The ongoing Covid-19 crisis has created challenges for both landlords and renters pertaining to managing their finances. If you are a landlord, you may be wondering whether you have a legal obligation to waive your tenant’s rent if they express their inability to pay this month or the next citing coronavirus related economic disruption.
To make sure that you are on the right side of the law, you should consult with a knowledgeable Maryland real estate attorney about your specific legal position as a landlord. However, in general, while you are not obligated to waive rent because of the coronavirus pandemic, you will have to follow the new rules on eviction imposed by the state to protect the interests of your tenants.
Find a Balanced Solution
If your tenant does not have a history of delaying rent or violating other terms of the agreement, you should recognize as a landlord that they could be facing a real financial difficulty. Many renters have lost their jobs or their businesses have come to a standstill in the prevailing Covid-19 crisis. In this situation, they need your understanding and cooperation.
It is also understandable that the same economic challenges are present for you as a landlord as well, and you will probably struggle to pay your own bills if your rent collections do not come in. Depending on your situation, you should seek legal advice from a reputable real estate lawyer on what could be the best course of action for you in a situation when you cannot evict tenants for the non-payment of rent.
Your lawyer will consider your circumstances carefully and discuss your best legal options with you. However, they may also point out to you what alternatives you have if you believe that evicting a tenant is the right course of action. In the current market, you may not quickly get a new, well-paying tenant and the gap period until you find a new tenant may more than offset any gains you achieve in this manner.
Deal with Compassion
In the current circumstances, an experienced real estate attorney in Maryland will advise you to treat your tenants well. It may be in your best interests if your existing tenants continue to stay for the long-term. Loyal relationships are formed in a crisis, and this is the time when your tenants need your compassion and support.
Avoiding communication with your tenants in this situation is not a solution. On the contrary, it will only work against you. Reach out proactively to your tenants and keep the lines of communication open as long as the ongoing coronavirus crisis lasts. If your property is managed by professional managers, make sure you speak with the manager regularly and send the right message through them to your tenants.
Update: Current Eviction Policy in Maryland
On 3rd April, Maryland issued a new order that temporarily prohibits landlords of both residential and commercial properties from evicting their tenants who have suffered a significant income loss following the Covid-19 crisis. The order also includes a prohibition of residential mortgage foreclosure as well as repossession of certain types of personal property.
The new temporary policy protects residential as well as commercial tenants against non-payment of rent. Courts will not be able to give a judgment or issue a warrant for the possession or repossession of any commercial, residential or industrial property during the period of state emergency.
However, the condition is that the tenant should be able to demonstrate to the court that they have experienced a “substantial income loss” resulting from coronavirus pandemic or the associated proclamations of a state of emergency.
Individuals can demonstrate substantial income loss by showing reduction in income, job loss, closure of workplace, or missing work because of childcare. For entities, substantial income loss can be shown by way of loss of business, mandatory closure of business or loss of key employees.
The order does not require that tenants should notify their landlord of their substantial income loss before the due date of rent. They only need to show it to a court of law. In any case, the state courts in Maryland are closed for all hearings at present (except emergency cases). Therefore, a legal proceeding for eviction cannot occur until the courts reopen anyway.
Landlords cannot seek eviction by citing “clear and imminent danger” in the event that a tenant or their cohabitant is diagnosed as Covid-19 positive.
No Waiver of Rent Payment Obligations
Notably, the order of the State of Maryland does not waive or excuse any payment obligation, which would presumably include rent, interest, other damages, contractual late fee, and attorney fee. The order has merely suspended judgments on eviction for the duration of the emergency.
The order does not prohibit the landlords from actions such as applying the security deposit to the unpaid rent, or drawing down on a letter of credit, or exercising any other available remedies except eviction. Landlords should speak to a competent real estate attorney in Maryland for their best legal options.
Schedule a Consultation with an Experienced Real Estate Lawyer
The Evans Law represents clients throughout Maryland and Washington D.C. in legal cases involving real estate, construction and land use matters, apart from settlement and brokerage services. Call us today at 410-626-6009 to schedule a consultation with one of our lawyers.