What to do if your tenants can't pay rent or can only pay some portion of the rent due under their lease?
Depending on your tenant's job, at some point, it's possible that they won't be able to pay rent. If your tenants are having difficulty paying rent due to the coronavirus impacting their ability to earn a living, and if the tenant has a good track record of paying on-time, then you should work with them on a revised payment plan. This new plan should be in writing and signed by both landlord and tenant. If, after signing the new plan, your tenants are still unable to follow the new agreement, then you should discuss lease termination options with them.
If your tenant cannot pay rent:
Ask your tenant to declare, in writing, that they cannot pay rent due to COVID-19.
Ask your tenant to provide and retain documentation evidencing their inability to pay rent due to the coronavirus's impact on their job because this documentation is essential for tax credits, a grace period on your mortgage, and eviction proceedings.
Keep a clear and traceable record of payments between January and the month in which the new payment plan begins to demonstrate the reduction in rent received.
Remember that you are far better off dropping rental rates than having many months of vacancy during a time like this, so if you see rental rates falling in the area where your residential income property is located, then you might want to consider reducing the rent for your current tenants.
Should you charge a late fee?
This is a tough time for your tenants and you. The best way to get through it is by working together. It's crucial to build positive relationships with your tenants (you do not want to be the person stating legal terms and threatening a lawsuit during this time of a pandemic), so we do not recommend charging late fees in the event of late payments. At the same time, you want to encourage on-time payments for those who are employed through this time, so we don't recommend an advanced notice on waiving late fees.
Are eviction rules changing?
There has been talk of local and state governments changing the eviction process during the COVID-19 crisis, and California is the first state to pass a statewide moratorium on evictions. On March 27, 2020, Governor Newsom issued an executive order (effective immediately) that banned the enforcement of eviction orders for tenants affected by the coronavirus. This moratorium is to remain in effect through May 31, 2020, and it provides relief for tenants with rent due on April 1. Your tenant is required to declare that they cannot pay all or part of their rent due to COVID-19, no more than seven days after the rent comes due. The tenant is still obligated to repay all the past due rent in "a timely manner" and could face eviction after the moratorium is lifted.
While most counties do not have an eviction ban in place to date, you should confirm with a local real estate attorney as the laws are changing daily. It is very plausible that eviction bans will only be for tenants with any of the following circumstances due to COVID-19:
Tenant lost their job or has reduced pay/reduced hours
Tenant has additional child care expenditures due to school closures
Tenant has health care expenditures from their immediate family getting the virus
Tenant has expenses from government ordered emergency measures
Keep in mind that foreclosures will most likely follow a similar policy if any temporary measures are put in place.
Do you need to perform repairs if your tenant is not paying rent?
Regardless of whether rent is paid, you should follow the lease contract and always perform the necessary repairs. You must keep the property in habitable conditions and perform necessary repairs, so emergency requests submitted by tenants should still be addressed immediately.
For non-essential repairs, you may need to provide an estimated future date to get those scheduled based on local shutdown ordinances and service professional availability. If you encounter a problem like this, then communicate the situation in advance to your tenants, and they should be okay with the delayed scheduling since it is due to circumstances out of your control
In general, it will be more difficult to schedule repairs., so the best landlords and property managers can do is to communicate frequently with their tenants. It may also be a good idea to mention to your tenants, in advance, that service professionals will be more difficult to source and schedule during this time of uncertainty. Let your tenants know that you will do your best to contact the licensed and insured professionals and keep them updated on the status of each request.
Before the scheduled repair takes place, let your tenant and the service professional know that it is okay to be in separate rooms during the service visit. Encourage social distancing, as the tenant can explain the situation through the phone, and even potentially use video over the phone. You may also want to inform service professionals that you encourage gloves, shoe coverings, masks, and goggles.
How do you handle a building with multiple tenant units?
We highly recommend shutting down communal areas in your complex during this pandemic. Whether it's a game room or a pool, we recommend announcing that it will be closed due to COVID-19 concerns. We can learn a lot from the sequence of events in Italy and elsewhere to do our part to make sure that our apartment complexes are not the reason for a spread in the virus.
