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Landlords Recover Unpaid Rent Through Federal Assistance

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Landlords have been hit hard by the COVID-19 pandemic. Many rely on rental income to take care of their own households. Due to lockdowns, business closures, and other circumstances, tenants may be struggling to pay rent. The Centers for Disease Control and Prevention (CDC) has orders halting evictions in counties where COVID-19 is spreading rapidly. When the mandates expire, many will face eviction. The eviction process is time-consuming and can be expensive. There is also no guarantee that the landlord will recover the unpaid rent.

Fortunately, under the American Rescue Plan Act billions of dollars in rental assistance is available to cover delinquent rent. Landlords can apply for rental assistance or help their tenants apply through State and local programs. Here are a few reasons why landlords may want to take advantage of the relief funds and resources.

Help Your Tenants

Many of the U.S. Treasury Department’s Emergency Rental Assistance programs require landlords to apply for assistance first. Other programs accept applications from tenants. For all programs the landlord will usually have to provide information to help complete the process. Some of the information that landlords may need to provide includes account information so they can make direct payments into your account, copies of the lease, and other documentation.

Up to 18 Months of Rent Coverage

If the application is approved, landlords can receive a direct payment to cover up to 18 months of rent for tenants. Both large corporations and individual landlords can receive federal rental assistance money if their tenants qualify. To be eligible, at least one member of the tenant’s household must:

  • Qualify for unemployment, have lost income, owe large expenses, or have financial hardships.
  • Have household income below a certain amount, based on where they reside.
  • Be experiencing housing instability, which means they are at risk of becoming homeless or would have trouble finding a stable place to live.

Where to Apply

Emergency rental assistance programs are set up across the United States with procedures to meet the needs of their local community. To find a local program, visit the Consumer Financial Protection Bureau’s resource page, call 2-1-1 or contact your local housing authority for assistance. Housing counselors are also available to help anyone apply for assistance.

Get the Word Out

Your tenants may not know that federal rental assistance programs can help cover more than rent. Funds may cover rent, utilities, and home energy costs. They may also cover:

  • Reasonable late fees not included in rental or utility debt;
  • Internet service to the home;
  • Moving expenses and other rental-related fees (e.g., security deposits, application fees, or screening fees) for families who have to move.

Other landlords and property managers in your network may not be aware that relief is available. Share the information with others so assistance can be obtained.

Other Options

During this stressful and unpredictable time, maintaining open communication with tenants is important. As mentioned before, the eviction process can be an expensive and lengthy process. In an effort to maintain a rental relationship it may be a good time to speak to delinquent tenants about repayment plans or other options. Some of these options may include:

  • Repayment Plan. The tenant repays back rent over a set period of time (e.g., 6 to 12 months). A portion of the arrears is added to the month’s rent payment. This saves the tenant from coming up with a lump sum at once and allows time to bring their payments current.
  • Due Date Adjustment. Due dates for rent are adjusted to coincide with the tenant’s payday or rent due dates, split into multiple payments over the month. For example, instead of collecting the total rent at the beginning of the month, changing the due dates can allow the tenant to make weekly, bi-weekly, or bi-monthly payments.
  • Waiving Late Fee. Late fees and interest are forgiven if payment is made. If the tenant makes payments in good faith, the landlord may consider dismissing usual penalties for delinquency.
  • Temporary Rent Adjustment. Smaller rent payments are accepted for a few months on the condition that the amount is paid monthly.

Any agreement should be put in writing. The details should be clear and should include the amount owed, any late fees or additional charges, applicable dates, and should be signed by the landlord and tenant(s).

Help for Property Owners Having Trouble

Property owners experiencing trouble making monthly payments due to the pandemic may be eligible for forbearance. Through forbearance you can temporarily pause or reduce monthly mortgage payments. This can be a huge help in relieving the financial strain you may be experiencing today. Currently, due to the pandemic crisis, getting forbearance may not affect your credit. Contact your lender or loan servicer to discuss options available due to Coronavirus.

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About Business Consumer Alliance Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.