One of the things we can be grateful for this month is that nationwide, most renters (94-95%) have paid rent for April. Nestwell has been able to collect 97% of April's rent. However, we are still getting questions about how to handle tenants that have not paid.

For the few tenants who have made rent deferral arrangements we:

  • Stay in contact.
  • Send polite reminders.
  • Avoid serving official three day notices.

For renters who are ignoring you or Nestwell if we're managing the home for you:

  • Find out if the CARES Act applies to you. If it does, you cannot send three day notices, only a delinquency notice or a rent reminder letter (you are covered by the CARES Act if you have a federal loan like FHA, Freddie Mac or Fannie Mae).
  • If you aren’t covered by CARES Act, you can serve a three day notice. If the renter responds that they have lost income because of Covid-19 and they were caught up before April 1, you can’t file an eviction until May 15.

This infographic from NAA may be helpful in explaining to your renters how rent is used. Even the 9% that goes to owners often goes to seniors or others that rely on that income for their livelihood. There are over 60,000 Utahns who own rental properties as investments. The rental business is not just fat cat owners. It's real people who live in our community and are hurt when renters don’t pay.  

Below is more guidance:

Quite a few real estate investors have asked Nestwell what can be done for Residents who haven’t paid their rent. With the current status of the Federal CARES Act and with the Utah Governor’s Order on evictions, Landlords need to make sure that their actions do not violate the current laws and orders.

CARES Act Properties 

(It is critical to know if you are covered by the CARES Act. If you are not sure, please review previous material we have provided or call us at 801-268-4134.)

Properties that have federally backed loans, Section 8 tenants, and Section 42 properties are covered by the Federal CARES Act. These properties CANNOT:

  • Serve 3-day notices or any notice that threatens legal action if someone doesn’t pay.
  • Begin an Eviction for 120 days from March 29th, 2020. 
  • Serve an end of term notice until July 25th, 2020.

These properties can receive mortgage forbearance. Reach out to your lender as programs differ.

As a reminder, if your property is covered under the Federal CARES Act, you CANNOT serve a Pay or Vacate notice to those that have not paid their rent. There are several methods to encourage the payment of rent that we suggest:

  1. Deferral Agreement - Most professional landlords, including Nestwell, have enacted a policy to allow for the execution of a deferral agreement for Residents who are having a problem paying their rent due to the Covid-19 pandemic. While originally, we tried to condition that deferral upon showing that a Resident was affected by the Covid pandemic, the CARES Act essentially removed that requirement. Communities and landlords should actively and proactively be trying to get residents to execute a Deferral Agreement.
  2. Delinquent Notice - While you cannot serve a Pay or Vacate, you can “serve” Delinquency Notices and Reminder Notices. Posted on our site are examples of Delinquency Notices that you can serve. If you have residents who have not communicated with you about their rent and have not paid rent, it is recommended that you serve a Delinquency Notice. (NOTE: Since this is not a “legal” notice, you should not post it on their door like a Pay or Vacate. It should be placed in an envelope and taped to the door.)
  3. Policy - It may be helpful to have a policy in place to discuss what your “intentions” will be for those that do not pay during the 120-day period. There is a suggested sample policy on the website, but you should and can adjust it to meet your specific needs. Generally, the policy should be stated in a way to encourage people to pay now and not wait. You can then use that policy when you are discussing payment options with your residents. (Those too may need to be adjusted to be consistent with your policy.)
  4. Check Units - It is important to check the units for residents that have not paid and not entered into Deferral Agreements. When checking you are trying to make sure that they have not skipped, but you should also be armed with Delinquency Notices to serve personally and to discuss options for deferral.  It is recommended that you check the units no later than the 15th of each month.
  5. Other Notices - While you cannot serve Pay or Vacate or End of Term notices until July 25th, you can still serve Nuisance Notices. When checking the units, if you determine that there is a lease violation, you can serve a Comply or Vacate Notice (or Notice to Vacate if it is criminal in nature). If we manage your property, you do not need to worry because we have created the notices and policies that were approved by our legal counsel.

Properties ONLY Covered by Governor’s Order

If you own a property that is NOT covered by the Federal CARES Act, you are still bound by the Eviction Order issued by Governor Herbert. That order restricts the filing of PAY or VACATE evictions until May 15. However, a resident must qualify to obtain that relief. To qualify the resident must have been current on their financial obligations under the lease on March 31 and they must provide to the landlord documentation that they have suffered a loss of income or job as a result of the Covid-19. It is likely that there will be some implied obligation on the landlord to question a resident who has not paid if they meet the “loss of income or job” requirement. If a resident has not paid rent and your property is only covered by the Governor’s order:

  1. Pay or Vacate Notice - You can serve a Pay or Vacate Notice. There is no restriction on serving the notice only on filing the eviction lawsuit. If a Resident has not notified you and requested a deferral and has not paid rent, you can serve the Pay or Vacate Notice. If the Resident was not current on its financial obligations under the lease on March 31, 2020, you can serve the Pay or Vacate Notice and proceed with an eviction with appropriate affidavits that will be provided by our office.
  2. Residents who Qualify - If a Resident has notified you that they qualify for deferment under the Governor’s Order, you should encourage them to execute a Deferral Agreement. This will assist you in managing the anticipated payment and strengthen your rights to evict if they do not comply with that Deferral Agreement.
  3. Deferral Agreement - A Deferral Agreement for a property that is only covered by the Governor’s Order does not have to waive late fees or other fees. Since the order expires on May 15, the deferral payments do not need to extend beyond that date.  If you do enter into a deferral agreement, then you should not serve a Pay or Vacate Notice until the resident defaults on the deferral payment schedule.
  4. Business as usual - If the property is only covered by the Governor’s order, other than the possibility that you cannot evict for a Pay or Vacate until May 15, all other matters should be handled as you would normally handle them. Checking units, serve notices, end of terms, etc. should all be handled as you would have handled them before the COVID-19 pandemic.

As always, if you have questions or concerns, contact us to discuss. 

Team Nestwell

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