Navigating Rent Collection During a Pandemic

Rarely, if ever, has the United States collectively experienced a crisis like this pandemic, with a wide-ranging impact in all regions and walks of life. Yet at this moment, that’s the challenge we all face, with thousands of Americans affected by the virus itself and millions more experiencing the resulting economic tidal wave of a global health crisis. Owners, operators, and managers of multifamily properties, typically able to sustain through “normal” economic fluctuations, are seeing the brunt of this pandemic’s impact on the economy and it requires a real adjustment to both practices and expectations.

In the last six weeks we have seen a heap of legislation thrown together to combat the pandemic at the local, state, and federal levels, and much of that regulatory language affects how you as a landlord do business. Given the circumstances, some of these actions may be justifiable or at least understandable, but that’s a hard pill to swallow when your bottom line is carrying the water for our economy. As such, adjusting your collection practices amid this crisis may mean the difference between sinking or floating, forgetting you’ll also reap the long-term benefits of some decisions you can easily make today.

Maintain Contact

With shelter in place orders stunting consumer demand, businesses have to cut expenses to make ends meet. Layoffs seem to be the primary means to that end, and roughly 22 million Americans have filed for unemployment in the past four weeks alone[1]. It’s likely some of your tenants are among these recently unemployed Americans. If not, they could be a freelancer seeing a dip in demand for their services as a result of these economic pressures. Either way, April 1 has already demonstrated some one in three American renters believe on-time and in-full rent payments are expendable as they’re hit by the economic downturn.

An important first step in handling unpaid rent is to reach out to your tenants with empathy, and explain you understand and appreciate what they are experiencing. Ask about their health and if they have experienced any changes in employment status. Provide the opportunity for a forbearance or hardship plan that involves direct payments to you. We recommend using an addendum that acknowledges these deferred payments do not waive other lease terms, and, in fact, that the tenant acknowledges their responsibility for the total presently due and owing so they cannot later dispute the balance. It is critical you establish in these contacts your expectations of the tenant in this situation and that if they do not work with you now, there will be consequences later. You may not be able to immediately pursue eviction, but at some point you will be – that public record may impact their credit for up to seven years, as could a judgment entered in your favor post-eviction if they do not pay. The benefit to this proactivity is to ensure you reduce the risk and expense of farming out this effort to a third-party come September or October when you are able to pursue your evictions.

Understanding the Eviction Moratorium

Federal, state, and local governments have implemented a number of policies to ameliorate the crisis for what they have determined are vulnerable populations. As a result, one of focus has been to shut down “non-essential” access to the court system and impose moratoriums on evictions and foreclosures. The most far-reaching of these moratoriums has come from the federal government, barring evictions on all properties with mortgages backed by the Federal Housing Administration, Fannie Mae, and Freddie Mac for 90 days. This decision handcuffs much of the multifamily industry, severely limiting the ability of property owners, operators, and managers to maintain stable cash flow. Some tenants may be unable to pay their rent, but clearly others simply will decide not to because you have no power to retake possession of the unit. This mandate also requires a new 30-day notice be issued prior to eviction for these properties, which means no can be no eviction filings before August 25, 2020 as the notice is barred prior to July 24, 2020. While this means you might be in court on or after September 1, 2020, you can certainly expect a healthy backlog – courts will be packed with new cases which will only drag this crisis out across all four fiscal quarters of 2020.

A Debt Collection Law Firm Can Help

Even in a bull market, collection agencies may not have the best success collecting unpaid rent debt. In the midst of the COVID-19 crisis, this may be even more true. First, take the balances into account. Your defaults won’t be a few hundred dollars – in fact, a tenant may rack up back rent from March through September 1 before you see a court date. That’s presuming they don’t also destroy your unit in the meantime the way frustrated renters and homeowners in foreclosures ransacked their homes in the 2008 financial crisis. Turning over these large balances to a boiler room bill collector may not be effective. If their main recourse is to call or send letters to your resident, that may not cut it. By September 1st you’ve probably already tried that several times since the first month they missed their rent. However, they can place the past due balance on your former tenant’s credit report, which could help to an extent, but you’ll probably be one of many collections on their credit report. That means you’re at the end of a long line of defaulted trade lines; certainly, this offers the tenant little incentive to make a voluntary payment.

In addition, when the balances are calculated (or disputed), whoever handles your account needs to understand that for certain months no late fees can be charged (as ordered by many state governments, along with those aforementioned fed regulations) to avoid putting your neck on the line for a violation of the Fair Credit Reporting Act. If you work with a collection agency make sure you find one with ethical and moral practices. The need for sensitivity to the economic hardships resulting from this pandemic crisis is crucial. Beyond liability, there is the serious risk your public image will be tarnished and we have already seen landlords attacked in the news and on social media for their handling of ordinary rent collection during this pandemic.

Working with a reputable debt collection law firm can reduce your liability, as they will likely indemnify you in its fee agreement. Debt collection law firms also tend to be mindful stewards of your brand and your legal responsibilities. In addition, it will have an arsenal of tools at its disposal to pursue lawful, meaningful collection efforts on your behalf, all the while employing a compliance team who will ensure you have complied with local, state, and federal laws. The tenant may again be provided the opportunity to work out a payment plan, but if this is refused or they default, a lawyer can file a lawsuit on your behalf and have a judgment entered in your favor for the total and all lawfully billed court costs.

Taking Advantage of the CARES Act

The recently passed CARES Act provides relief for all Americans, and also provides opportunities that your company can and should take advantage of. While the most well-known provision is the refundable tax credit expected being paid out to Americans this month, perhaps the most critical aspect of the bill to your operation could be the benefits offered to employers, who “will be eligible for a 50% refundable payroll tax credit on wages paid up to $10,000.00 during the crisis.” We recommend reviewing this option with your accountants or payroll service providers, along with possible healthcare coverage for any employees you may have laid off or furloughed. If businesses take advantage of these payroll protection loans, along with the increases in unemployment insurance benefits, it is our hope your tenants will be responsible and keep their rent payments coming.


Navigating the COVID-19 crisis as the owner or operator of a multifamily property will not be easy, but with a proactive and informed approach, you can adequately plan to survive these difficult times. Establishing clear expectations for your tenants; understanding new regulations, including the eviction moratoriums; working with a capable debt collection law firm; and taking advantage of applicable CARES Act provisions can help mitigate risks as we collectively navigate these strange new days we live in.

Fishman Group, P.C. represents the owners and operators of multifamily housing communities across the United States. Our firm has succeeded in making the recovery of accounts receivable a profitable endeavor for more than four decades. Today, we use automation technology partnered with the experience of our attorneys and staff to seamlessly integrate with our clients; manage compliance in multiple jurisdictions; and collect for our clients. Ryan J. Fishman is the firm’s managing partner. Nisim Nesimov is a marketing intern and finishing his undergraduate degree at Wayne State University. For more information, visit or call 248-353-4600.