What to Do When You Can't Pay the Rent

Millions of tenants, out of work and financially strapped due to the coronavirus pandemic, have enjoyed a temporary reprieve from homelessness as a result of States, cities and the federal government implementing measures – typically called “eviction moratoriums” – in an effort to avoid a massive flood of evictions due to Covid-19 related unemployment and loss of income from which to pay rent.

Eviction moratoriums, however, were neither designed nor intended to create rent holidays, rent moratoriums, rent abatement or rent forgiveness programs. Rent payments continued to be due and owing as scheduled. The moratoriums were primarily designed to give tenants time to re-establish their incomes, either by returning to work or by giving them to to apply for and receive of State and federal unemployment benefits, thereby enabling them to resume paying rent.

One by one housing courts and landlord-tenant courts, closed due to Covid-19 infection concerns, are reopening. At the same time State, city and federal eviction moratoriums are coming to an end, as outlined by Eviction Lab’s national database of eviction data – including moratorium data. All of which raises the question of whether, during the time of the moratorium, you did any of the following?

Apply for and receive state unemployment benefits, which you then used to pay all or most of your rent; or,
Apply for federal job loss benefits, which you then used to pay all or most of your rent; or,
Apply for rent payment assistance, either governmental, charitable or familial – communicating the status, and hopefully the success of your efforts, to your landlord; or
Keep your landlord apprised of your circumstances and your efforts to make things right with the landlord; or
Negotiate a payment plan, setting forth how you intended to catch up on overdue or accrued rent; or
Negotiate a lease termination agreement.

If you haven’t, meaning you sat back and didn’t pay any rent despite collecting unemployment benefits, then the good times of living “rent free” will soon be coming to an end. Why? Because, at the very least, landlords want to know whether, during the time of the eviction moratorium, you have been acting in good faith in your relationship. Your landlord-tenant relationship.

It’s no guarantee, since all landlords are not alike, but based on my forty years of litigation experience, I’ve learned that “good faith” can go a long way towards making difficult circumstances – such as not paying a landlord his due – just a little bit easier. That is, so long as you did the best “someone in your shoes” could do.

Negotiating Rent Payments When You Can’t Pay the Rent in Full

Based on my experience in Landlord-Tenant Court most landlords are not forgiving when it comes to unpaid or late rent. They want their money and they want it when it’s due. End of story.

Some landlords may be cordial or well mannered, but it’s a mistake to confuse “friendly” with “charitable”. Eventually, no matter how kindly you are, you will be told some version of “It’s not personal. It’s just business”, as in “I (the landlord) also have bills that must be paid or there will be consequences for me, too!”

However, times are a bit different.

Not that it will matter in your situation, because some landlords may be shortsighted, but when it comes to discussing possible solutions to late rent payments – solutions other than eviction – keep in mind that Covid-19 may be changing the landlord-tenant landscape. Eviction moratoriums may only be the first chapter in that changing landscape.

The next chapters in the business of renting properties will likely include:

A shift in rental markets, from cities to suburbs, as people seek to escape the close quarters of city living and either rent in the ‘burbs or move to home ownership. Where there once was excess demand for rentals, driving up rents, there is likely to now be a swing in the opposite direction: more supply than demand, as people escape from infectious close quarter living.
A further shift in rental markets as workers, who once saw “living in the city” as a luxury (pricey rents) with benefits (avoiding commuting related expenses). A shift in business operations due to Covid-19, from office work (commuting) to telecommuting and working remotely, is taking place. As business experience during the pandemic proves the viability of the remote work model, the success of the model is likely to lead to a further reduction in demand for city rentals or “near city” rentals by those who chose renting in the city over the daily cost of commuting to the city.
A wave of personal bankruptcies and a return to multi-generational living, especially as the transmission of Covid-19 comes under control.
A willingness by landlords, with eyes on the current crisis, to accept as “qualified tenants”, those who blamelessly (in varying degrees) defaulted on paying rent due to job loss during the pandemic.

A landlord with an eye on the market will likely have this in mind when making decisions about tenants who are late or behind with rent payments.

In this context, a negotiated settlement with a tenant may prove a better outcome than an evicted tenant, a bill for attorney’s fees and court costs, an empty rental unit, and a likely uncollectible judgment for unpaid rent.

So, all is not necessarily lost if your landlord is circumspect. Negotiations may be possible, where they once were not.

The “Good Faith” or “Bona Fide Effort” to Pay Rent

So, I return to the question “Have you been acting in good faith”, because it’s likely that will play a crucial role in whether your landlord “pulls the trigger” and promptly files to evict you or remains open to a less severe approach.

