September 22, 2020 Chicago Landlord Advice & News

Can't Pay Rent During Coronavirus? Help for Landlords During COVID

During the spring of 2020, as Illinois residents hunkered down to try to slow the spread of the COVID-19 pandemic, furlough notices and job losses started to lead to late or missing rent payments.  Initially, Mayor Lightfoot asked property owners to “give tenants some grace, whenever possible during these trying times.”  Renters and landlords alike looked for government subsidies and to work out deals to defer or forgive rent obligations.  Currently, landlords have few choices when renters cannot pay the rent, and eviction is not among them: a statewide eviction moratorium, recently extended through May 2021, as well as the CDC's September 4, 2020 sweeping temporary eviction ban, which halts evictions for certain qualifying renters. This federal eviction moratorium will be in place until June 30, 2021 and is designed to prevent landlords from pursuing the eviction process.  Neither the state nor federal eviction moratorium forgive a renter's obligation to pay the rent.

Landlords, Consider Your Options for Tenants not Paying Rent During Coronavirus 

What can landlords during Coronavirus do if renters can't pay rent? Most landlords would probably prefer keeping a good tenant rather than evict them because they can’t pay the rent due to consequences of a worldwide pandemic. But even for those landlords interested in pursuing eviction, it’s not a viable option in the short term because Governor J.B. Pritzker’s extended stay-at-home order also included the Illinois eviction moratorium; this order was officially extended to run through early May of 2021. 

Here are a few ideas for landlords during Coronavirus who face the challenging situation of renters who ask to delay or skip rent payments due to the Coronavirus pandemic.

Can Renters Who Can't Pay Rent During Coronavirus Get Relief From Government or Nonprofit Agencies?

An abbreviated session of Illinois’ general assembly held over the Memorial Day weekend in 2020 resulted in added financial assistance for Illinois homeowners and renters. Nearly $400 million in financing was made available from the Illinois State CURE Fund. Finances were distributed by the Illinois Housing Development Authority. Landlords can encourage renters to apply for rent relief from nonprofit and government agencies. The Chicago Community Trust and United Way’s Chicago Community COVID-19 Response Fund is offering rent support. Renters could also apply to the Rental Assistance Program through the City of Chicago, which provides Coronavirus relief to renters facing immediate risk of homelessness due to a temporary economic crisis beyond the renter’s control and who are likely to be able to meet the lease obligations based on anticipated income. Catholic Charities and other nonprofits have established rent relief programs, too. 

Should Landlords Accept Pre-payment or Partial Rent During COVID?

Landlords can provide temporary COVID-19 relief to tenants who can't pay rent during Coronavirus if cash flow allows. Is there any COVID-19 relief for landlords? Landlords can take some solace in Cook County’s decision to waive late fees on property tax bills. The Cook County Board of Commissioners effectively extended the deadline for payment on the second installment 2019 property tax bill to October 1 from the original due date of August 3. 

Landlords might simply forgo collection of next month’s rent. Landlords who lose rental income can contest the Cook County Assessor’s next property tax bill on the basis of the depreciated rental income, but keep in mind that Cook County Assessor Fritz Kaegi announced that his office will be reassessing properties across the county as markets and property values have been substantially impacted by the Coronavirus pandemic.

Or perhaps you can't afford to lose the upcoming rent payment, but would like to defer collecting it until the tenant's employment resumes or unemployment benefits kick in. In that case, ask the tenant to sign a lease amendment that agrees to defer collection of the next month's rent and obligates the tenant to pay it in equal parts in October, November, and December. (For example, if the monthly rent is $1500, the tenant would pay zero rent in August, but would agree to pay $2000 in each of October, November, and December).  Lastly, if you collected a security deposit, you might consider refunding it in its entirety to the tenant with the understanding that she would use those funds to pay the rent. Similarly, if the lease required a prepayment of the last month’s rent, consider offering the tenant a lease amendment that applies that pre-payment of rent to the October rent. Landlords have many options to support tenants during this unexpected period of economic duress.  But be sure to consult an attorney and document any rent relief effort with a lease amendment signed by both landlord and tenant.

Is There Any Help for Landlords during Coronavirus?

Landlords, if you support your tenants by discounting, delaying, or forgiving rent, you are likely eligible for relief for landlords during Coronavirus from public-private partnerships like the new Chicago Small Business Resiliency Loan Fund, a new fund created to help small businesses and neighborhood entrepreneurs survive the dire Coronavirus economic fallout. Landlords who offer rent abatements or other financial benefits to their tenants can apply for low-interest loans to ease the burden. Landlords may also find it worthwhile to apply for disaster relief funds from the federal Small Business Administration.

Landlords who have tenants not paying rent during Coronavirus could also try to collect from their commercial general liability carriers instead, as policies typically include some coverage for business interruption. Perhaps a cluster of tenants in your building transmitted the virus to one another through the building’s gym, shared cooking facility, or other common space, and then lost their income due to extended sick leave. Or perhaps a few tenants are concurrently unable to pay the rent because of job losses caused by the epidemic. The insurance policy’s epidemic coverage might be too limited to respond to the current crisis, but it is probably worth an email to your broker or carrier to discuss the costs and benefits of filing a claim. 

Chicago tenants and landlords will find their way through this difficult time. As all Chicagoans practice social distancing and do their part to stop the spread of Coronavirus in Illinois, Domu wishes for robust health for all of us. 

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.