APPLETON, Wis. (WZAW) -- The coronavirus pandemic has caused business closures, furloughs, stay-at-home orders, and layoffs. The result is that many tenants are reaching the point that they are unable to pay rent.
Photo: Dennis Capati / MGN
Susan Bach is the northeast Wisconsin regional director for the Better Business Bureau out of Appleton. She joined NewsChannel 7 at 4 on Thursday. She said it’s a two-way street struggle for both the small business owners who rent their place of business and are struggling to pay, as well as landlords who are watching their own source of income dry up if their renters are facing a difficult financial situation.
Bach said under normal circumstances, landlords can provide their tenants with notice when they miss a rental payment. If a tenant still fails to pay, the landlord can take action to collect unpaid funds or to have the tenant evicted. However, the current pandemic has affected these normal procedures.
“Governor Evers had a moratorium for evictions, but that expired at the end of May. So in your municipality are there any local provisions in this regard that you should be aware of,” she said. “Second, review the terms of your lease, because that will give you a clear-cut path as to what happens next once rent is unpaid.”
Each party’s options and legal obligations depend largely on what is written in this legal agreement. The lease may offer emergency provisions, suspending rent obligations during times of crisis or forced shut down. Such provisions are rare, but it’s worth reviewing just the same.
But Bach said perhaps the most important is to keep the lines of communication open. If you are a small business owner struggling to cover the rent, call your landlord to discuss the situation. For many landlords, working out an agreement is mutually beneficial, if it means the tenant’s business will survive when state-mandated stay-at-home orders are lifted. Some landlords may even be willing to suspend a payment, defer rent, or lower monthly payments for a specified period of time.
If you are a business owner struggling to come up with money to pay, Bach said should take some time to evaluate your finances and consider all your options.
“Do you have savings that could help you cover your rent or mortgage? Did you receive an economic stimulus payment or a small business grant that you could use to pay for essentials, or could you take out a low-interest loan to help you stay afloat?”
There are also options you have as a landlord to receive the money that’s owed to you. If circumstances still warrant evicting a tenant, consider this option, but keep in mind that it will likely take longer to go through the legal process than it did before coronavirus hit.
Instead, think about the following:
- Lowering your tenants’ rent to a price that covers your expenses but forgoes profit for the time being.
- Forgiving one month’s rent
- Working out an arrangement that postpones rent payment, while eliminating late fees and penalties
If you are struggling, there are some places to go for outside assistance. Some cities are now offering rent vouchers and emergency funds for renters in need. Find out if there are organizations in your area offering this kind of assistance for small business owners. If you are a landlord, you can do the same research in behalf of your renters. After all, if they get help, you’ll get rent.
In addition, landlords having trouble paying their own mortgage can get in touch with their lender to find out if they are offering any assistance to borrowers who have been affected by COVID-19. Some counties and states have extended the due dates for property taxes and eliminated late fees and interest. A quick visit to your local tax assessor’s website will tell you if you qualify.
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June 05, 2020 at 05:21AM
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Business tip: What to do if you cannot pay or collect rent - WSAW
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