If your tenants resist common area closures because access to common areas was written in their lease, then you can refer to a local medical authorities' recommendations. You can also use these medical authorities' advice to require travelers from high-risk areas to remain in their apartment for a 14-day quarantine period. If a tenant just flat-out refuses to follow these rules, you can take the next step by requesting a court injunction to bar the prohibited behavior and possibly obtain a temporary restraining order for the health and safety of other residents. Most importantly, you should not impose any fines in this situation.
Even though hallways and lobbies are lower risk areas, since most tenants would be mindful of not touching surfaces there, elevator buttons, door handles, and other commonly touched surfaces are still of concern. Landlords and property managers should sanitize these surfaces more frequently, and it's a good idea also to encourage tenants to wear gloves and wash their hands thoroughly. It is also a good idea to place hand sanitizer stations around the building along with antibacterial soap in the common area restrooms.
What should you do if a tenant in a building with multiple tenant units has contracted the coronavirus?
Instead of having someone visit the tenant to check on them, notify the local health department or Centers for Disease Control and Prevention. They will be able to provide the next steps for your safety and those around the tenant.
How should you communicate with your tenants during the pandemic?
It's best to over-communicate and to stay positive. Your tenants need to hear from you about the current situation and advice on how to move forward, so don't panic when you provide information and advice.
Refrain from in-person meetings wherever you can and promote online communication as much as possible. This includes everything from leasing to management, where you are already able to handle most operational tasks such as applications, tenant screening, leases with e-signature, tenant message communication, maintenance request submission, and lease renewals online.
You may also want to consider a pandemic disaster plan to prepare tenants.
What should you do if you're trying to lease a property during the pandemic?
Here are some important things to consider if your rental property or a unit in your multi-unit rental property is available for lease and you are listing it for rent on the market:
Before Advertising Your Rental: Sanitize the entire rental property through a third party, a professional cleaning company that can do a good deep cleaning.
Setting up Individual Rental Showings (rather than group showings): While showing the rental property to multiple parties at the same time is the fastest way to re-lease your property, consider booking 15-minute time slots with at least a 5-minute buffer in between each showing to make sure you do not have multiple attendees at the same time. If you have current residents in the property, then due to landlord/property manager liability, we recommend not showing it until they are moved out, and the rental is thoroughly sanitized.
Social Distancing During the Rental Showings: Make sure to inform the potential tenants about the importance of social distancing. Remind them that they should do their part to reduce touching surfaces like elevator buttons and doorknobs. Open closet doors, bathroom doors, etc. in advance, and bring sanitizing wipes for all doorknobs or other surfaces that may have been touched. Remember that it is acceptable to be in a separate room during the rental showing.
Helpful resources if you are a landlord or if you own residential income properties.
Here are some template letters that you can use to notify your tenants about COVID-19. Remember, the laws are changing daily, so before using any of these templates, you should confirm with a local real estate attorney that these are still acceptable.
You might also want to read the following articles for more information about how the coronavirus is impacting the Southern California real estate market, and some helpful tips for home buyers, homeowners, owners of investment properties, and seller of a home or investment property, can make the most of this new real estate market.
About Titan Pacific Group, Inc. - Real Estate Sales & Investments
Titan Pacific Group is a premiere Southern California real estate sales (Realtor) and investment firm located in Corona del Mar, CA. While this elite Realtor team specializes in buying and selling properties as a Real estate brokerage firm based in Orange County, they also manage several rental income properties throughout Southern California for their clients. Titan Pacific's Realtors represent buyers and sellers of single-family homes, condos, and multiple-unit residential income properties. Titan Pacific's property managers manage those single-family homes, condos, and multi-unit residential income properties for Titan Pacific Group's real estate investment clients. Titan Pacific Real Estate Sales and Investment Group's portfolio of properties under management includes single-family homes, condos, and multi-unit residential income properties located in Los Angeles, Costa Mesa, Irvine, Newport Beach, Corona del Mar, Newport Coast, Laguna Beach, Dana Point, San Juan Capistrano, San Clemente, Aliso Viejo, Laguna Niguel, Mission Viejo, Ladera Ranch, Huntington Beach, Yorba Linda, Santa Ana, Tustin, Orange, San Diego, La Jolla, Del Mar, Carlsbad, Encinitas, Mission Hills, Hillcrest, and downtown San Diego. Call 949-464-7639, email omid@titanpac.com, or visit https://www.titanpac.com for additional information on Titan Pacific Real Estate Sales and Investments, a Realtor firm based in Corona del Mar (Newport Beach), CA.