Aug 30

A published research paper that found:

“Our research shows that in order to keep rental housing affordable and sustainable for low-income families, lawmakers have to walk a fine line in determining what will benefit the tenant and what may ultimately be detrimental to them,” Shen said. “On the surface, strict landlord regulation sounds good for tenants, but our paper points out, the solution isn’t that simple. The research suggests that conventional thinking on the issue of more regulation may have the opposite effect on tenants.”

“Though advocating for tenant rights seems noble and the right thing to do, the resulting consequences could have a devastating impact on this vulnerable population,” Shen said. “Our research indicates that if landlords aren’t allowed to evict, rent will likely increase to compensate for their losses. The housing supply would diminish, though the demand would still exist. These landlords may choose alternative investments if owning property is no longer feasible. A reduced housing supply would mean less competition, which would drive up the cost of rent for everyone.

Coulson, N. Edward and Le, Thao and Shen, Lily, Tenant Rights, Eviction, and Rent Affordability (July 4, 2020). Available at SSRN: https://ssrn.com/abstract=3641859 or http://dx.doi.org/10.2139/ssrn.3641859
Aug 22

I grabbed a few of the more pertinent paragraphs, but he article is a worthy read in its entirety.
 
https://www.nytimes.com/2020/08/21/business/economy/rent-tenants-evictions.html

  • Instead of an avalanche, the appropriate metaphor might be a receding tide that is exposing layers of financial insecurity.
  • Even before the pandemic, about 25 percent of tenants were paying at least half their pretax income for housing.
  • Even as corporate landlords report little change, smaller landlords are reporting declining collections and in many cases expect to use loans and personal savings to cover shortfalls.
  • Partly this is because these landlords have less access to capital than large corporations, but buildings like duplexes and triplexes — the kinds of properties that many small landlords own — tend to be more affordable, so they attract lower-income tenants, who have been hit the hardest by the pandemic. 
  • Several tenants haven’t paid rent. Others are making partial payments and asking for extended payment plans. “At the beginning of the pandemic, I expected what I’m seeing now,” [the landlord] said.
  • Avail, a platform that helps small landlords manage their properties, recently surveyed about 5,000 tenants and landlords and found that 42 percent of tenants and 35 percent of landlords were pulling money from savings and emergency funds to make it through the pandemic.
Jul 30

An article from Bloomberg that concisely lays out the two main problems facing rental housing and tenants.

The U.S. had a pretty “stingy” safety net when it came to housing before the pandemic, said Mary Cunningham, vice president of the Metropolitan Housing and Communities Policy Center at the Urban Institute.

….

But over the long-term, rental revenue will decline because of missed payments and lower occupancy as tenants look to save money by doubling up with others, Pawlowski said. Landlords could end up missing more than $22 billion in rent over the next four months, according to the Stout analysis.

$22 Billion in loses will impact rental housing costs and availability for years

Jul 24

[Edit: The WI case permitted a $50 late fee. A $75 late fee was not found excessive in one owner’s Milwaukee County Cases. ]

Late fees and security deposits are two points of friction in housing.

A question was asked, ‘How much should I charge for late fees?’

The WI Court of Appeals that allowed a $50 late fee in 1993.

It is a Fair Housing violation to charge late fees to tenants that seek a reasonable accommodation based on a disability. A prime example is an SSI recipient who receives their check on the 3rd of the month. There are a number of federal cases that owners have lost because they were inflexible on this point.

We stopped charging late fees on April 1st, 2020, prior to the moratorium. We did not charge any late fees for July, despite it again being legal to do so for most tenancies. (It is illegal to charge late fees for CARES Act covered properties until August rent and illegal to charge late fees if you are receiving mortgage forbearance on a federally insured mortgage)

Normally we have a due on the first, late on the 5th policy. At the close of business on the 5th, we charge a $15 late fee. If the rent is still not paid by the 12th, there is an additional $35 late fee, for a maximum of $50 late fees in a month. Our staff can forgive one late fee per tenant per year without asking for permission. We also do not charge late fees for tenants who are on a payment schedule, for example, they pay twice a month to coincide with their payroll.

Per diem (daily) late fees are problematic and can violate usury laws. For example, a $25 a day late fee after the fifth is $625 if the tenant misses a month.

Jun 28

The NYT article is title is “Lori Lightfoot, mayor of Chicago, on who’s hurt by defunding police.” But it has a lot to do with rentals from what I perceive as a very liberal politician’s view.

I would take the Chicago Housing Solidarity Pledge as it is what my company is already trying to do.

From the NYT’s article interview with the Chicago Mayor:

As a result of what we’ve all been going through, a lot of us, I think, have been reconsidering some of the fundamental assumptions we had about our government and economic system. Have you? Are you thinking differently now about things like rent control? [6]

When I think about rent, I think about it in the context of the entire ecosystem. The problem is mortgages that have to be paid and the banks that hold those mortgages and whether they’re going to give any forbearance. I think about landlords who are under pressure to pay their mortgage, their utilities, their property taxes. I think about renters and how stressed they are, worrying about being able to pay but also about possible evictions and what impact that is going to have on their credit rating. So the way I think about public policy is not individual levers and solutions in isolation. I try to look for the balance. Many times, there’s a solution lurking in the center.

So where might there be a solution for helping people who are struggling to pay rent because the economy cratered?

One thing that we did here is we brought together banks, landlords and people representing renters into what we called a solidarity pledge.[7] It’s voluntary; it’s not mandatory. But we put a lot of emphasis on saying: “Be good neighbors. Give each other grace and space in this difficult time.” That means not filing evictions. Not penalizing people because they can’t pay their mortgages or their rent. Be engaged in conversation to find common ground. We heard from all the actors that they were engaged in a lot of these conversations already. But by me, as mayor, publicly challenging them, it moved a conversation that was in the backroom to a more public reckoning.

