You have a few months’ reserves left. If you have a bit of a cushion, you still need to take steps to retain the tenants you do have, as well as prepare for the worst-case scenario.
Below you can explore options that may help regardless of which camp you fall into.
What Options Other Than Eviction Do You Have?
Evicting a tenant because of COVID-19 related reasons will only create more headaches and compound the national emergency. Fortunately, eviction is not your only option and, in fact, should be your last resort option. Below are a few steps you should consider taking first that are also within your rights as a Landlord during COVID-19:
Work with your tenants
If you have long-time tenants whom you trust and who made timely payments prior to the pandemic, work with them if they begin to struggle financially. Though usually discouraged, offer tenants the ability to make partial payments for the time being. Set limits for how much and how long. Set up a rent deferral program, waive late fees or offer to use tenants’ first and last months’ rent to help them catch up. If financially feasible for you to do so, reduce rent for a specified period.
Look for outside assistance
If you struggle to pay your mortgage because of tenants’ inability to pay, you may qualify for mortgage forbearance or reduction. On March 19, the government ordered that lenders reduce or suspend mortgage payments on single-family homes for homeowners who either experienced a reduction in income or job loss due to COVID-19. Depending on your situation, you may qualify for up to 12 months of leeway. If you own a multi-family property, you may qualify for forbearance through the Federal Housing Finance Agency. But you must agree to suspect all evictions. You can look for other options in the Coronavirus Aid, Relief, and Economic Security Act.
Consider taking out a loan
The Small Business Association is currently offering low-interest disaster loans to small businesses and homeowners impacted by the crisis. If you do not qualify, talk to your bank about increasing your line of credit, deferral programs and waiving late fees.
Consult With an Experienced Local Landlord and Tenant Lawyer
COVID-19 has created tough times for everyone, and because of this fact, there are several options for landlords and tenants who cannot make ends meet. Though it seems as though many moratoriums help tenants, the truth is that there are plenty of relief options available to you and other landlords as well. Stand up for your financial well-being and rights as a landlord during COVID-19. An attorney with experience with landlord/tenant issues can help you explore those options and advise you on what you need to do to take advantage of them. Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!