June 24, 2020 Landlord Advice

Leasing Apartments During an Unemployment Crisis: What Landlords Should Know

Every renter’s financial circumstances are unique, no doubt about that. And in Chicago, renters are protected from discrimination on the basis of their legal source of income. In other words, if a renter can afford the rent due to unemployment benefits, housing assistance, spousal support or child support, a landlord cannot refuse to lease the unit simply because the renter’s income is not associated with a job. This protection may be relevant for the first time for renters who are furloughed or out of work right due to changes triggered by the coronavirus.

 In hypothetical terms, let’s say that a renter has been furloughed from work and won’t be returning for another 5-6 weeks -- they still have a job and they’re receiving all the regular benefits like dental and health insurance – but their apartment lease is up at the end of the month. 

Can a landlord refuse to rent an apartment to someone until they can prove that they’re back at work full-time?

First, landlords can’t discriminate in their listings based on source of income. With so many renters bearing the economic brunt of disruptions brought on by the Coronavirus pandemic, a lot of apartment seekers are reckoning with the fact that their wages have been significantly reduced and may take several more weeks to recover.

What does the Chicago Fair Housing Ordinance mean when it prohibits discrimination based on “source of income?” The City of Chicago Municipal Code defines “source of income” as “the lawful manner by which an individual supports himself and his or her dependents” (see Municipal Code of Chicago, Section 2-160-020).

In normal non-Coronavirus circumstances, this protection is of vital importance because it safeguards renters who rely on alimony, child support or housing subsidies -- such as the Housing Choice Voucher program or “Section 8” as it’s colloquially known -- from discrimination. Landlords may only consider whether the tenant’s income, whatever its legal source, is adequate to pay the rent. 

Could a furloughed renter find new work before going back to their old job? 

Depending on the employment contract between a renter and the employer, a furlough status likely doesn’t prevent a furloughed employee from looking for alternative employment. By the time a tenant signs a new apartment lease, the renter may have found new employment. 

What does it mean if a renter is furloughed but they’re also accepting unemployment benefits? 

The expansive federal Coronavirus relief bill, also known as the CARES Act, includes up to 39 weeks of unemployment benefits that are scheduled to last until July 31. Landlords who ask whether a tenant is receiving unemployment benefits should consider the potential longevity of the renter’s eligibility for benefits. 

Landlords, here are the things that you CAN ask to see during the tenant screening process: 

  • Proof of income: Can landlords ask for proof of income in the screening process? Sure, they can. But there are protections under Chicago’s fair housing laws prohibiting landlords from discriminating on the basis of a renter’s income.  
  • Rental history, i.e .references from previous landlords: A landlord may ask for contact details from a renter’s previous landlords or apartment management companies. Landlords will likely follow up with a series of short questions and they may justifiably inquire whether a renter was served with eviction notice(s) while living at their earlier residence. Other common questions include whether the tenant was ever late in making rent payments or if they ever bounced a rent check.

Read about the other questions that landlords can and can’t ask for renting Chicago apartments in Domu’s guide to the tenant screening process.

What can landlords do to work with tenants who are furloughed from work right now? 

Many landlords are trying to do what is feasible within their budgets and being kind. Being kind is hardly a panacea for the small galaxy of troubles facing renters and landlords right now, but it’s the cheapest and most widely available option for many people. Beyond simple acts of human kindness, there are programs rolling out to support both renters and homeowners who are dealing with mounting bills during the crisis.

There’s a growing network of rental assistance programs available to tenants who might be struggling to pay rent. Rental assistance is part of a recently announced $900 million relief package from Illinois Governor J.B. Pritzker, with $150 million earmarked specifically for renter relief. The city will also distribute further rental assistance for renters who missed out on either the federal stimulus package or earlier rounds of housing grants.

Chicago City Council recently voted to adopt a new COVID-19 Eviction Protection Ordinance in a June legislative session. This new ordinance adds a seven-day negotiating window for tenants who get served with eviction notices in the immediate aftermath of the Coronavirus pandemic. If tenants can prove that their inability to pay rent was caused by the pandemic, landlords must engage in a good faith negotiation towards a workout for seven days before pursuing eviction. This ordinance applies to ALL dwellings in Chicago and covers eviction notices served within the first 60 days of the state’s eviction courts reopening.

The City of Chicago created a Housing Solidarity Pledge that brings together lenders, landlords, and city agencies to shore up support for struggling tenants during the Coronavirus pandemic. This non-binding pledge is a source for public accountability, it doesn’t require landlords to forgive outstanding balances on missed rent payments or waive late fees. A landlord or lender who signs onto the pledge signals their intent to work with tenants to come up with late payment plans and hold late fees until the economic outlook starts to improve for the Chicago area.

And there are also backstops in place for mortgage holders that would otherwise rely on prompt rent payments to keep cash flowing. Payment deadlines for the Cook County Property Tax Bill have been delayed until early October to give struggling landowners more time to pay the bills and avoid a large number of defaults. The federal and state income tax filing deadlines were also delayed by several months.

Domu reminds you that it is not a lawyer or a substitute for one and is not purporting to provide legal advice here or anywhere.