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COLLECTING PAST DUE RENT – If you have a renter who owes you money, you have a few options.

COLLECTING PAST DUE RENT – If you have a renter who owes you money, you have a few options.

  • Posted: Aug 27, 2023
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Pursuing collection of bad debt is tricky business so these tactics and tips might make that unfortunate task easier.

Your lease agreement serves as the legal contract that entitles you to collect unpaid rent and additional fees if a security deposit does not cover the amount due.

If you have a previous renter who owes you money, you have a few options.

Pursue Repayment In-House
Landlords and property managers may attempt to contact the previous renter themselves in an attempt to collect the rent.

Locating a previous renter owing back rent or reimbursement for damages may prove difficult as a tenant in default might not always offer a forwarding address.

One way to start the process is to send a demand letter to the last known address on file, even if it’s the rental address.

Be sure to mark the front of the envelope with ‘Address Service Requested’ or ‘Address Correction Requested’ and adhere the appropriate postage to cover the delivery and this added service.

When requested and purchased, the United States Postal Service (USPS) will research their database for the new address, if any, and forward the letter. In addition, the USPS will send you a postcard with the corrected new address.

Debt Reporting
You can also report the outstanding debt to the three major credit bureaus. It will then remain on those credit reports as unpaid rent. To cure the outstanding balance the previous tenant will need to cure the balance before the credit bureaus will remove the file.

If personal contact and credit reporting is unsuccessful, you can file a small claims case or hire a collection agency to pursue the claim.

Small Claims Court
If you file a small claims case against your tenant, following local court rules and your lease terms, you may also be able to collect money for additional damages, late fees, and legal fees.  This tactic requires a heavy investment of time and effort throughout the process.

Check your state collection laws, contact your local small claims court for paperwork, and locate your tenant’s new mailing address  (see above) so they can be notified of the proceedings. Depending on how much your tenant owes you, small claims court may or may not be worth the investment you have to make.

Debt Collection Agency
Working with a company that specializes in delinquent rent collection is the best option for landlords and property managers who do not want to spend their time or resources tracking down a tenant.

A reputable debt collector in an agency will know and follow debt collection laws outlined in the Fair Debt Collection Practices Act (FDCPA). Recognizing the need for accessing a trustworthy collections agency that benefits property managers and landlords by producing results.

Rent collection services will provide their clients a highly trained and experienced staff of skip tracers, attorneys, private investigators, and professional collection agents that team up to provide you an aggressive collection effort.

Some agencies provide a flat fee collection option that allows a property owner to immediately report a delinquent tenant to the credit bureaus and order a series of collection letters to be sent by a licensed collections agency. Flat-fee services are done online and charge a low-cost up-front payment allowing you to keep the majority of the proceeds, while contingency services charge a percentage of the money collected.

PURSUING PAYMENT FROM CURRENT TENANTS WITH DELINQUENT RENT

The main component of a lease is the agreement the tenant has made to make timely payments of the agreed amount in exchange for the right to occupy the rental. When they pay late or less than the agreed amount, they have violated the lease agreement and you have options on how to proceed.

First and foremost, become the expert regarding your local and state regulations regarding tenant payments and your options to pursue and how to document and navigate those choices.

Payment Arrangements
If local regulations allow and rent payments have become severely delinquent consider allowing the tenant a fresh start where they pay their next rent amount in full plus an installment amount to put towards the past debt.

When making this type of payment arrangement, create a lease agreement addendum outlining the payment arrangements to pay current plus partial back rent.

An easy way to calculate the amount due is to divide the past rent debt by the number of months left in the current lease. If the lease will end soon or that amount is too great a burden, you might consider asking them to sign a lease extension, giving them longer to pay off the debt.

Payment Incentives
Depending on your regulations, you might be able to offer a rental discount for on-time, full, or partial payments.

Regardless of how you choose to work with your tenants to bring their account current, it is important to be aware of what you can not do

 

WHAT NOT TO DO WHEN COLLECTING RENT

Don’t Go Rogue
In the news are reports of landlords taking matters into their own hands to get tenants to pay rent or leave such as removing front doors and turning off utilities. This passive-aggressive behavior is not only unprofessional but is absolutely illegal.

Don’t Harass Your Tenants
Tenants have the right, regardless of their payment status, to quiet enjoyment of the home. That includes the freedom from harassment. To ensure you are careful not to cross the line, know and follow all regulations regarding written notices as well as verbal and electronic communication.

