COVID-19

A challenge many property owners are likely to face as a result of COVID-19 is an increase in unpaid rents. This memo provides owners guidance on how to handle delinquencies in a manner that balances our duty to act in our client’s best interest with an understanding of the economic impact of COVID-19.  

 

This memo contains general information, not legal advice. 

That said, at this time we are not adopting a “global” and/or preemptive approach to delinquencies. Instead, we will wait to see how things develop and determine what response is reasonable based on those specific circumstances. Some tenants will be harder hit than others by the economic consequences of this crisis; one size does not fit all.  In general, our default will be to follow our normal collection procedures. 

 

In general, we are not lowering rents or allowing an abatement of rent.  Lowering the rents or giving renters a few months off now only means we will have to deal with collecting those sums further down the road. The economic crisis created by the COVID-19 virus is unlikely to be short-lived and deferring the necessity of collecting the amounts in question probably will not make it any easier for people to pay (and might make it more difficult).

To the extent it is reasonable, we will try to accommodate payment plan arrangements for individual tenants if they come to us with a proposal. Especially when owners are dealing with a significant loss of income, there is little to be gained by refusing to accept payment plans or refusing to waive late fees and interest. 

 

Things we will do (or at least consider): 

• Respond to and accept reasonable tenant requests for payment plans. 

• Consider waiving late fees and interest in exchange for payments made. 

Things we will avoid:

• Telling tenants they don’t need to pay.

• Waiving late fees and interest for payments not received. 

• Deviating from our collection policy when payments stop and the  tenant has not communicated with us. 

Please keep in mind that expenses may continue to accrue, and your owner funds trust account cannot go into a negative balance.  We cannot pay your bills without adequate owner funds or reserves (and may require additional reserves).  We will be analyzing your owner funds balance continuously in order to inform you where your owner balance is.     If you aren’t already doing so, be sure to try to budget for unpaid rent. If you have specific questions, please contact us via email.

Kind regards,

Ned Brandenberger, RMP®, CMCA®

ned@rentbuttemt.com