Best Practices for Landlords During COVID-19
Updated: Jul 2, 2020
by Monique Lum, CPA, MRED
Evergreen Capital
COMMUNICATION WITH TENANTS
Clear communication during COVID-19 should be a primary focus for landlords. As tenants are instructed to stay home by the state and local government, peace of mind and clear communication can set your community at ease.
Those living in small spaces that share walkways, elevators and stairwells are feeling additional stress from the density of the living environment. Signage with clear instructions on elevator capacity is helpful. Keeping your tenants informed of local park and business amenities open in your neighborhood provides meaningful resources.
For example, One Jefferson Parkway located in Mountain Park (Lake Oswego, Oregon) has engaged the local food cart community by programming a different food cart each day of the week during lunch time. This allows residents to follow the stay at home orders while enjoying different food options. It’s important to be factual and transparent when sharing information with employees, residents and suppliers. In emergency situations, employees will look to you for guidance and residents will feel more comfortable knowing you are prepared.
RESIDENT INFECTION
If a resident tests positive for the coronavirus and notifies the property owner or manager, the owner or manager should follow the CDC’s guidance and work with local health officials. A notice to the community should go out should a resident or employee have a confirmed case. If emergency personnel takes a resident away in a stretcher and information is not known regarding COVID-19, it is always good to check in with your community and let them know you will provide any information as soon as it is available. By keeping residents in the loop, they may have the option to take extra precautions.
A tenant or employee’s identity should not be disclosed. A tenant was taken out by stretcher in my apartment complex in early May. This caused some anxiety for tenants within the building. No communication was distributed. A simple awareness e-mail stating that management is aware of the incident as well as any suggested precautionary measures should have been communicated.
RESIDENT EVENTS
Recent federal and state/local recommendations limit group gatherings. Management is encouraged to find alternative ways to engage residents through social media to keep the community connected.
AMENITY SPACE
Many owners have closed all amenity spaces. This compensates for the additional time needed to perform sanitization and other preventive measures focusing primarily on access points and common areas.
Keep in mind, many tenants may feel constricted with business centers, work out facilities, and common areas closed. Reducing hours, and limiting number of users in a space may be a better option to accommodate your residents. It may be unbearable for some tenants to be confined to their individual unit and many residents will consider the amenity space as an area they are paying for. Consider reducing rent for tenants that have paid full rent for lack of use of these common areas should these areas be completely shut down.
LEASING OFFICE
Notify residents to avoid physically visiting the office if possible, as this is a preventive measure that will help both residents and the onsite staff to stem the spread. Encourage visitors by appointment only. Encourage residents to speak over the phone or via email when possible. Encourage all residents to utilize their community website, resident portal and email for all service requests, rent payments and general questions, where applicable.
COLLECTING RENT
Some residents have been or will be financially impacted by COVID-19. Communicate your policy on working with residents on alternate payment schedules. Provide tenants with resource information on how to apply for unemployment or rent assistance. Making your tenants aware that there will be repayment schedules in the future may motivate them to seek out the assistance that exists should they need it. During the Moratorium landlords are required to accept partial payments. Once the statewide moratorium is lifted (end of June 2020), landlords will be able to issue notices that only allow a short time for tenants to pay what is owed. Multnomah County (Oregon) has issued Executive Order 388 stating that Landlords must give tenants 6 months to repay outstanding rent after the Moratorium has ended.
EVICTIONS
As of April 1, 2020 the statewide eviction moratorium (Executive Orders 20-11 and 20-13) ordered by Oregon Governor Kate Brown prohibits 72-hour Non-payment and No Cause terminations and evictions through the end of June 2020. Tenants will still owe rent, utilities, and other costs and fees.
The statewide moratorium prohibits landlords from issuing termination notices to tenants or filing for evictions in court for non-payment of rent, utilities, costs and fees.
Prohibits landlords from issuing tenants termination notices for no cause or filing for evictions in court for no cause.
Waives any late fees that landlords may want to charge tenants for non-payment during this time.
Sheriffs are not allowed to remove people from their homes, if the eviction was based on nonpayment of rent or a termination without cause until at least June 20, 2020. Landlords are still able to issue termination notices and file for evictions in court for other types of evictions.
What tenants must do:
Tenants must notify their landlord of their inability to pay rent as soon as possible.
If tenants are “financially able” to make either a full or a partial payment to their landlords, they must.
The statewide eviction moratorium does not stop landlords from issuing For Cause termination notices, other than 72-hour Non-payment. It does not stop landlords from filing an eviction case in court for For Cause terminations or prevent sheriffs from forcing tenants out of their homes at the end of the eviction process for cases other than Non-payment and No Cause evictions.
PACKAGE ACCEPTANCE
Follow the guidance of the local public health agency concerning package deliveries. If you currently allow delivery of packages in the leasing office, consider referring deliveries directly to the package recipients address. Packages should be left outside the apartment door to avoid contact with any self-quarantining resident.
CLEANING PROTOCOL
A strong focus by staff should be placed on sanitizing work areas, public areas and commonly touched places (door handles, elevator buttons, etc.) and placing hand sanitizers in common areas. The U.S. Environmental Protection Agency (EPA) released a list of EPA-registered disinfectant products that are qualified for use against this strain of coronavirus through the agency’s Emerging Viral Pathogen program.
TOURING PROSPECTS
Consider moving all prospect tours to virtual tours using technology such as Zoom, Google Meet-Up or FaceTime.
Pre-record videos of model or vacant apartments and post on YouTube. Then, share the link with prospects via email or text where authorized.
Consider accompanying the prospect to the model, but simply let them in and allow them to self‐tour.
Any modifications you make to your process for touring should be applied consistently and be compliant consistent with Fair Housing Administration and Fair Housing regulations.
SERVICE REQUESTS
Defer non-essential maintenance, resulting in only handling emergency or urgent issues as allowed by applicable law.
Maintenance associates should wear disposable latex exam type gloves when performing service in an occupied apartment home and thoroughly wash their hands after completing any service.
MODIFICATIONS TO LOANS & FORBEARANCE
Borrowers should contact their lender to discuss their actual or anticipated inability to make debt service payments. A borrower might request modifications such as a reduction in the interest rate, the conversion of an amortizing loan to require interest-only payments for a period, a reduction in payment amount, or a forbearance for a period of time. A borrower might also want request that the lender consent to the addition of one or more new equity partners. Lenders may agree to the borrower’s requested loan modifications or respond with a variation of the request.
REFINANCING
The lending market is still active and interest rates are low. Lenders may require higher cash reserves to cover non-paying tenants and loan to value ratios requirements may be lower due to the increase in uncertainty the current market is experiencing. Overall, tenants in Oregon have been paying their rent.
SOURCES
The National Law Review. “Issues Facing Commercial Mortgage Lenders in the COVID-19 Pandemic,” April 3, 2020.
Governor Kate Brown. Executive Order 20-13. April 1, 2020.
Monique Lum, CPA is a Vice President of Commercial Loan Originations at Evergreen Capital, a Master of Real Estate Development (MRED) candidate at Portland State University, and a Multi-Family Northwest Student Fellow. In her spare time, she owns and manages her own investment properties. You can find her on LinkedIn here.