These are challenging times for everyone, landlords and renters included. As always, we continue working to ensure our landlords are armed with the latest information impacting their rental businesses.
With unemployment at an all-time high and an uncertain future ahead, many renters are struggling to pay rent.
To help stabilize the economy and provide relief for all Americans, part of the US government’s federal stimulus package includes providing money directly to citizens based on income levels with stimulus checks.
The stimulus checks of up to $1,200 for a single person and $500 for each dependent were meant to provide “fast and direct relief” to cover living expenses, including rent.
Aside from SBA loans for landlords, which have been slow to fund, the stimulus checks paid to individuals was seen as a potential lifeline for impacted renters and landlords.
But now it appears that banks might be keeping stimulus funds to themselves to cover for any outstanding fees and debts owed to creditors by the individuals entitled to that money.
The Treasury Department has informed banks that there is currently nothing in the legislation that prevents them from doing so, and there have been reports of stimulus funds being withheld from individuals.
While legal advocates and politicians are trying to influence the Treasury Department to explicitly ban this practice, there are some things that you can do as a landlord to help your tenants during this time.
Potential Steps Concerned Renters Can Take
Hopefully, you have been in close communication with your renters during this time. If you believe that your renters have cause to be concerned about garnished funds, let them know about the following steps they could potentially take.
Ask for a Paper Check from the IRS
If your renters believe that their funds may be withheld by their bank, they can request a paper check to be mailed to them rather than a direct deposit.
This can be done on the IRS’s Get My Payment page.
Withdraw Funds from Their Account
While a riskier option, your renters could withdraw funds from their account after receiving the direct deposit, before their bank could garnish their stimulus payment.
A trip to the ATM could potentially pose health risks, so this would not be advisable for anyone in a high-risk group or geographic location.
How to Deal with Rent Payment During This Crisis
While collecting rent on time is the lifeblood of a rental business, it is always important to recognize that it’s a human-based business and that your renters may be dealing with real issues at this time in particular.
We encourage landlords to be flexible and work with their renters to find common ground so that rent could ultimately get paid without tenants having to worry about whether they will be able to maintain a roof over their heads.
To accomplish this, landlords have several tools at their disposal (refer to our article about collecting rent during the crisis for more in-depth coverage):
- Collect rent online
- Collect partial payments – create an installment plan you and your renters will be comfortable with
- Defer and spread out payments – postpone payments and spread them out over the remaining life of the lease
- Waive late fees
- Forgive or discount rent
- Use the security deposit – buy renters time to repay by using the security deposit earlier than expected
- Use last month’s rent – similar to using the security deposit