Don’t Give Unauthorized Notices
Notices such as late rent notices, notice to quit, notice to vacate, and demand letters are legal documents. Your state and local area have specific laws on which notices are appropriate and how to serve them. If following legal guidelines that require posting a notice on the door, be certain to place that notice in a sealed envelope.

Don’t Call Outside of Business Hours
Follow guidelines for calling within normal business hours outlined by your local regulations. It’s not only polite but can save you from being accused of harassment.

Don’t Abuse Electronic Communication
It may seem easy to shoot a text over or send a quick email but make sure to only text during business hours and keep all communication (electronic, verbal, or written) very professional and appropriate.

Don’t Show up Unannounced
It needs to be repeated, do not show up unannounced. If you need to go to the home, provide the proper notification. Just know, going to their home for the purpose of collecting rent is considered landlord harassment unless the tenant has agreed to a payment pickup.

 

STEPS TO AVOID COLLECTION ISSUES

Setting expectations and clear communication are keep steps to avoid collection issues.

1. Conduct Tenant Screening
Much has been written on the importance of credit and background checks and employment verification in the tenant screening process and these guides can help with those best practices:

It’s never too early to bring up your no-nonsense rent policy during the screening process. Outlining that policy may help weed out the bad players from an interest in your rental.

2. Create a Rent Collection Policy
It’s a good practice to not only add the following into your lease agreement but also create a document outlining your rent collection policy and procedures. Items to consider:

  • A note that partial payments constitute a breach of the lease agreement and partial payments require pre-arrangement.
  • Location and office hours if an in-person drop-off is an option.
    PRO TIP: provide pre-stamped, pre-addressed envelopes and consider installing a dropbox for after hours.
  • Outline payment methods available. Be sure to note any exceptions and how these types of payments can be processed.
  • Fees for processing payments
  • The rent due date. Be sure to note if it is due on or by that date.
  • Grace period. Helpful to include that a grace period is designed to account for weekends, holidays, mail delivery services, and circumstances outside of anyone’s control. It is not a time period to put off paying rent but rather as the name implies, a gracious buffer for the unexpected.
  • Fees: List any late fees, processing fees, returned checks and non-sufficient fund fees, etc. Check local laws on fee limits.
  • A note that it is the tenant’s responsibility to have funds available for processing the payment type chosen. Returned Checks, non-sufficient funds, returned checks, dishonored checks, etc.
  • Consequences. In addition to any fees they might incur, outline what they can expect if they default on rent payment such as termination notices.

3. Offer Varied Payment Options
It’s been documented that offering a variety of payment options can help landlords receive more rental payments.

RENT COLLECTION DURING PANDEMIC AND EVICTION MORATORIUMS

Many misinterpret eviction moratorium to mean rent forgiveness. Because of this, some renters believe that any communication of a past due balance is in violation of the moratorium.

As landlords are aware, any amount in arrears is still due. So, how do you communicate a late balance without it being perceived as an eviction?

First, check with your state if a pay or quit notice is still allowed to be a part of your late payment processes. Although evictions are on a moratorium, the documentation of late payments still needs to be processed in such a way that communicates to the tenant that the rent amount is in arrears and still due. It is the consequences of breaking that portion of the lease that has been paused, not the responsibility of meeting that obligation.

Secondly, you may need to check with an attorney to review your notices to make sure they comply with current regulations.

Regardless of the type of notice to communicate that default that your state allows you to deliver at this time, try to couple that communication with resources and tools to help them as an outreach.

People respond best when they know you care. When discussing their specific difficulties and payment plans, empathy is king.

 

Implied Warranty of habitability. This means that a landlord has a responsibility to keep the rental in a fit and habitable condition.

Implied Warranty of habitability. This means that a landlord has a responsibility to keep the rental in a fit and habitable condition.

  • Posted: Jul 09, 2021
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Landlord-tenant law also places specific maintenance obligations on every landlord. These responsibilities include:

 

Implied Warranty of Habitability – a general requirement that all vital services must be functioning and in good repair and that the rental property must be clean and safe.

