November 18, 2020

Landlords Are Humans Too: A Tenants Inability To Pay Rent

The inability to pay rent has affected landlords with small properties and the entire business of “rentals” in general. This scenario is because the ongoing pandemic has become an avenue to skip rent or apply for forbearance. Yes, tenants are given the leniency to prolong their payments-especially if their jobs have been affected by quarantine.

The main issue would be that tenants are slowly not realizing the gravity of their missed payments. Landlords are also struggling to make ends meet. Let’s try to keep in mind that landlords have invested hard-earned money to access and utilize rentals for their benefit. If we continue to ask for relief, you may still have a roof over your head, but your landlord wouldn’t.

Here are some of the issues concerning tenants’ inability to pay their rent.

Look at Leases


You should have a thorough discussion with your landlords on payment schemes and agreements concerning the relief you are given. This may also include the forbearance agreement that you come up with as well. Make sure to come up with a solution that caters to both parties. The majority of leases contain a “force majeure” clause excusing the parties’ performance due to events such as strikes, government directives, and we all didn’t see this coming, pandemics. 

The thing about “force majeure” clauses is that they do not cover instances brought to us by COVID 19. Admittedly the limitations are acts of god that we are familiar with like hurricanes, thunderstorms, even fires of natural or man-made causes. With that being said, the lease given to tenants is provided such a vague statement that can be used against the landlords. Contracts and verbal agreements were drafted for both parties to avoid losses. Some tenants take advantage of their landlords. Thus they must always remember that they are humans too.

The force majeure clause is not the only relevant provision to consider. Some or most leases may contain co-tenancy clauses that dictate the tenant’s performance of its lease obligations in line with a separate tenant’s continued operation wherever they may be. Leases may also impose obligations and responsibility upon the property owner regarding the leased property’s ongoing process that may come into play if neighboring or collective property is shattered and affected. The potential presence of these clauses and highlights are disclosed and agreed upon by both parties before closing the agreement.

The Landlord’s Point Of View


As discussed in the previous paragraph, when considering a tenant’s request for rent relief or forbearance, a landlord also needs to assess its financial obligations and cash reserves. It’s because processing or agreeing to relief or forbearance may be mandated by the law or would deem necessary given the situation. Still, landlords utilize rentals as their primary source of income. They may have to review and assess the situation before agreeing to the terms needed for repayment.

Some landlords can quickly agree to such relief because they have other outlets and income sources. Other landlords do not have the leniency to do so since they may be depending on the property you are currently renting. Should you wish to consult your landlord on the processing of relief or forbearance, it may be useful to consider both employment status to ensure that the agreed-upon terms suit both the tenant and landlord.

Landlords will need to have a frank and open discussion with their lenders and tenants regarding forbearance potential. Again, this isn’t a wrong decision wherein whatever is dictated by one party will be the ending statement and agreement. The responses to these requests will vary with the lender or tenant; however, each landlord should approach forbearance discussions with transparency and a plan for resuming payments that would also be feasible for the individual who pays. 

Negotiation May Be The Solution


Like any other relationship out there, the best solution to resolve or agree is communication. If the landlord and tenant can agree to assist the tenant in making the payment, ensure that the landlord won’t suffer bankruptcy and survive through the pandemic in peace.

The main issue is that individuals can take advantage of one party without thinking of the repercussions. We are all trying to survive and make it through the ongoing pandemic with as much ease as possible. The act of taking advantage of someone won’t do us any good.

The key to good negotiation is making sure that both parties benefit from the exchange. The transparency in the discussion wherein no one is at a loss and that both parties can make ends meet. This is a true testament to what we can achieve if we work together. Landlords aren’t the wealthiest people. Some landlords are also struggling to survive and make it through and succeed in the industry. Taking advantage of them won’t do us any good. A healthy exchange of unified understanding will surely get us a long way.

To conclude the ideas shared in this blog, we want you, as real estate investors, to understand that an investment in the real estate industry is not easy. Landlords have the same motivation and drive to succeed through a continuous cash flow that rentals provide. They aren’t within the context of buying and selling properties, yet, we all have one thing in common. That is to generate a hefty income through the business of our choosing.

We want to leave you with this context. Landlords are humans too. Let’s treat them like one.

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Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.