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When Renters Withhold Rent | Washington D.C. Association Management Insight

EJF Real Estate Services - Thursday, May 7, 2020

As the expert in Washington D.C. association management, we know that condominium owners are no less at risk than their single-family counterparts when it comes to the impact of the COVID-19 crisis on their residents. Finances could become stretched thin if your renters haven't had the benefit of working from home these last few weeks.

The Washington D.C. area has long been sheltered and bolstered by an influx of government work. However, during social distancing and shutdowns, paying down expenses has become an entirely new challenge that (in some cases) has led to a loss of income. If your residents are struggling to pay the May rent that was due, you need to be preparing now for how this will impact you as the property owner.

Coronavirus. Man at home wearing protective mask. Working from homeIt's also worth considering that if we're experiencing a struggle of this magnitude now, it could happen any time there's a universal crisis that threatens your ability to generate income from your condo. Whether your renters are struggling to pay their bills legitimately or are withholding rent in protest, we know from our experience managing properties that this ultimately impacts you as the landlord.

Even in a crisis, landlords must continue to operate under the rules of lease agreements between you and your renters to continue providing your residents with a safe home. Without rental income, you cannot cover your overhead for owning and operating a rental property. Here's what property investors can learn from an expert in Washington D.C. association management when your renters are withholding rent.

As a note: This post is not a substitute for proper legal counsel. When in doubt, it's best to reach out to your Washington D.C. property management partner or obtain guidance from a skilled attorney.

Commit to Documentation

Making notes and tracking conversations can be tedious work—but it's critical when you own even a single investment property. From the lease agreement to keeping records about conversations, notices, requests, and other communications, it's crucial to document everything that takes place with a property and renter.

If you're not a note-taker—or if you don't have a documentation system in place—now is the time to start. As your portfolio grows, thorough documentation is an excellent business practice across multiple units and provides a professional touch. Creating long-lasting habits and systems for tracking your documentation will ensure you stick to your new paperwork policies.

The following are a few of the essentials you should already be keeping track of:

  • Lease agreements: These documents are the guide to your policies with every property and every renter. When you face issues with your residents, turn to your lease agreement for guidance about rent amounts, due dates, and assessing penalty fees for late payments. It's worth checking to see if you are legally allowed to collect late fees during a crisis, as such means available to landlords may be suspended.
  • Conversations (or lack thereof): When reaching out to tenants about past-due rent, log every call, text, email, or notice. Ultimately, this is to protect you down the line should you need to pursue a legal outlet.
  • Recommendations and accommodations: Keep a record of how you've offered to work with your renters on solutions for making their payments.

We hope a delay in rent doesn't result in penalties or eviction for your renters, but when you keep track of everything that takes place between you and your residents, you have a documented case for future action.

Be a Compassionate Enforcer

An economic crisis can make landlords feel like the villain when expecting the rent to come in on time. You know your renters might be struggling—but without their rental payments, you'll be in financial difficulty, too. 

As a Washington D.C. association management professional, we know that your approach and tone in any given situation has considerable mileage. Remember that:

  • Your renters must abide by the lease agreement they signed. 
  • The rent is still necessary to continue providing an excellent home.
  • You're not a villain for needing to meet the expenses incurred from ownership.

However, it's important to temper your role as the rule enforcer with a touch of compassion. You have an opportunity to create stronger landlord-renter relationships during a crisis when you choose a kind approach to encouraging your tenants to prioritize their rental payment.

  • Let your residents know you understand their current financial challenges.
  • Soften the language in your payment reminders.
  • Offer to discuss options that work for both of you.

Compassion and flexibility help your renters not only realize that you see them as more than a rent check, but it also humanizes you as the landlord.

Struggling With Bills

Offer Options (Within Reason)

We've learned as a Washington D.C. association management provider that flexibility improves resident satisfaction. However, we know that large-scale adaptability isn't necessarily possible for solo property owners during a financial crisis. That said, there are options available even to a landlord with a single property.

One of the best ways to adapt to a crisis is to help your renters help themselves:

  • Direct your renters to available local, state, or federal organizations and resources that can help with food or essential needs. Help them find resources that offer rental assistance. 
  • Offer a payment plan to residents who need the most help. This should happen on a case-by-case basis and not become a blanket option for all of your residents. However, the options you provide should be equal in scope to prevent discrimination claims down the road.

Make sure your cash flow can handle a reduction in rent for a short time. However, offering some relief now to help your residents pay in full throughout the remainder of the lease can go along way in building goodwill. For many renters, returning to work is just a waiting game at this point

Evict If Necessary After a Crisis

  • If you choose to go this route, you must avoid the appearance of retaliation.
  • Don't evict a tenant during a crisis or against short-term government moratoriums on evictions. 
  • As an expert in the industry, we always recommend you consider this move as a last resort for any property.

If you still can't collect rent from a tenant, despite your efforts and offers to accommodate their situation, it's appropriate to start the eviction process after a crisis ends. Currently, there is a stay on filing for eviction enacted by the D.C. Council. Collect the documentation we mentioned earlier and work with your property manager and legal advisor to proceed safely when you are allowed to do so.

Washington D.C. Property Management Handles Any Crisis

At EJF Real Estate Services, one of our points of pride as a Washington D.C. association management provider is that we have over 25 years of experience providing consistent, excellent service. However, we don't simply manage associations! We know that many landlords right now are feeling pressured by the continued COVID-19 crisis.

This is why we also offer a compassionate approach to single-family and small apartment management. We know that our property owners need rental payments to cover expenses—so we put together our Collecting Rent in a Crisis Handbook just for you. Download your copy for free today, and let's rebuild together.

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