  • Following Building Codes: Every landlord has a responsibility to keep their property up to local and state building and safety codes. This includes:
    1. General Building Safety: The physical structure of the building must be safe for tenants to live in. The roof and foundation must be structurally sound. Entrances and exits must be easily accessible. Windows and doors must have proper waterproofing and proper locks. Floors must be structurally sound and free from tripping hazards. All staircases must have the appropriate handrails.
    2. Plumbing Inspections: Plumbing must be up to code.
    3. Electrical Inspections: All electrical work in the property must be up to code.
    4. Fire Inspections: Rental properties must have the proper number of smoke and carbon monoxide detectors and they must be in good, working order. Some towns will require these detectors to be hard-wired, while others allow battery operated detectors. The property must not exceed a certain number of occupants, stairways and common areas must have proper lighting and fire retardant paint must be used in certain areas, such as stairways.
    • Performing Repairs: Landlords are responsible for completing repairs in their property to keep the property in habitable condition. These repairs need to be reasonable. For example, if a tenant does not have a working stove, the landlord can hire a repairman to fix the current stove. The landlord does not have to purchase a brand new stove for the tenant if the current stove is able to be repaired to a working condition.
    • Common Areas: Landlords must keep all common areas of the building clean and safe.
    • Maintaining Vital Services: Landlords are responsible for keeping all vital services in the rental property functioning. This includes heat, hot water, electricity, gas, and central air conditioning, if applicable. If the tenant is responsible for paying utilities, the tenant must keep current on their bill to make sure their heat, electricity or gas remains on.
    • Providing Garbage Bins: Landlords must provide garbage cans where the tenants can dispose of their trash. These must be an appropriate number or size for the rental property.
  • Supplying Running Water: Tenants must have access to running water. Burst pipes or blockages must be fixed immediately.

How Long Does a Landlord Have to Complete a Repair

For repairs that violate the warranty of habitability or pose immediate health or safety risks to the tenants, landlords will have a reasonable amount of time, based on state law, to complete the repair once they have been notified of the issue. What is considered a reasonable amount of time will vary by state law and by the severity of the issue.

Many states will allow a landlord 30 days to fix a problem, while others will only allow three to seven days for serious issues, such as lack of heat or running water. If the repair is not completed within this time period, the landlord may owe the tenant damages, the tenant could be allowed to move out of the rental unit, the court could hire a third party to complete the repairs or the landlord could be fined.

Advance Notice for Entry

In order to enter a tenant’s apartment, landlords typically have to give notice. The amount of notice will vary by state but is typically between 24 and 48 hours’ before desired entry. This notice requirement is usually waived in emergency situations.

Right to Withhold Rent

Tenants in certain states, such as Connecticut, are allowed to withhold rent until a necessary repair is made. There are specific rules that must be followed such as serving the landlord with formal notice that the repair is necessary and then filing a complaint with the court. The tenant will then deposit the rent amount withheld with the court.1

The repair must violate the warranty of habitability, such as an extreme pest infestation or lack of heat in the winter. Based on state law, the landlord also has a certain amount of time to address the repair.

Check your state’s laws because not all states allow tenants to withhold rent until a repair is made.

Right to Repair and Deduct

Other states, such as California, allow a tenant to have the repair completed themselves and deduct the amount of the repair from their rent payment. The tenant must first notify the tenant of the needed repair either verbally or in writing. If the landlord does not respond and address the repair, the tenant can have the work done. The amount the tenant deducts for the repair cannot exceed one month’s rent.2

Damage Caused by Tenant

Landlords are not responsible for completing repairs that were caused by the fault or negligence of the tenant, member of the tenant’s household or guests of the tenant. These repairs are the monetary responsibility of the tenant.

 

 

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State-Specific Resources for Landlords, help to and handle the situation of Rent relating to COVID-19

State-Specific Resources for Landlords, help to and handle the situation of Rent relating to COVID-19

  • Posted: May 07, 2020
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How should Landlords as rental housing providers respond to and handle the situation of Rent relating to COVID-19

On March 16, 2020, The White House signed an Executive Order allowing local jurisdictions to enact eviction protections for renters that experience substantial financial hardships as a result of a tenant’s medical expenses, childcare, loss of wages, layoffs or reduction of hours relating to COVID-19 (Coronavirus). Following the order, cities have issued executive orders or have passed ordinances barring certain residential evictions.

 

State-Specific COVID-19 Resources

 

 

Here are a few ways to approach this delicate and challenging issue

1. Communicate With Renters:

First, communicate with your renter. Empathize with them and let he or she know how you feel about these unprecedented circumstances. Explain that all of us are in the same situation and because you want to ensure you can continue to provide them with a safe, well-maintained home, that would be impossible without receiving the rent you depend on to maintain the building and to support your own family.