Don’t you think that a voluntary “solidarity pledge” could just give landlords the cover of paying lip service?

You’re underestimating the level of activism here in Chicago. Any instance in which people feel there’s been a deviation, they are not hesitating to call it out. But of course, not everybody’s taking the pledge.

————

6 Rent control has been banned in Illinois since 1997.
7 In addition to the solidarity pledge, Lightfoot recently proposed a prohibition on landlords’ eviction of a tenant without first allowing the tenant five days to deliver a “notice of Covid-19 impact” outlining financial hardship brought on by the pandemic. Delivery of the notice would then earn tenants an additional week for negotiation.

Jun 26

Legislative committee blocks rule prohibiting landlords from charging late fees on rent

The ban on late fees was determined to be “arbitrary and capricious” yesterday morning by the Joint Committee for Review of Administrative Rules, on a 6-4 vote, and therefore unenforceable.

Important Note:
If your property or tenant is subject to the CARES act you cannot charge late fees until after July 24th, 2020.

Just because you can charge late fees, does not mean you should charge late fees, without exception.  Discretion should be given to tenants that are facing hardships.

Think of this like the speed limit. The sign says 70 and you usually do 75 to reach your goal a bit sooner. But trying to even do even close to the limit in a blizzard may well have the opposite effect. We could see an economic blizzard later this year.

The purpose of late fees is to encourage on-time payments by those who can pay, it is not to penalize those who are facing hardships.

My company did not charge late fees in April, even though the moratorium did not exist then, because anxiety was high for tenants.

Even though we can again charge fees, our company will waive late fees for tenants that can provide proof they have not received their unemployment checks or are waiting on WRAP, etc.

We have a list of resources for tenants facing hardship due to COVID or otherwise that you can share with your tenants if you wish.

Jun 18

As seen on Tristan’s Landlord-Tenant Law Blog

https://petriepettit.com/blog/landlord-tenant/current-state-of-affidavits-of-non-compliance-in-milwaukee-county

Jun 12

Milwaukee BizTimes

“We’re urging all owners to work with their tenants who are experiencing legitimate difficulties and are taking steps to apply for whatever help is available to them,” Tim Ballering, AASEW treasurer and managing member of Milwaukee-based Affordable Rentals Associates LLC, said in an interview. “We’re also urging owners that, prior to committing to a court eviction, they explore other opportunities to find another resolution.”

Jun 11

The WI Department of Agriculture, Trade and Consumer Protection has issued an FAQ on late fee and eviction moratorium.

​Emergency Rule Related to Residential Rental Late Fees and Penalties
​On what date may landlords resume charging late rental fees and penalties because the emergency rule is no longer in effect?

Late rental fees and penalties may be charged starting August 9, 2020.

Late fees and penalties may never be assessed or charged for any missed rent payment or any late rent payment that occurred during the effective period of the emergency rule. The emergency rule is effective from April 25, 2020 through August 8, 2020. ​

It seems to me that August 8th is mathematically improbable, but it is the date we should adhere to.

Why improbable?

If the Public Health Emergency ended with the May 13th Supreme Court decision, then 90 days is August 11th. This has no consequence for most tenancies as the due date of the rent would generally be August first.

However, as The WI Supreme Court found EO 28 to be “unlawful invalid and unenforceable”, then the Public Health Emergency ended on 4/24 with the expiration of EO 12, 90 days after is July 23rd.

If you charged late fees after April 24th you have violated the DATCP 134. The penalties for doing so are great. You should reverse those late fees and notify your tenants that you have done so.

More important than late fees of course is working with your tenants that are struggling. My company waived late fees for April, well before the moratorium. We will evaluate the situation for September based on what we see the economy doing at that time.

Remember that a full third of people who have applied for WI Unemployment and Federal Pandemic Unemployment have not received payment.

Jun 03

There is a lot to consider now that the eviction moratorium has been lifted, including the delays facing the eviction courts as well as if the tenant is still waiting to receive unemployment or other payments.

Vacancies and evictions are expensive for owners and disruptive for tenants. When there is a better option, take it. In some cases, mediation may be a better answer than court.

In all cases, you should talk to your tenants before filing, both to understand their situation as well as giving them time to make arrangements to pay or move.

Suggest they attempt to get on the WI Rent Assist Program waiting list as well as apply for Emergency Assistance. We have links to these as well as a list of other resources for tenants on the Affordable Rental Associates, Tenant Resource page that you can share with your tenants.

I am reading more and more that both state and federal unemployment is not being paid as it should be. Part of the problem is many employers are closed and therefore are not responding to UC separation notices. Part of the problem is the state computers they are trying to process the deluge of new applications on is less powerful than your kids Nintendo.

The Federal Pandemic Unemployment Compensation program has not paid one of three who should be eligible to receive it:

Almost one-third of unemployment benefits estimated to be owed to the millions of Americans who lost their jobs as a result of the coronavirus slump haven’t been paid yet, as flagship policies struggle to cope with the unprecedented wave of layoffs.

Source: Bloomberg

Likewise, Wisconsin has 728,000 unpaid/unprocessed Unemployment claims, which is also about one in three:

As of Monday, [May 27th] the state had yet to pay more than 728,000 of 2.4 million weekly claims that had been filed since March 15, when the coronavirus pandemic began to batter the state’s economy. Others have encountered problems that have prevented them from filing claims.

Source: Milwaukee Journal

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