The pandemic has left millions of people unemployed and caused families to struggle with their mortgage and rent payments.
Where there are renters not paying rent, there are also landlords who may not be able to pay their bills.
It’s a sensitive situation, and there’s not an easy solution. But there are ways to deal with a tenant who can’t pay rent because of financial hardship caused by COVID-19.
What Steps I Should Take If My Tenant Isn’t Paying Rent?
In a normal situation, a landlord can evict a tenant who’s not paying rent. But the pandemic has presented new challenges to what used to be a standard process.
Because of these special circumstances, you need to show empathy toward your tenant, explain the reality of the situation, and offer them options.
Have Some Empathy
They’re struggling. You’re struggling. We’re all struggling. Take the time to have a conversation with your tenant to find out what they’re going through and how you can help. As a landlord, you have experience with finances and may be able to offer some advice.
Shelter is one of the most basic human survival needs. If your tenant cannot afford to keep a roof over their head, they must be in a dire situation. Your renter may be struggling to put food on the table as well. An open dialogue that introduces a general understanding of the situation will allow you to determine your next steps.
Give a Reality Check
Once you’ve established your empathy and awareness of the tenant’s troubles, it’s time for a reality check. It must be made clear that even if there are pandemic relief measures in place—such as an eviction moratorium or a late fee ban—the rent is still due. Those protections will end eventually, and if payment is not received, the eviction process will begin.
The reality is that you, as a landlord, have financial obligations as well. If you don’t get rent from your tenants, then your debt begins to pile up, including your mortgage payments. You can explain that you’re having these same kinds of conversations with your creditors to come up with a plan that pleases everyone, and your options are limited.
Go Over the Options
Even though they are limited, there are still options for you to discuss with your tenant.
Make Arrangements
Depending on the severity of your financial situation, you could waive, postpone, or reduce the rent.
- If you waive the rent, you should come up with an agreement to revisit the situation on a future date.
- If you postpone the rent, you can create a repayment plan with details on how the debt will be paid.
- If you reduce the rent, you may be able to, at the very least, meet your financial obligations and do without a profit for the time being.
Research Assistance
You should also stay informed about rental assistance programs and pass on that information to your tenant. You can find a list of relief funds by state on the National Low Income Housing Coalition’s website.
For some tenants, the inability to pay rent may be a matter of having to choose between shelter and hunger. The Centers for Disease Control and Prevention (CDC) has a list of food assistance programs and other resources to help those who are struggling.
As a landlord, you could be eligible for help, too. This website lists federal, state, local, non-profit, and private sources of financial assistance and other resources for landlords and tenants.
Last Resorts
In a last-ditch effort, your tenant may be able to pay rent by using a credit card or borrowing money from friends, family, or a retirement plan. However, these options come with ramifications.
If you don’t accept credit cards, your tenant would have to find a third-party processor to make that payment method work. Plus, they will likely face fees for the transaction, as well as interest charges if they can’t pay off the balance immediately.
If your tenant borrows money from a friend or relative, that may put a strain on their relationship. Taking out funds from a 401(k) could create significant long-term consequences regarding their financial security.
Advice for Landlords Dealing with Tenants Not Paying Rent
Now you know how to deal with tenants who aren’t able to pay rent because of financial hardship related to the pandemic.
Connect with your tenant and show empathy, but make sure they understand the rent is still due even if a moratorium prevents you from evicting them.
Hopefully, you can offer some advice and work out an agreement that allows both of you to make ends meet.
If you’re thinking about vacating your responsibilities as a landlord, but don’t want to wait for your property to sell, a cash buyer can take it off your hands fast.