2. Empathize:

Now, the remainder of the steps here are more concrete, but I want to make sure we address this. Tenants are people, and they are going through a remarkably scary time, as well. Perhaps it’s even worse than you’re going through, because you’re probably more financially educated than many of your tenants. So before anything else, listen to your tenant. Talk with them. Empathize with them. We’re all in this together, so let’s remember to be human and keep people before profit in our discussions.

3. Explain That Rent Is Still Due:

For as long as there have been tenants and landlords and bills to be paid, there is a super interesting piece of human behavior at play: People will pay the bills that give them the greatest consequence of not paying. In other words, most people financially struggling can pay most of their bills—but not always all of them.

This is why late fees are so vital in normal landlording. When the choice between paying rent and buying a flat-screen TV are presented to a tenant, the late fee and threat of eviction tips the scale toward using that money to pay rent.

But we’re not really dealing with flat-screen TVs today, are we? Regardless, the principle still applies. It’s likely your tenant is going to have to make some serious decisions on which bills are being paid. This is why after talking with the tenant and sympathizing with them, I believe it’s still important to let them know that the rent is still due.

As I’m sure you’ve heard, evictions are being suspended in most areas of the U.S. right now. The ability to issue a late fee might also be banned soon. Your tenant very well might assume that this means the need to pay rent is being suspended, and it’s your job to inform them otherwise.

Even if you can’t evict right now, it doesn’t mean they still don’t owe the rent, and it doesn’t mean you won’t evict when the courts open back up. You don’t need to be a jerk about it, but letting them know that you have a mortgage and other bills to pay is going to be important.

4. Give Your Tenant Options:

Once you’ve explained that the rent is still due, now it’s time to help the tenant navigate this difficult time. We plan to do this by giving them their options, as they may be unaware of the different ways they could come up with the rent.

First, we plan to keep an eye on programs that the government is designing to help tenants. This is a rapidly changing time, so we’ll keep current on assistance programs. Right now, there is a very real possibility that the government is going to issue cash payments to every adult American, which could help. But even if they don’t, there may likely be local, state, or federal programs that could.

Also, we are going to offer other suggestions, as well. For example, could they borrow the money from a relative? Or could the rent be paid via credit card?

In fact, to help where we can, we plan to offer to pay the fee associated with using a credit card. Now would be a good time to get set up with a rent collection system that has the ability to get paid via credit card.

5. Rent Deferral Plan:

Now, Its like some loans, banks can take one or two payments and move this to the back of the loans. Well these are not loans so…..

If I brought this up at the beginning for tenants, most everyone would jump at it. Remember, humans will naturally pay the most pressing bill, so I need them to know that rent is incredibly high on their priority list.

So, step five is our “worst-case” measure that will only be mentioned to tenants when they can’t or don’t pay their rent—not when they call and say they won’t be able to. We will still let the tenant know that rent is due on the 1st, give them the options I just mentioned, and even still issue a late-notice to the tenant if they miss rent.

If they really have exhausted their options and just can’t pay the rent?

 

Rent Deferral Plan

Having this documented plan in place shows the tenant that this is not us winging it—but we have a system in place to handle this crisis for everyone.

*First, there is a really important question we will ask each tenant: “How much CAN you pay toward your rent?”

Chances are, even if they can’t pay all their rent, they can probably pay some of their rent. Maybe their rent is $1,000 per month, and they can only pay $300. We’ll accept that $300 and move onto the deferral plan.

 

Rent Deferral Plan, allows the tenant to opt into a payment plan for their rent over the following 10 months. The deferral plan is an addendum to their lease that gives them the ability to take their rent and pay it in equal portions over the next 10 months (beginning the second month after enacting). It basically gives them an extra month before the increased payment begins.

For example, let’s say we’ve gone through all this, but the tenant simply cannot make the April 1st rent. They owe $1,000 in rent and because we asked what they can put toward it, they are able to pay $300. The remaining $700 becomes $70 per month and gets added to their rent beginning June 1st.