In rare circumstances, landlords with long-standing tenants who have consistently proven their “good faith”, will be a bit more forgiving. This includes tenants who, in the past, may have come up short with their rent money but promptly made good, by borrowing money from friends or family or by other means. In such cases, an unexpected job loss or illness, followed by a tenant’s immediate application for unemployment benefits or disability benefits, with the promise to make payment as the first benefit check is received, will satisfy some landlords.

Call this the “bona fide effort by a tenant” to be a good tenant and a good citizen. In my experience as a lawyer, in a variety of situations, acting in good faith goes a long way in avoiding a hardship or a harsh response.

In the context of late rent payments a “good faith effort” would or may have included:

Promptly notifying your landlord of a job loss due to Covid-19
Confirming with your landlord that you have applied for unemployment benefits
Keeping your landlord apprised of the status of your application
Promptly notifying the landlord of your receipt of unemployment funds, possibly including the amount of the first payment. (A landlord would likely appreciate knowing that he/she is being treated fairly in the initial allocation of funds
Routine payments as funds arrive, proportionate to overall living expenses
Evidence of attempts to make up any shortfall, including offers to perform work in or about the rental property as an offset for the shortfall

Keep in mind that the law may not require you to make any of the above disclosures and, in fact, it may be unlawful for a landlord to inquire or require you to make such disclosures as a condition of negotiating an agreement to avoid an eviction. However, that’s not the same as saying it would be against your personal interest to be forthcoming by offering your landlord “reasonable assurances” that you are doing everything you can to uphold your end of the bargain, that is, the lease agreement. Bona fide – good faith – efforts can sway people who themselves labor to always act in good faith.

Resourceful Funding of Overdue Rent or Scrounging for the Rent Money

Asking a landlord to further extend you the right to occupy their rental without paying some or all of your back rent is a bit like asking the landlord to act as your bank or your lender.

Consider this: If you, the tenant, cannot find anyone to advance you money to pay the rent – such as family members, friends or employers – that suggests that you’re a bad risk when it comes to loaning you money. In the landlord’s mind, the question becomes “If no one else will loan you money why should I?”

So, the first question is have you exhausted all possibilities of a personal bail-out, from family or friends or from an employer as an advance on wages (if you were recently re-employed)? Maybe mom, dad, a sibling or aunt would rather pitch in financially than having you pitch a tent in the backyard or couch-surf in the basement. If you can get some assistance from family or friends, preferably in the form of a check payable to your landlord, you should seize the opportunity. The fact that your family or friends are willing to assist you will likely be taken as a sign of your good character and honest effort.

Secondly, if you have anything of value you might consider resorting to the “family and friends pawn shop’ – instead of an actual pawn shop that will charge absurd interest and fees. Sometimes handing over something of value “as security” for your promise to pay back whatever sum they loaned you may be just enough of a “good faith effort” to convince a friend or family member to make you a loan. This assumes that you would rather hold onto an item than outright sell it.

Seeking Charitable “Rent Assistance”

If you cannot secure a personal bailout from family, friends or an employer then the next avenue to pursue is “rental assistance”, which may come from any number of organizations. Unfortunately, due to Covid-19 charitable organizations are also underfunded and greatly burdened by the number of people who now (or soon) will be seeking their assistance.

When it comes to “rental assistance” or “charitable assistance” you should be aware that many agencies that offer rent assistance only do so on an emergency – not long term – basis. They may offer assistance paying one month’s rent or providing funding for a security deposit, but no more. (Ask on the phone or check their website.)

Resources for locating agencies that may offer rent assistance include the following:

Other Solutions to Avoid an Eviction

Subletting Your Rental

If you are unable to cover your rent and carrying costs your options may be limited by the terms of your lease. Keep in mind, however, that the goal of a landlord is to collect rents, so – contract language to the contrary – there may be a work-around.

If you are going to consider subletting your unit you need to first read your lease (or check with a lawyer) to determine if there are specific restrictions or limitations to subletting your unit or if such limitations are prohibited by local law.

Barring local laws or ordinances that govern the subletting of tenancies your ability to sublet will hinge on the terms of your lease, your landlord’s willing to cooperate, and lastly finding a sub-tenant who can financially qualify to pay the rent and pass a background check, if required. (If you were subject to a background check you should expect no less for your sub-tenant / sub-lessee.0

The possibility of a sub-let, however, begs the question. It assumes that a landlord will allow a tenant in default to do anything – other than move out and be subject to a judgment for unpaid rent. However, what you may accomplish by opening a dialogue about subletting is paving the way to “mitigate damages”, i.e., minimize any claim for future unpaid rent, especially if you can prove that you brought to the landlord a person or parties willing and qualified to step into your shoes as a rent paying tenant.

