Saturday, May 16, 2020

Rent is Due First of the Month!!

In a world where legislators and the Fed bend over backwards to leave no bank, large corporation, or wealthy person behind, lavishing government assistance and tax dollars on the Masters of the Universe, I can't really be that upset with less wealthy people seeking their cut of government largesse. 

There are some people who are just ideologically opposed to the concept of renting property, viewing all landlords as exploiters. 

I think that this pandemic may have given some such people more courage to advance their agenda than would normally be the case.

If someone can't pay their rent because of the Coronavirus pandemic, I think he should try to work out a plan with their landlord. And I think a rational reasonable landlord, particularly a landlord who doesn't want to take the time and expenses needed to find a quality tenant, should be willing to listen to all good faith concerns. 

One NYC landlord cancelled all April rent due for his tenants. I think that was a good deed. A cynic might retort that the man is apparently wealthy enough to be able to afford such kindness. Other landlords, who might only own a few properties or have smaller margins, aren't necessarily situated to miss too many rent payments before they start having financial problems of their own.
Society is all about the balancing of competing interests. We don't want to increase homelessness. In some states lawmakers or governors are trying to assist tenants who can't pay their rent and/or prevent them from being evicted.

As missed rent payments and delinquent mortgages pile up across the state, California Democratic lawmakers Tuesday introduced a series of sweeping proposals aimed at shielding homeowners, renters and landlords from the economic fallout of the COVID-19 pandemic.

A plan put forward by Sen. Toni Atkins, Democrat from San Diego and leader of the state Senate, would grant qualifying renters 10 years to repay missed payments directly to the state, which would in turn compensate landlords for the missed rent with tax credits that could be sold to pay mortgages and other bills.

A separate bill from Assemblywoman Monique Limon, Democrat from Santa Barbara, would allow California homeowners to request a forbearance on their mortgages for nearly a year while requiring mortgage servicers in most circumstances to tack on missed payments in monthly installments at the end of the loan. The legislation would also allow borrowers of auto loans, payday loans and other debts to postpone payments without fear of immediate repossession or other penalties.

Gov. Gretchen Whitmer has extended a statewide suspension on evictions during the COVID-19 pandemic, her office announced Thursday night. Under the executive order, which had been set to expire Friday and now is in force through June 11, tenants and mobile home owners can remain in their residences even if they are unable to pay their rent. 

“It’s critical Michiganders can self-quarantine and continue staying safer at home without fear of being evicted,” Whitmer said. “This Executive Order gives renters and mobile home owners some peace of mind as we continue to flatten the curve.”

The federal CARES Act, the $2.2 trillion economic rescue package, halts evictions for properties with federally backed mortgages for 120 days. The Urban Institute estimates that's about 28% of the nation's 43.8 million rental units. The act also allows owners of multi-family properties with federally backed mortgages to apply for loan forbearance. 

The Wayne County Treasurer's Office has said it will not foreclose on any properties for unpaid taxes this year. Oakland County has said no owners affected by the coronavirus outbreak will lose their properties.

There are some legitimate questions in Michigan about how long the Governor's emergency authority lasts and if indeed it extends to interfering with business contracts where no law has been broken. 

That has yet to be determined, either by the legislature or the courts. But if I were to be a landlord again, I would much rather be one in Michigan than in California. It usually takes more than a month or two to evict someone in the best of times, which these are obviously not.

The proposal in California to defer rent payments for up to ten years while the landlord only gets a tax credit which would need to be sold at a sizable discount is more problematic. That's just a big middle finger to landlords. I think if that became law smaller landlords would be more likely to be driven out of business. You don't want people to think that any time they run into trouble if they scream long and loud enough the government will change the rules. That's partly why I hate corporate welfare so much. 

Bottom line is that just as the tenant has a right to expect a safe, clean, up to code place to live, the landlord has a right to expect rent paid in full on the first of the month. The pandemic may have made both of those duties more difficult to carry out. But to be fair the costs of altering that contract should be borne by both parties.    

What do you think?

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