So, starting June 1st (not May 1st, and I’ll explain why in a second), they will pay $1,070 per month in rent until next March. Why not start the payment next month? Simply because I have a strong suspicion that this is not going to end that quickly and a one-month deferral may not be enough time to get back on their feet. This is why we’re going to wait an extra month before adding the extra amount. Furthermore, it is our company policy that during this time, a tenant will be allowed to use this twice. Of course, we won’t tell them this immediately, because we want to work through steps one through four first on the next month, as well. Rent has to remain a priority.

 

If after two months they are still unable to pay, the tenant may just need to be removed. This is completely uncharted territory we find ourselves in today, so I’m not going to lie to you and tell you I know exactly what we’ll do then. But the government can’t forever stop evictions and stop making people pay rent while continuing to force mortgage payments and foreclosures—or nearly every single landlord in the country will eventually go bankrupt.

If this social distancing, job loss, and potential economic meltdown continues, we’ll make new rules as it happens. My guess is that the government will offer more and more programs to attempt to help, because remember—you and I are not in this alone. Everyone is trying to figure this out. And we will. Humans have an incredible ability to figure stuff out when the night is darkest. We will get through this. We will survive. We will emerge stronger.

I hope this sheds some light on what I’ll be doing in my personal rental portfolio to handle potential rent issues in the near future. Maybe you’ll be doing something different—and that’s great. I encourage you to share your thoughts below and let us know what your plan is. And perhaps together, we can help the world move forward financially.

We are offering landlords an Agreement Form and Lease addendum package to help with this Rent Deferral Plan

Download the Forms for Covid-19 Agreements with Tenant Today!

Private and/or Non-Profit COVID-19 Resources

 

 

NationalEvictions.com is here for Landlords, Property Owners and Property Management Professionals.  We can prepare notices to be sent to Tenants, Have them Served to your Tenants,  If and when the Notices expire have all the court forms ready to file with the courts for Landlords. 

Find out more about your rights and our services on our website: https://NationalEvictions.com

 

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Concerned Landlords who have been notified by their renters that rent will not be paid due to the coronavirus. They are asking what should we do?

Concerned Landlords who have been notified by their renters that rent will not be paid due to the coronavirus. They are asking what should we do?

  • Posted: Mar 26, 2020
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Landlords who have been notified by their renters that rent will not be paid due to the coronavirus. What should they do?

They are asking us, how should we as rental housing providers respond to and handle these situations?

On March 16, 2020, The White House signed an Executive Order allowing local jurisdictions to enact eviction protections for renters that experience substantial financial hardships as a result of a tenant’s medical expenses, childcare, loss of wages, layoffs or reduction of hours relating to COVID-19 (Coronavirus). Following the order, cities have issued executive orders or have passed ordinances barring certain residential evictions.

 

So, what should you do if a renter tells you that he or she do not want to pay their rent?

Here are a few ways to approach this delicate and challenging issue:

 

1. Communicate With Renters:

First, communicate with your renter. Empathize with them and let he or she know how you feel about these unprecedented circumstances. Explain that all of us are in the same situation and because you want to ensure you can continue to provide them with a safe, well-maintained home, that would be impossible without receiving the rent you depend on to maintain the building and to support your own family.

2. Offer Deferment Of Rent:   read more below on – our five-point plan for dealing with late or missing rent.

Next, when necessary, consider offering a full or partial deferment of rent. But let your renter know any reduced or deferred rent is not forgiven rent, and that they will have to repay you.

3. Ask them to Provide Written Documentation:

Any renter that asks you to reduce or defer rent must provide you with written documentation that they have suffered adverse financial consequences due to the COVID-19 virus resulting in a “substantial” reduction or loss of income for any of the following reasons:

Sickness with COVID-19 or caring for a household or family member who is sick with COVID-19.

Lay-off, loss of hours, or other income reduction resulting from business closure or other economic or employer impacts of COVID-19.

Compliance with a recommendation from a government health authority to stay home, self-quarantine, or avoid congregating with others during the state of emergency.
Extraordinary out-of-pocket medical expenses.

Childcare needs arising from school closures related to COVID-19.

 

If you have been impacted by one of the situations above, your renter must provide you with written notice of his or her inability to pay the rent as soon as the circumstances set forth above arise. In addition, in order to temporarily avoid eviction proceedings, your renter is obligated provide specific, verifiable supporting financial, employment and/or medical documentation of loss of income and reflecting that his or her loss of income is directly attributable to COVID-19.  After the expiration of the local emergency, the tenant must repay within the period of time set by local ordinance or government order. Be sure any rent reduction or agreement made with your renter is documented in writing through a lease amendment.

