1st rental reduction requests - how to react?

Question

This morning I got email from a tenant that requesting a rent reduction due to the shelter-in-place order:

Wanted to hear your thoughts on how to react?

Greg M. · Answer

There is no right or wrong way with this one. Your tenant has a legitimate issue that they are paying for services they are not receiving. However, you can and would be providing these services if it were not for a short-term legal restriction.

I would likely not provide the rent reduction as I didn't cause the inability to use the amenities. I'd probably respond with a "we're all in this together" letter... I understand your frustration with not being able to use the amenities. It's by law and outside our control. It's for your benefit so you have a safe place to live. FYI, even though these amenities aren't being used, we're still paying for the loans on them, the insurance, and the maintenance. Therefore, we're unable to discount rent. Please be assured they will be available for use once we are legally able to.

For future leases, consider adding wording that amenities are not guaranteed. This works even better if it is part of an HOA and outside your control. I use: Tenant acknowledges common area amenities such as pool, patio, lawn, and entertainment space outside the unit are maintained by the HOA and are outside the control of landlord and as such, landlord cannot guarantee their continued availability.

Charles Enman · Answer

Mr. Tenant-

Thank you for your email regarding services at Insert address here.

We are faced with a new reality as a result of the coronavirus epidemic and the response to it dictated by health and governmental authorities.  I certainly share your concerns that our residents cannot access the amenities normally available to them and that we must limit our maintenance and repair efforts to emergency situations.    However, it is incumbent upon us to take steps deemed necessary by our health and governmental leaders for the greater good of the public.  We will continue to support - and encourage all members of our community to support – steps to protect our community from this pandemic.

I understand your wish to pay a reduced rent and, were it a circumstance that was under our control, I would likely agree.  However, this event is beyond our control.  We, like you, will share the burden of this time.  The dictates of social distancing deny us all the benefits of activities that include components of congregating with our friends and neighbors.  But the fact that I cannot visit and enjoy my local public park or public beach will not result in a reduction in my property taxes.  Likewise, we are not able to reduce rents because some amenities and services are limited during this exceptional event.

I regret your temporary inconvenience.  I sincerely hope that this exceptional time will pass quickly and that we will be back to providing all the amenities and services our residents normally enjoy very soon.

Stay safe.

Very truly yours,

Your Landlord

Evan Polaski · Answer

@Serhii Aksiutin are the amenities even listed in the lease agreement?  I only own single families and duplex, so legitimately don't know if it is standard practice to list things like fitness facilities and pool as part of the lease agreement.

If it is not listed, and simply an implied benefit to his lease, then there is no reason to reduce rent.  He is being provided all promises in his lease.

As for the clogged drain and toilet, again is it landlord's responsibility to plunge the toilet or drain-o his drains, per his lease?  If not, you not only have no obligation to reduce rent for him, but also calling this out states that he is not maintaining the apartment.  Again, I am making an assumption that there is some language in your lease stating that tenants are responsible for common issues and will maintain the premises to a certain standard.

At the end of the day, it all hinges on what your lease says is included and to what level.

Account Closed · Answer

Sounds to me like they are testing the waters. Check your lease for language concerning the amenities, as well as language concerning Acts Of God and how these apply. As far as clogged sinks and toilets, around here it is city ordinance that tenants not clog toilets and sinks! Of course a law isn't going to stop that stuff from happening anyways.

I would tell you what I would do, but I already did it, and most people think I'm nuts for doing it, which is to waive April for all tenants.

I think the decision of what to do depends on how many units you have to manage, what your financial position is, and what your typical tenants financial position is likely to be.

I think they slipped you a fast one by referencing the maintenance. They are actually addressing two separate issues at once in the same written, not verbal, letter. Here in WI, real estate is being deemed an essential service and therefore, landlords can go to units and make repairs. However, that does not align with the national and state efforts to stay in place we are all attempting to adhere to as much as possible does it!!! And so therefore, I would definitely call this person on the phone and inquire what the deal is with their sink and toilet. It may be you have a multi-family and a different tenant has clogged the system causing it to back-up in other units so, I would refrain from jumping to any conclusions over who caused it. Then I would act accordingly, if the building has an issue I would address it immediately and if the issue is isolated to the unit, I would see what the tenant wants to do. Obviously each of you risk infection if you enter and fix the clog.

As far as the rent reduction in amenities? For me that's an easy and hard no off-the-cuff answer. It's an Act Of God, times are tough for everyone. I would let them sue me for it, unless of course my lease language had a course of action and I would then take that!

However, what might be the case is the tenant can see they are going to struggle to pay and are further struggling to communicate that with you. This might be their round-about way of letting you know all is not well with them. You can choose to handle this possibility proactively or take a wait-and-see approach - landlords here have done all of the above. I might just nip it in the bud and tell them no on the amenities and then bring up the issue of full rent still being due right there, along with what you intend to do about it if they come up short. I tend to take the straight-forward approach in all cases, because even though this is a business and we have to play coy occasionally, we are talking about a persons living situation, so it's rude to not be up-front, IMO.

I hope that was helpful. Good luck, be well and welcome to BP.

Todd Powell · Answer

@Serhii Aksiutin cant blame them. In my state they could decide not to pay any rent for 3 months and nothing you could do about it. So, have a heart and work it out, its thats simple!

Carl Millsap · Answer

@Serhii Aksiutin I agree w/ @Evan Polaski is the pool, gym etc. included in the lease as part of the rent?

One of properties has access to a pool, tennis court etc. which we advertise when the property is listed BUT we never guarantee full access to it etc., it's simply a perk for living in the property.

A rent reduction is a slippery slope. We've given tenants reduced rent for one time issues / inconveniences that we caused but it's rare and few and far between.

Bjorn Ahlblad · Answer

The tenant has a point.......my health club has put fees on hold for now. Is the HMO willing to give you a break on fees? You should consider negotiating and have the tenant agree to raise the rent back up when all this blows over.

Nick Loukas · Answer

Personally In this situation I see it from both sides. However, had the tenant provided any documented income reduction from work etc. ? If not I’d keep rent where it is. These facilities are not being used due to government laws for shelter in place to protect them. On the other hand if they can prove financial hardship I’d empathize with them and try to work out a deal.  Personally I’d reduce rent with a lease clause for a specified amount of money until everything resumes back to normal, but add whatever reduction was agreed upon into split payments for the remainder of the lease. I.e. they pay 100 less per month for 4 months then add 400 split evenly over the remaining months of lease. So if 10 months remaining they pay full rent plus an extra 40 dollars a month. If they can’t do that then amend to subtract losses from security deposit if that’s legal in your state. Uncharted waters so not sure what we can and can’t do as landlords but just my opinion.

Matthew Paul · Answer

I would reply with one word ...................NO