Chicago Landlording in the time of Covid-19

Ways to react to Tenants during the Coronavirus Pandemic

We are living in trying times.  People are sick.  People are out of work.  Tenants are scared.  Landlords are scared.  There is rent to pay.  There are mortgages to pay.  Everything seems uncertain.  We even read reports in the news from radical tenant’s rights activists about “rent strikes” (way to take advantage of an emergency for your own political agenda) or other “anarchist” concepts.   So, what is a Chicago landlord to do?

Assess the Situation

First, landlords need to step back, take a breath, and see what the playing field looks like.  They’ve heard about government halts on evictions.  What is that all about?  There are two important moratoriums to know about.  On March 13, 2020, the Circuit Court of Cook County ordered a halt to the Sheriff’s enforcement of Eviction Orders or Orders for Possession for the next 30 days (to April 13, 2020).  Second, on that same day, the Circuit Court indicated it would not start any new trials nor would they enter any eviction orders.  Does that mean no evictions?  Not really.  We can still serve 5 day notices.  We can still file new lawsuits (that will not be heard until after the moratorium).  The Sheriff will still serve a summons and complaint.  Bottom line: if you know you need to evict a tenant, there’s no reason to wait until the moratorium is over.

Second, On Friday, March 20th, Governor Pritzker issued Executive Order 2020-10 requiring all Illinoisans to stay in their homes to prevent the further spread of COVID-19.  There is nothing – I’ll say it again, NOTHING – in the Governor’s order that forgives rent, delays rent, or allows a tenant not to pay rent.  Tenants must still pay their rent.  (Just as landlords must still pay their mortgages).

Ground Zero

All of that said, many tenants have lost their jobs.  Many tenants do not have unemployment insurance.  Many tenants have no other source of income.  There are going to be tenants who want to pay, but just cannot pay.  And while landlords are NOT dragons lying on a pile of gold, hopefully, there is a bit of flexibility and humanity out there to work with tenants.

At the same time, landlords must be vigilant to make sure that tenants with actual needs are being helped.  Hopefully, tenants who retain the means to pay (there are plenty of folks in essential services still working) will be forthright enough to continue to pay.  Hopefully those folks don’t seizing on this time as an opportunity to take advantage of the current panic and uncertainty as an excuse to skip out on their rent.

It is a tired and old solution, but communication is key.  Tenants cannot go “on the lam”.  Once a tenant “goes silent”, things don’t often get back on track.  Similarly, landlords who refuse to reach out and talk to their tenant or who prefer vague and terse text-message contact are not going to have a good result.  Good open communication between a landlord and a tenant is necessary so that landlords can see if it is worthwhile to work with a tenant who cannot pay.

Possible Solutions?

Landlords can offer relief in a number of other ways.  They can waive or reduce late fees.  They can hold off on filing an eviction (although, as already mentioned, the system has its own delays already).  They can also work out payment plans with their tenants.

One common solution we have been working on here in our offices is a rental lease amendment in the form of a forbearance agreement.  The concept of a forbearance agreement comes from the mortgage lending world where a lender agrees with a borrower in default to “forbear” their legal right to bring a foreclosure action in return for a promise by the borrower to agree to a repayment plan to bring the loan obligation current. 

Landlords and tenants can do the same thing.  A tenant with a $1500 per month rent and a job as a waiter and a landlord could agree, for instance, that rent for the month of April and half of the rent for May will be deferred until the last four months of the year (resulting in a rent payment in September, October, November, and December of $2062.50 instead of $1500.  That allows the tenant peace of mind for April, a chance to get back on their feet in May and allows the landlord to, eventually, get repaid the full amount of rent.

There can be plenty of variations of this idea.  Landlords can forgive a portion of the rent, back-load a portion, or extend a lease at an increased rent amount.  A proper forbearance agreement would clearly document these terms and provide, perhaps, that in the event that the tenant fails to timely pay rent, the entire deferred rent becomes immediately due and payable and can be added to a money judgment obtained in an eviction.

Landlords should face the fact that we are at a time of uncertainty.  Combine that with the fact that the usual multi-month eviction will be stalled even longer by the current moratoriums, and, for the right unit and the right tenant, working something out can be, in the long run, a far better result than jumping into eviction court.  Will it work every time?  No.  Landlords should be discerning about the process, but before spending a bunch of money on a lengthy and costly eviction, a landlord should consider whether or not a work-out plan makes sense.

Help from Elsewhere?

Another possible solution is turning tenants on to the many resources being made available to tenants in this time of need.  A good place to check is the Chicago Community Covid-19 Response Fund.   Catholic Charities provides rent assistance.  The City of Chicago is also providing some form of rental assistance.  A number of other organizations might as well.  There are people suggesting that landlords who delay or forgive rent might also find themselves eligible for certain financial assistance.  This is a fluid situation and landlords would be smart to stay on top of what local and Federal programs are available to them and their tenants.

We Can Help

Are you a landlord who needs to consult about your options?  Would you like to work-out a forbearance agreement and you need help documenting its terms?  Our office can help with those needs.  Feel free to contact us to see if we are a match for an engagement.