 

Remember, the law does not eliminate your renter’s obligation to pay the unpaid rent. After the expiration of the local emergency, your renter is obligated to repay any deferred or forgiven rent, and you as an owner may seek payment of the unpaid rent. if they dont? You may need our services for an eviction or an legal agreement?

 

Of course, if you’re not a landlord, you’re probably wondering, “What’s the big deal? Just do the nice thing and don’t make anyone pay rent.” But as Property Owners, Managers and Landlords we know that’s not necessarily possible, right?

 

I mean—unless the government changes something,  we aren’t just going to be able to stop paying our mortgage payments, our taxes, the insurance, and everything it takes to keep our properties running. And despite what the general population thinks, most landlords are not rich, greedy, multinational corporations with billions sitting in the bank.

Most landlords are people just like you and me—people who, whether by accident or on purpose, ended up with a few rental properties and are trying to manage them while also working a job or running a business.

Most won’t be able to pay the bills on their properties long-term without receiving rent from our tenants.

How can we look at this situation and make decisions that are best for all. Well, I can’t answer for you necessarily, as we all have unique situations. But I can at least share with you my exact strategy that we have come up with.

 

Here’s our five-point plan for dealing with late or missing rent.

 

Step 1: Have a Plan:

Ok, this is kind of a summary point, but it needs to be made. Whether in the Wild West or dealing with a tenant, shooting from the hip is generally a pretty terrible plan. Making decisions on the fly usually results in bad decisions being made, so step one is commit to having a plan written down for how you will deal with this issue.  Because for most property owners, this is not a question of IF but WHEN. Maybe this can become a plan that you follow, but even if you do something entirely different from what I’m about to say… just be sure you are prepared. This way, you won’t be shooting from the hip when that dreaded phone call comes in from the tenant who just lost their job.

Step 2: Empathize:

Now, the remainder of the steps here are more concrete, but I want to make sure we address this. Tenants are people, and they are going through a remarkably scary time, as well. Perhaps it’s even worse than you’re going through, because you’re probably more financially educated than many of your tenants.

So before anything else, listen to your tenant. Talk with them. Empathize with them. We’re all in this together, so let’s remember to be human and keep people before profit in our discussions.

Now that said, we still need rent. We can’t survive financially without it. So, that brings me to step three.

Step 3: Explain That Rent Is Still Due:

For as long as there have been tenants and landlords and bills to be paid, there is a super interesting piece of human behavior at play: People will pay the bills that give them the greatest consequence of not paying. In other words, most people financially struggling can pay most of their bills—but not always all of them.

This is why late fees are so vital in normal landlording. When the choice between paying rent and buying a flat-screen TV are presented to a tenant, the late fee and threat of eviction tips the scale toward using that money to pay rent.

But we’re not really dealing with flat-screen TVs today, are we? Regardless, the principle still applies. It’s likely your tenant is going to have to make some serious decisions on which bills are being paid. This is why after talking with the tenant and sympathizing with them, I believe it’s still important to let them know that the rent is still due.

As I’m sure you’ve heard, evictions are being suspended in most areas of the U.S. right now. The ability to issue a late fee might also be banned soon. Your tenant very well might assume that this means the need to pay rent is being suspended, and it’s your job to inform them otherwise.

Even if you can’t evict right now, it doesn’t mean they still don’t owe the rent, and it doesn’t mean you won’t evict when the courts open back up. You don’t need to be a jerk about it, but letting them know that you have a mortgage and other bills to pay is going to be important.

 

Step 4: Give Your Tenant Options:

Once you’ve explained that the rent is still due, now it’s time to help the tenant navigate this difficult time. We plan to do this by giving them their options, as they may be unaware of the different ways they could come up with the rent.

First, we plan to keep an eye on programs that the government is designing to help tenants. This is a rapidly changing time, so we’ll keep current on assistance programs. Right now, there is a very real possibility that the government is going to issue cash payments to every adult American, which could help. But even if they don’t, there may likely be local, state, or federal programs that could.

Also, we are going to offer other suggestions, as well. For example, could they borrow the money from a relative? Or could the rent be paid via credit card?

In fact, to help where we can, we plan to offer to pay the fee associated with using a credit card. Now would be a good time to get set up with a rent collection system that has the ability to get paid via credit card.

