There are a lot of things to think about as a landlord or property manager during what arguably is one of the most challenging times we've seen, or will ever see, in Massachusetts. The outbreak of the novel coronavirus COVID-19 has already presented serious adversity as it relates to managing your investment property. In this post, we’ve attempted to answer some increasingly common questions.
So far, the biggest challenges being faced are due to the Social Distancing policy we've reasonably been asked to adhere to by state and local authorities. Property management is a hands-on business, especially when you take property showings to prospective renters, maintenance, and move-in / move-outs into account - all of which require face-to-face contact.
Secondly, landlords and property managers alike have either already, or likely will face, issues with delayed or non-existent rent payments come April 1st.
It's a best practice to consult with your attorney, or physician before implementing your policies. Below is an outline of the policies that many professional management firms have implemented nationwide, particularly in hard-hit areas like Massachusetts.
How do I handle maintenance requests?
Maintenance requests fall into one of two categories – urgent, or non-urgent. Best practice during this time is to place all non-urgent maintenance requests on hold until further notice, or at the very least until April 17th.
Regardless, there is still an obligation to respond to urgent issues. An urgent maintenance request is generally defined as a ticket created in response to a problem that creates an immediate threat to life or property. This includes fire or electrical hazards, plumbing issues that can result in a lack of hot water or water damage, lack of heat, lead paint remediation, etc. This list is not exhaustive, and each maintenance issue should be taken on a case-by-case basis.
Furthermore, for urgent maintenance requests, it is best to ask if anyone living in the apartment is symptomatic or has been either mandated or voluntarily quarantined and/or have traveled outside the U.S. or Massachusetts in the last 14 days. If the answer is yes to any of these questions, one should consult the local board of health for guidance on how best to move forward.
How do we advertise and show an apartment?
Generally, showings are done in person. The door needs to be unlocked, lights turned on, questions answered, and an application may need to be provided if not online.
If the apartment is occupied by a current tenant, it's best to postpone the showing until at least April 17 or further. Medical experts and attorneys in the industry have advised there is simply too much risk to a tenant and prospective tenant to continue with showings as has been done historically.
Vacant apartments also present challenges, although technology and trends in professional management have mitigated the impact of COVID-19 in this case. Many firms are now offering self-showings to prospective tenants. These prospects are required to provide identification and often receive a unique lock-code so that they may view the apartment on their own time, and still adhere to social distancing. A small percentage of owners are uncomfortable with this scenario, but it's an increasingly common tactic in the industry, even before C19, because it helps get units rented quickly, to well-qualified tenants due to the ability to be nimble, responsive and continue with scheduled showings.
What should we expect for rent collection?
Many experts believe that financial hardship will disproportionately impact people who fall into low, or middle-income brackets, many of whom rent; your bartender, server, hairdresser, grocer, bank teller, your child's teacher, etc. This is a tough subject.
Each owner or Landlord has a different tolerance for delayed or waived rent. Many of our clients own multiple properties which allow them to absorb a small percentage when missing a rent payment. However many, if not most, Landlords rely on their tenants' rent payments to make their mortgage, healthcare, college tuition for their children, retirement income, etc. – waiving rent is simply not an option and allowing delayed rent payments can create significant financial hardship in their own right. Clearly a quandary for which there aren't a lot of viable solutions.
Several steps can be taken to help create an acceptable situation for both parties.
First, tenants should be asked to prove their financial hardship – notice of a layoff, proof their income is from a temporarily closed bar or restaurant, etc.
Second, there are options outside of "free" or delayed rent, that both parties can find acceptable - Tenants can be allowed to pay by credit card, with the owner absorbing the fee. A payment plan can be instituted (work with an attorney or your property manager). There are also churches, SBA loans, housing agencies such as Residential Assistance to Families in Transition (RAFT), friends, etc. These are short term, and this author is hopeful, that the pandemic does not cause long-term financial implications.
Rather than serve a 14-Day Notice to Pay or Quit it is recommended to be as flexible as one can at this time and negotiate rent amount due, time to pay or both – IF financial hardship is evident.
For Landlords or managers that don't have the desire or ability to provide any flexibility, be prepared to wait until at least April 17th before the Massachusetts Housing court begins hearing eviction cases for non-payment of rent, (expect a back-log), and tenant-friendly judiciary at that point.
A side note: for those that are unaware, or have historically not been interested in Section 8 or other subsidized housing programs (even though it's illegal in Massachusetts to decline an applicant solely based on the source or their rent payments), now is when you see some of the benefits – for tenant and landlord alike. Subsidized payments almost always come in on-time, every month.
What about evictions for other reasons?
Unfortunately, lease violations occur in the absence of failing to pay rent – though the two are not mutually exclusive. Non-smoking violations, illegal activity, tenant created safety hazards (i.e. removing all the smoke detectors etc.) are included in this category. It is recommended that lease violation letters and Notices Terminating Tenancy continue as they did before. It is worth noting, however, that even if the Notice is issued in March, the expiration with the court doesn't occur until April 30th, so there is no sense in delaying.
By consulting with an attorney either directly or through your property manager, one is also able to enter into a less formal behavioral agreement in the interim. Again, speak with a professional.
As mentioned, this list is not exhaustive, and the situation is changing on a day-to-day, and even hour-by-hour basis. It's important to know the facts and to work with a professional whatever the case may be. While COVID-19 is new to the property management and legal industry – adversity, financial or otherwise is not. This author, and those that work for him, are prepared to help in any way we can.
