The economy has taken a hit in 2020 due to the Coronavirus pandemic, and renters in Chicago are reacting to the economic fluctuations brought on by COVID-19. Landlords with vacancies are trying to avoid slashing rents to attract reliable rent-paying tenants. As renters look to negotiate payment plans and lease terminations, landlords should consider that mass vacancies could create a race to the bottom with regards to rent prices. Negotiating with tenants to keep them in their apartments can prevent a surge in vacancies and also stabilize rent prices.
Landlords have few options this summer regarding tenants who are unable to pay the rent due to job loss triggered by the pandemic. The statewide moratorium on the filing of new eviction actions and eviction orders is extended until October 17, 2020. Additionally, the City of Chicago passed a COVID-19 Eviction Protection Ordinance in June 2020. Why is this ordinance relevant in these circumstances? Because it prohibits landlords from filing eviction notices for 60 days from the expiration of the statewide eviction moratorium AND it requires that landlords enter good faith negotiations with tenants to create repayment plans for any missed rent payments before they start the eviction process. Landlords can read more about the ordinance here.
What Details Should Renters Share with Landlords About their Household Finances?
Communication is key in establishing a positive, professional relationship between landlords and tenants. Renters who are facing reduced wages from being furloughed or laid off shouldn’t delay in communicating their financial circumstances with their landlords, even if they hope that new work will materialize or new government benefits will become available before the next rent payment is due. Landlords and tenants should share updates and try to maintain a cooperative relationship, if possible.
A landlord usually runs a thorough credit screening before offering a lease agreement to a potential tenant. But if a landlord’s impression of a renter’s finances was shaped by a pre-Coronavirus world, a renter whose employment status has changed would benefit from sharing any important updates on the household income status prior to missing the rent payment.
How Can Tenants Set Up Payment Plans with their Apartment Landlords?
Renters who proactively open a dialogue with their landlords about budget shortfalls can explore different ways to close the gap. Paying partial monthly rent is one course of action. Landlords might be willing to accept half of the monthly rent in the short-term in exchange for a promise to repay the missed rent in future months.
Chicago landlords who negotiate partial payment plans with their renters should ask renters to sign a lease amendment that details the agreement to defer part of the rent. The city’s COVID-19 Eviction Protection Ordinance requires landlords enter into good faith negotiations with tenants who are struggling to pay, and this paper trail will evidence that effort.
There are additional resources poised to help landlords and tenants reach mutually beneficial arrangements. The City of Chicago is partnering with the Center for Conflict Resolution to provide free mediation services for landlords and their tenants regarding payment plans or communication issues.
What Can Landlords Who Need Immediate Cash Flow Do if Tenants Can’t Pay the Rent?
Cash is king, as the saying goes. And landlords certainly aren’t immune from money troubles in the uncertain conditions created by the Coronavirus pandemic. If renters anticipate having zero flexibility in their household budgets, at least for a brief period of time, they can suggest that landlords use their apartment security deposit as a stopgap payment towards the monthly rent. Again, landlords should document the missed rent and the application of the security deposit to meet the shortfall.
Cook County also took action to delay property tax bills for homeowners and landlords. The county postponed the property tax payment deadline from August 3, 2020 to October 1, 2020 to buy some time for struggling property owners in the wake of the pandemic.
The State of Illinois also made $150 million in emergency assistance grants available to mortgage holders who’ve fallen behind on payments due to the pandemic. The deadline to apply for grants of $15,000 from the Illinois Housing Development Authority is September 4, 2020. Mortgage holders who are behind on payments can check their eligibility on the IHDA web portal: https://ema.ihda.org