Rent Is Due...Now What?

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The 1st day of the month typically marks this as “rent due day” leaving many landlords and tenants in a complicated position with both sides unsure of their rights during this unprecedented situation. Given the use of potentially misleading terms we are seeing in the media, such as “forbearance”, “forgive”, “deferment”, etc., and the range in how jurisdictions are addressing this issue, this can be a confusing time and results in the spread of misinformation. 

For real estate professionals, the concept of home has deep and personal significance to us. We are literally in the business of sheltering people. Our primary goal is to settle people into a space that they can call their own and feel safe in. 

In addition to facilitating the buying and selling of homes, many of us also call ourselves landlords. It is in this capacity, during this unsettling time, that we find ourselves navigating incredibly challenging situations as businesses are ordered to close leaving a population of tenants without income to cover full rent payments. Home as a safe space matters to us whether you are a client or a tenant.

On April 16, Gov. Janet Mills issued an executive order barring most evictions during the ongoing civil state of emergency. Mills also unveiled a rental assistance relief program. The new $5 million Rent Relief Program will offer some help. Under the program, eligible households can receive a one-time payment of up to $500 in rental assistance. Some say this is not enough and rent should be halted during this time of economic stress.

Brit Vitalius, President of the Southern Maine Landlord Association, has been encouraging landlords not to evict anyone during this public health emergency, and he thinks the governor's Rent Relief Program is an important step. In a recent statement to Maine Public for the April 17 piece covering the topic, Brit stated, "It doesn't benefit anyone if we simply let the tenant stop paying rent, which is a rent freeze...that $500 will complement unemployment benefits, the stimulus money that's going out. All of these are designed to keep this housing, the tenants and the landlords, this whole structure in place."

No one can realistically forecast how this situation will play out. However, given our years of  combined service to our community, colleagues, and clients, we can can continue to advise with confidence that communicating early and often makes a difference in transactional relationships.

Here is how we are advising and guiding our community of landlords and tenants during this time:

1)  Communicate Immediately: This is the time for both landlord and tenant to check-in. Both parties are highly encouraged to initiate a conversation to update each other on their respective situations, intentions, and expectations. 

  • Both should prepare for a difficulty or an inability for monthly rents to be paid and have a plan in place to anticipate this situation.

  • Renters should communicate immediately if their income has been compromised and if this will affect their ability to pay their rent in any capacity.

  • Landlords should initiate and continue to communicate with their tenants on a regular basis to check-in.

2)  Be Responsive: We are all in this situation together and open, timely communication is critical between all parties. Everyone should be agreeable to finding suitable monthly payment solutions. 

  • Landlords are always encouraged to work with their tenant on an individual basis to best understand their unique situation.

  • All tenants should be given or have access to links to local and federal resources available to them, including how to file for unemployment, anticipated Federal payments related to COVID-19, General Assistance (rental assistance), and any other additional resources that support their efforts. 

  • Customised Hardship Application Forms should be readily available for tenants to complete. 

  • Tenants are encouraged to get in touch with budgeting services, and other agencies to see what support is available and share their efforts with their landlord.

3)  Be sensitive, be clear and be direct.  A vague or a “we’ll see” approach is not recommended. Pointed, respectful conversations and action plans get results.

  • All changes existing contracts and leases, even if temporarily, must be documented in writing either upfront or following a verbal communication.

  • Rent is not 'forgiven' but payments or partial payments can be deferred and landlords must work with their tenant to get on a payment plan over time as the current situation becomes more clear. 

  • This is a stressful time but keep emotions in check! Threatening and defensive language or tones which will only serve to cause additional anxiety.

  • Landlord and tenants will need to demonstrate actionable items are in process to maintain trust and transparency.

  • To reiterate - everyone involved in the transaction is reminded to check back early and often with each other to inform on updates on their progress.

  • Continue to seek and share available resources as they become available.

We hope these guidelines are helpful as we all do our best to navigate this situation with compassion and understanding to keep our communities safe and secure while sheltering in place. Please do not hesitate to reach out if you have any questions.

Stay safe and healthy!

The Vitalius Real Estate Group Team