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Home · Property Management · COVID-19 · The moratorium extension continues to loom on, how are landlords recouping losses?

Debt, calculating debt taxes and loan, money cash While the federal eviction moratorium was originally set to end at midnight on January 1, 2021, the period of time has been extended. With President Biden’s inauguration, the administration announced an extension immediately to remain in place until January 31, 2021 — this was then given a further extension through March 31, 2021. There is still a level of uncertainty as to if there will be future federal extensions down the line — this all depends on the Biden administration and rulings from congress. 

Most aspects of the eviction moratorium change the landlord tenant rights, and prevents them from taking the following actions when it comes to non or late payments of rent: 

  • Presenting a tenant(s) with eviction notices or orders 
  • Filing for an eviction through the courts 
  • Eviction court hearings, court orders, rulings or writ of Restitution to remove the tenant from the property with the assistance of law enforcement 

According to an article from the Washington Post, while there is a continued push for rent to be excused for the time being, landlords have refuted, stating that this will leave the economy in worse condition. If due to non-payment of rent, landlords need to default on property loans, it could be the 2008 market crash all over again.  

What this means for landlords 

It’s no secret that these are difficult and trying times for landlords across the country. While landlord tenant laws differ from state to state — there are also federal laws that need to be observed. While rental assistance is being provided to tenants that are currently struggling — no such package has been made available for landlords who, even with a lack of rental income, still have mortgages to pay as well as other property related taxes and maintenance costs. The lack of support to collect rent has landlords’ livelihood shifting into the unknown.  

While assistance is currently being provided to many of those who qualify, once the eviction moratorium ends, it is unlikely that previous debts will be forgiven and forgotten. Tenants will be expected to pay all outstanding debts or face legal ramifications. While this may give piece of mind to some — with no end in sight, it turns into a frustrating situation. While landlord laws under the moratorium prevent evictions, landlords can still present tenants with a late rent notice. When rent can be collected again, this provides documentation that has been presented as a copy to the tenant(s) and is also filed by the landlord. 

According to an article from Forbes, some landlords are beginning to feel backed into a corner, unsure if they should continue to accumulate debt or simply make the decision to sell from their property portfolio. While evictions are currently prohibited, the rulings on foreclosures remain unchanged. Without a steady income flow, landlords are faced with the rick of being foreclosed on by their mortgage holders.  

How landlords are working to recoup losses 

With so many factors in the current economic landscape working against landlords, there are some changes that landlords are imposing to continue to collect rent. 

Depending on the specific property insurance plan, loss of rent falls under “business interruption“ which is listed in the original insurance wording. As this is always a pressing concern for landlords there are clauses that can be added into insurance plans such as “rent guarantee insurance”. These plans are put in place in the event that a tenant is unable to pay rent due to loss of income in relation to rising unemployment rates or life changes that the tenant unexpectedly faces. It is important for landlords to work directly with their insurance provider to ensure the best plan is selected to provide essential coverage for their properties. Other loss of rent coverage may only cover rental loss due to damages that make the unit unlivable for a period of time. 

Included in many landlord laws, a tenant’s security deposit can be used for unpaid rent. When it comes to security deposits it is essential to always be meticulous in itemizing all charges in the event that the tenant disputes any of them upon moving out. As with any security deposit that is used when a tenant vacates a property — keeping an in-depth list and copies of receipts that provide proof as to what the deposit was used for will protect against any future potential civil suits. In the event of unpaid rent, landlords can provide a receipt of payment from the tenants’ security deposit.  

Another route that landlords are taking is encouraging their tenants to see if they qualify for Emergency Rental Assistance Programs. For example, the federal $25 billion assistance program is offered to people who are financially unable to continue payments. These funds are then forwarded to landlords, providing them the financial ability to continue loan and general maintenance payments.  

Some landlords have taken a different approach, working with their tenants to create payment plans. If at the time tenants only have enough to cover half of their rent — from a landlords’ perspective, there is still money coming in monthly until their tenants’ financial situation changes, or the moratorium ends. 

Looking towards the future 

As many aspects of the eviction moratorium are still facing changes at both the federal and state level, one thing is clear — renters aren’t the only ones facing tough times. Landlords are facing difficult decisions as they continue to endure stricter rules regarding tenant non-payment, and the potential consequences of their own monthly loan payments falling by the wayside.  

As the legislation continues to change, there is hope that there will be funds made available that directly benefit landlords as they work to continue maintaining their property portfolio 

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