 

Step 5: Emergency Rent Deferral Plan:

Now, this is where I hope my tenants don’t watch this video—because I don’t want the tenant really knowing this is an option. If I brought this up at the beginning for tenants, most everyone would jump at it. Remember, humans will naturally pay the most pressing bill, so I need them to know that rent is incredibly high on their priority list.

So, step five is our “worst-case” measure that will only be mentioned to tenants when they don’t pay their rent—not when they call and say they won’t be able to. We will still let the tenant know that rent is due on the 1st, give them the options I just mentioned, and even still issue a late-notice to the tenant if they miss rent.

But what if they really have exhausted their options and just can’t pay the rent?

This is where we will introduce the tenant to our

 

Have a Rent Deferral Plan
_________________________________________________

And because you followed step one above, we have a specific plan in place to deal with this inevitable situation. Having this documented plan in place shows the tenant that this is not us winging it—but we have a system in place to handle it.

First, there is a really important question we will ask each tenant: “How much CAN you pay toward your rent?”

Chances are, even if they can’t pay all their rent, they can probably pay some of their rent. Maybe their rent is $1,000 per month, and they can only pay $300. We’ll accept that $300 and move onto the deferral plan.

 

Simply put, the ERDP allows the tenant to opt into a payment plan for their rent over the following 10 months. The deferral plan is an addendum to their lease that gives them the ability to take their rent and pay it in equal portions over the next 10 months (beginning the second month after enacting). It basically gives them an extra month before the increased payment begins.

For example, let’s say we’ve gone through all this, but the tenant simply cannot make the April 1st rent. They owe $1,000 in rent and because we asked what they can put toward it, they are able to pay $300. The remaining $700 becomes $70 per month and gets added to their rent beginning June 1st.

So, starting June 1st (not May 1st, and I’ll explain why in a second), they will pay $1,070 per month in rent until next March.

Why not start the payment next month? Simply because I have a strong suspicion that this is not going to end that quickly and a one-month deferral may not be enough time to get back on their feet. This is why we’re going to wait an extra month before adding the extra amount.

Furthermore, it is our company policy that during this time, a tenant will be allowed to use this twice. Of course, we won’t tell them this immediately, because we want to work through steps one through four first on the next month, as well. Rent has to remain a priority.

If after two months they are still unable to pay, the tenant may just need to be removed. This is completely uncharted territory we find ourselves in today, so I’m not going to lie to you and tell you I know exactly what we’ll do then. But the government can’t forever stop evictions and stop making people pay rent while continuing to force mortgage payments and foreclosures—or nearly every single landlord in the country will eventually go bankrupt.

 

If this social distancing, job loss, and potential economic meltdown continues, we’ll make new rules as it happens. My guess is that the government will offer more and more programs to attempt to help, because remember—you and I are not in this alone. Everyone is trying to figure this out.

And we will. Humans have an incredible ability to figure stuff out when the night is darkest. We will get through this. We will survive. We will emerge stronger.

I hope this sheds some light on what I’ll be doing in my personal rental portfolio to handle potential rent issues in the near future. Maybe you’ll be doing something different—and that’s great. I encourage you to share your thoughts below and let us know what your plan is. And perhaps together, we can help the world move forward financially.

 

NationalEvictions.com is here for you, We can prepare notices to be sent to Tenants, Have them Served to your Tenants,  If and when the Notices expire have all the court forms ready to file with the courts for all Landlords

Find out more about your rights on our website: https://NationalEvictions.com

 

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Millions of U.S. households are expected to face financial burdens in the wake of the coronavirus pandemic.

Millions of U.S. households are expected to face financial burdens in the wake of the coronavirus pandemic.

  • Posted: Mar 26, 2020
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Millions of U.S. households are expected to face financial burdens in the wake of the coronavirus pandemic.

If you are facing reduced hours or job loss and are worried about making your rent or mortgage payment this month, stay calm — President Trump said Wednesday that the Department of Housing and Urban Development will suspend “all foreclosures and evictions” through the end of April.

That said, you will still want to discuss your options with your mortgage lender or landlord if you have experienced a disruption in your income. Here are some steps to take now.

 

 

If you are a homeowner

Contact your lender

Financial planners and consumer advocates are encouraging homeowners to reach out to their loan servicer directly to discuss payment options as soon as they can.

