We’re all living with many unanswered questions right now. How long will this crisis last? What will the repercussions be? Will I still have my job? Beyond these big questions, we also have more technical ones: If I do lose my job, what if I need a break on rent, mortgage payments, or utilities? And if I am running a business, what happens if I can’t pay rent on my business space? Needing a break on rent or mortgage payments is a very real conversation some of us might need to have, and, although we’re facing something totally unprecedented, there are some important basics you should know.
Residential Leases
Eric Dunn, director of litigation at National Housing Law Project, first recommends that tenants check to see if their state or local government has implemented a moratorium on eviction. For example, New York governor Andrew Cuomo recently implemented a 90-day moratorium on evictions for tenants throughout the state.
Once you have an understanding of your local government’s current policy, Dunn suggests tenants get in touch with their landlords to see what kind of arrangement they can come to. Some people might find themselves with landlords who have their own private eviction moratorium, with friendlier policies. Eventually, Dunn hopes there will be some kind of relief package put in place. “The longer this goes on, the more complicated these solutions might become,” he says. “It’s not unrealistic to think that if someone falls behind with several months’ rent, there might be some kind of relief package available to help them.”
Another issue is late fees: Is it fair to tack on late fees for people who lost their jobs and can’t pay? Says Dunn, “I would tell tenants to use good judgment and think about what’s fair. A lot of these situations are not going to be clearly covered by existing law. Try to see things from both sides and think of something that is reasonable,” adding that we should be prioritizing health. If you’re in an apartment and can’t pay the rent, do you move out and wind up in a shelter because you’re afraid of paying late fees? “I guess that’s a decision that everyone should make for themselves,” he says. Ultimately, tenants should try to reason with their landlords, whom both Dunn and Jeff Eager, of EagerLaw, an Oregon-based law firm, believe will be more flexible during this time. Despite all the unanswered questions, one thing we should all remember is that we’re all in this together.
Residential Mortgages
On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a bill that allows homeowners more flexibility on mortgage payments. In New York state, Governor Cuomo also suspended mortgage payments for three months for homeowners in financial distress. Check to see what your state’s policies are right now.
While this may be helpful in the short term, once the moratoriums have been lifted, there will be an arrearage for payments. As nobody knows what financial position they’ll be when this is over, an arrearage of payments won’t solve the fact that money is owed. Dunn suggests people get in touch with their legal aid programs and service providers in their areas. “Advocates are keeping up on new developments, putting things on their websites, creating plain English materials, and translating them into other languages to make sure everyone can access it. They’re usually available by phone,” says Dunn. The legal aid community can provide resources and insight into what protections might apply and what benefit programs might be available.
Commercial Leases
If you’re a commercial tenant, look for the Act of God clause (aka Force Majeure), a clause written into some commercial leases that excuses one or both parties if the failure to perform is due to something outside the control of the party, like a natural disaster or a pandemic. Although the way the clause plays out is set in the contract itself (and each contract is different), Eager thinks that even if the language is strict, landlords will be more flexible and interested in keeping tenants in their buildings during this crisis. “Communicating with the landlord early and often in this situation is important for any commercial tenant. The landlord may also be willing to amend the lease. Many, many tenants are hurting right now, and a good landlord is going to work to keep tenants he or she believes will bounce back from this crisis,” says Eager.
More information on protecting renter and homeowner rights during the pandemic can be found here.