“My tenants haven’t paid their rent in months. What are my options?”
This is a question our firm is receiving regularly from clients who own rental properties and have been unable to collect rent from tenants since COVID-19 began. Like many states, New York imposed a moratorium on evictions to protect tenants who lost their jobs or suffered financial distress during the pandemic. With no threat of eviction, many tenants have stopped paying rent, either because they are unable to, or because they are reprioritizing their budgets and allocating their rent money elsewhere.
Clients may call our team expecting that our first recommendation is to file a lawsuit to secure the delinquent rent. They are often surprised by the approach we recommend. First, we explain to our clients that, while necessary at times, lawsuits are ideally the last option to resolve a dispute. At the same time, we understand that, as landlords, they are on the hook for mortgages, insurance, and upkeep on property that isn’t bringing in its full revenue. Many feel like their options are limited.
One point about the eviction moratorium that is often missed is this: the law provides a pause on evictions, it doesn’t eliminate the back due rent. If a tenant doesn’t pay his or her $500 rent for ten months, they still owe the $5,000. The deeper the hole, the less likely a tenant will be to make full arrears, and therein lies the issue landlords face.
If we look ahead to life after COVID is under control, we can see a scenario whereby all of these rules are back to normal. Landlords that don’t pay their mortgage at that point will be foreclosed on, and tenants that are thousands of dollars in arrears can be sued, but will there be any money to collect? That could be tricky, and it leads to the crux of our advice to clients: be a social worker.
In many cases, your tenants are good, hard-working people who, like so many Americans, have hit hard times in the wake of COVID-19. They are feeling the pressure from all sides, and the last thing they need is to worry that they may no longer have a roof over their heads. Our advice to the landlords we work with is simple: be nice. Show your clients empathy. Talk to them and get to understand their circumstances. If your tenants feel a connection to you, or at least they believe you are there to help, not hurt them, you will find yourself much closer to a resolution of collecting the back rent.
Now you can guide your tenants in the direction of the many programs that are available to offer assistance in paying rent. Pass along the information and send them links to websites. We have even worked with landlords that hand delivered the applications, and even assisted the tenant with completing the paperwork.
There are a number of programs at both the state and federal level that you can direct tenants to if they are struggling to pay their bills. They include:
The NYS COVID Rent Relief Program, which offers a one-time cash payment made directly to the landlord to cover rent. This money does not have to be repaid. *Note: This program is only accepting applications through Feb. 1, 2021.
Evergreen Health’s Housing Assistance Program, which can help pay past due rent or past due utilities.
Catholic Charities of Buffalo, which offers up to $500 to pay back due gas bills for qualifying families.
Belmont Housing Resources for WNY, which can offer guidance and assistance to those people struggling to pay their rent.
These and other programs are available in our community, but the reality is, many tenants will never connect with these groups. That is why we advise landlords to be the go-between.
Is that part of your job as a landlord? It may not have been in the past, but it should be in 2021 and beyond. Even if you are only successful helping one tenant with securing rent assistance, it is still money in your pocket. It is also a chance to show compassion to those who are struggling, and your tenant won’t be likely to forget the courtesy you extended.
Jonathan D. Schechter’s practice and experience includes business counseling and corporate law, commercial real estate and financing, estates, trusts, taxation and cross-border and business tax planning. Using his in-depth knowledge of tax law, he assists owners of both publicly traded and closely held businesses with their legal needs as well as their personal estate planning. In addition to being an attorney, he is also a landlord.