“Borrowers should first reach out to their mortgage holder and inquire about resources they have to delay payments,” John Graff, a Los Angeles-based real estate broker, tells CNBC Make It. “Many lenders have implemented special waivers due to COVID-19, you should check with them first.”

Lenders have certain obligations under your mortgage contracts, says Ira Rheingold, executive director of the National Association of Consumer Advocates. If they aren’t willing to work with you, he suggests reporting them to your state attorney general’s office and the Consumer Financial Protection Bureau.

“You’ve got a long-term relationship with them and they have certain obligations under the law,” says Rheingold. “Contacting them before you are behind is a good thing to do.”

 

Reach out to your bank or credit union

Your bank may also offer hardship programs you can tap into. Don’t wait until your mortgage payment is due to find out about this, call today.

“You have to call and ask about it and most likely apply,”  “Don’t wait until your mortgage payment is due to find out about this, call today. Remember that you don’t have to take advantage of these programs, but it’s worth it to know what’s out there.”

If that doesn’t work,  we suggest contacting your bank to discuss your personal loan options to continue making payments. “Low rates coupled with mass benevolence from corporate America means you may be able to borrow some cash to help tide you over,”

Many banks are already putting together coronavirus response pages. Here are a few major ones:

 

Put your loan in forbearance

A less-than-ideal alternative for homeowners is forbearance, a hardship option that allows you to postpone payments.

“The key here is to inquire about options available for a delay in payments under so-called hardship circumstances,” says Mark Hamrick, senior economic analyst at Bankrate.com.

Although this can provide immediate relief, interest will still accrue on your loans. Since you won’t be paying down your principal balance, that means you will likely owe more in the long run because you will owe more in interest than you would if you made regular payments.

If you have to go this route, ask your lender what terms they can offer you. They will be different for each person depending on their financial history and loan provider.

 

If you are a renter

Give your landlord notice

Renters are advised to contact their landlords as soon as they can to talk through delayed or partial payment options.

“Most landlords would be willing to work with a good tenant who is experiencing hardship due to current events,” says Graff.

Work out a payment plan

It’s best to give your landlord at least a partial payment if you can, says Long. Make a payment plan with them with repayment dates, and get everything in writing. She suggests using the following script and inputting your own financial details:

Hi landlord, as you probably know, I’m off work right now. Will you accept $500 this month rather than the typical $1,000?

If you believe you won’t be able to make a payment at all, bring it up to your landlord as soon as possible and, again, ask if you can put a plan into place to pay once you have income again. Long says to ask if you can skip a month and spread the payment out over the next six months (or whatever is realistic for you) once you are back to work.

“Remember that your landlord needs income too, so approach this with empathy for what you’re asking,” she says. Make clear that “you’re just paying late rather than asking for free money.”

You can also call 211 for your local United Way to see if they are offering rent help, Long suggests.

Look for outside assistance

If your landlord refuses to work out a payment plan, Graff suggests turning to your bank for a short-term loan.

“Many banks are offering to help their customers during this difficult time and you should absolutely take advantage of the assistance if you need it,” he says.

 

 

Housing is your top priority

Housing and food should be your top priorities, says Long. After that, take time to figure out what’s going on with your other bills. Both renters and homeowners can check in with creditors and utility companies to see if they are offering financial hardship assistance.

“If your utility company is willing to waive late fees and give you a payment plan with super low interest for your bill, but your internet provider won’t be flexible, you may opt to pay your internet bill before utilities,” she says. “The goal is to minimize the long-term impact of paying late or less than in full.”

 

Eviction bans

Before Trump announced that the federal government would take action, many cities and some states said that they would implement 30-day or indefinite eviction bans so that renters cannot be kicked out of their homes during the crisis.

“In Los Angeles, for instance, renters experiencing hardship due to COVID-19 qualify for the eviction moratorium and will have up to six months to repay any unpaid rent,” says Graff. “You should check local and state government websites to see if there are options like this available in your area.”

Other cities and states doing this include Baltimore, Boston, Kansas, Miami, New York state, Portland, Sacramento, San Francisco, San Jose and Seattle.

The Federal Housing Finance Agency has asked mortgage servicers to offer borrowers options to reduce or suspend payments for up to six months, says Jill Fopiano, CEO of Boston-based O’Brien Wealth Partners. She also advises homeowners to consult the CFPB’s Find a Counselor tool, which provides a list of counseling agencies.

 

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