Keep in mind that if you can find someone interested in subletting your unit it may be simpler – or wiser, if possible – to offer to enter into an agreement with the landlord to vacate the unit early and without the necessity of an eviction order, and instead have the interested party simply sign a lease for your uni upon your immediate departure.

Negotiating a “Rent Settlement” with your Landlord

The first step in negotiating a rent settlement or “payment plan” for catching up on rent arrearages is to talk with your landlord.

Here’s a simple form that you might adapt for use in opening up a dialogue with your landlord about rent payment difficulties. (Form provided by Jacksonville, FL Area Legal Aid, St. John’s County and Clay County Legal Aid)

When it comes to negotiating a rent settlement there are economics that may favor the tenant, which circumstances rarely should or need to be argued to the landlord or put in his or her face. Caveat: Don’t act like you are smarter than your landlord or know something she doesn’t already know.

The “economics of settlements” include:

Saving the cost of hiring a lawyer to appear in housing court (not all landlords hire lawyers; some courts require a lawyer to appear – as in the case where the landlord is actually a corporation)
Saving court costs, which include filing fees and sheriff’s fees
Avoiding additional lost rent during the time following an eviction
Avoiding rehab or repair costs, once the tenant is evicted, if the landlord – by being accommodating – can secure the cooperation of the tenant in cleaning up and removing furniture and trash
Avoiding advertising costs to find a new tenant

Some landlords will consider such costs marginal, that is, nothing that deserves to be considered when choosing to evict or work with a tenant. Others may take a more considered approach, so tread lightly when raising such considerations when attempting to negotiate around your late rent. In the right circumstances your “cooperation” in leaving ASAP may be worth 10-20% of the potential accrued or accumulated “rent debt”.

If you can reach an agreement with your landlord addressing overdue rent be certain to put the agreement in writing and have it signed by both parties – you and the landlord. In simplest form the agreement should make reference to the original lease or rental agreement and confirm that the only change to the lease is whatever the arrangement is for making up the overdue rent. In other words, the original lease remains valid in all its original terms – including the obligation to make payment according to whatever schedule and amount is set forth in the agreement or “amendment”. The amendment would only cover any amount that is currently overdue. It may provide for installment payments to make up the overdue balance , setting forth the amount of each installment and the time by which the overdue balance must be paid in full.

It is likely that a landlord who operates several or more rental units for a period of years will already have a form of agreement that applies to tenants who fall behind on their rent. If so, ask for a copy to read at least a day before you sign it, so you will have time to consult with others about its terms and to think carefully.

When You’re Behind on Rent and Can’t to Negotiate A Way Out of a Lease

When all else fails and eviction becomes inevitable the only sensible path to follow is to participate in the process, if for no other reason than to preserve whatever self-interest the process will allow you to preserve – including the possibility of extending your stay based on the failure of the landlord or his representative to follow proper procedures.

Just how to effectively participate, without the assistance of legal counsel (if you don’t qualify for free legal assistance and which assistance is not granted as a “matter of right” in most housing courts) is discussed elsewhere on Lawsuit.org.

Although it may be frightening to face the prospect of a landlord who threatens to “collect all the arrears” it’s pointless to worry since the landlord’s bluster must be matched by his legal ability to collect, based on a court order “judgment” and that outcome generally is not part of the eviction process itself. An eviction is not the same as a judgment for unpaid rent or money damages. A judgment for possession – the standard outcome of a court hearing on a “Complaint for Eviction” – simply authorizes the landlord, typically through the actions of a sheriff or other legal agent, to re-claim the rental unit.

Even if matters go so far as a landlord suing your for back rent and getting a judgment there still are laws and actions you can take that will make the process bearable, since “debt collection” is a process that is well regulated and offers judgment debtors a multitude of protections – from limiting the amount of money or assets that a judgment creditor (your ex-landlord) can collect at any point in time. Your options also include filing for bankruptcy, perhaps as a last resort, and even a bankruptcy will not be the “end of the world” for you or others in your shoes – if for no other reason than, sadly and unfortunately, so many may have to resort to the process – making it less of black mark and more of a “sign of the times”.

Collection of back rent, by judgment and debt collection, is also a topic that is further discussed on Lawsuit.org.