I want to address the government mandate as it pertains to Landlords and Fair Housing amid the Coronavirus crisis.
Before I begin, I recognize the fact that safe housing is one of the most important things to any individual in this country, next to nutritious meals and freedom from tyranny.
In case you are not aware, in response to the Coronavirus pandemic, one of the government mandates was that landlords cannot evict anyone for 120 days from the day the mandate was passed. For round numbers, lest just call this period 4 months. So, for 4 months, landlords cannot evict a single person, regardless of whether they pay their rent or not; and, furthermore, the landlord cannot charge late fees for the same individuals when they do not pay. The mandate makes no exceptions for an “Undesirable Tenant”, but for the purposes of this discussion, I will only make an argument as it pertains to rental payments.
The argument from the government is that the individual(s) will still ultimately be responsible for payment after the pandemic is settled. I will address this below.
Let’s assume a small investment company owns an apartment complex consisting of 50 units. Let’s assume the average rent on these units including utilities is $1,000 per month. Now let’s assume that exactly half the existing tenants cannot (or will not) pay their rent for the 4 months. That is a hit to this small investment company of $25,000 per month or a total of $100,000 over the duration of this epidemic.
During this period, the landlord is being FORCED to continue providing housing, electricity, water, sewer, insect services, security lighting, maintenance services, drinking water treatment, etc. Insurance coverage cannot be waived or defaulted on, office costs do not get reduced, accounting must still be paid for, estimated taxes still need to be paid, and the list goes on.
What if the landlord quit paying to have the household garbage removed? The waste company would remove the dumpster, the garbage would pile up, and the Department of Health would get involved, likely fining the landlord.
In the meantime, the tenant does not have to pay a penny. In fact, the tenant likely will be getting a stimulus check (dependent on their income); and, in some cases, if they were laid off, their unemployment payments will be increased.
At the end of the 4 months, let’s assume all 25 of those tenants still will not pay. (A likely scenario given my experience in this field). Now the landlord has to file an eviction notice on all 25 tenants at a minimum cost of $120 per household. That is another $3,000 in expenses to the landlord. The landlord is now out of pocket $103,000, minimum. But it gets worse. Assuming the landlord files on the last day of the government mandate, and the court could hear the case in a reasonable amount of time, with all of the existing laws governing a proper notice to the tenant, and the normal delays on the court docket, it would be a minimum of 2 weeks before each case could be heard. That is another $12,500 that the landlord must cover.
In all likelihood, there will be a backlog (according to a story on the local news website), so let’s assume it will be a minimum 4 week backlog. So that is now 5 months that the landlord has had to pay expenses for these 25 tenants. The landlord is now out of pocket $128,000 due to this government mandate.
The argument will be made by some that the landlord simply has to file suit against each of these tenants to recover the costs incurred. What they won’t tell you is that in order to do this, the landlord will have to pay an ADDITIONAL $120 per case to file suit on each of these tenants, and THEN, it will be the responsibility of the landlord to do the legwork to find out if the persons named in the suit is still living in the area so that he/she can be served, and the landlord also has to find out on his own where the person works so that their wages can be garnished IF the judge finds in the favor of the landlord. If the tenant so chooses, he/she can simply quit their job, start another one, and the garnishment does not follow them. The landlord would have to then re-file another suit IF he could find the person, and the process continues.
So, at a minimum, a small investment company could be out of pocket $100,000. This does not include the maintenance costs, cleaning costs, advertising costs, etc. that would have to be covered once the tenants finally left. These costs are not covered by insurance, not covered by the government, and most likely will not be covered by the tenant.
The scenario I’ve presented here is not only VERY LIKELY, it is already happening. I had a tenant that moved in the SAME DAY the proclamation was made, and this tenant promptly informed me that she would be making no further payments due to the “Coronavirus” and she then quoted the government mandate, informing me that I could not evict her for 120 days. And since the announcement, I have had 3 more that have made the same decision. The word is spreading like wildfire.
There is no other industry that is being FORCED to support people that are not paying. Can you imagine the outrage if the government mandated that small grocery stores could not prevent someone from walking in and filling up a buggy with groceries and walking out the front door without paying? A buggy of RIBEYE steaks would be worth only about $500. But the government is okay with forcing a landlord to keep their properties open and keep services supplied to people who refuse to pay? I am getting calls every day from people wanting to rent a property and I have to turn them down so that someone that refuses to pay can remain there.
Furthermore, once this crisis is behind us, the damages incurred by this mandate will force me and other landlords to raise our prices in order to recover these losses.
How many of the elected officials are being forced to open their front doors to people who are refusing to pay? There is actually a video online from the Executive Director of the Louisiana Fair Housing Action Center instructing renters that if their landlord gives them an eviction notice, the landlord is “BREAKING THE LAW”. Landlords are not only under the thumb of the government, we are being painted as the bad guy in all of this.
this is not only ridiculous, it goes against everything this country was founded on. Landlords provide an invaluable service to this state and this country and we are being unjustly penalized with NO RECOURSE. The only analogy or comparison I can make is “TAXATION WITHOUT REPRESENTATION”, which isn’t really correct, since this is being imposed on me and other landlords by government officials which were elected by the majority. Most landlords or investment companies plan for and are prepared for emergencies, natural disasters and, of course, vacancies. But there is no way any of us could have foreseen the government basically SEIZING our property. I would expect this in Russia or China, but not in the United States of America.
Samuel John Juneau
CEO-Juneau Property Investments and Highland Properties