The coronavirus pandemic has turned life upside down. One in 10 Maine workers have filed for unemployment benefits in recent weeks. Many businesses are closed or have reduced hours and fewer workers. For many, paying the monthly rent has become increasingly difficult or, in some cases, impossible.
While few landlords want to kick out tenants during a pandemic — when the governor has ordered people to stay home other than to conduct essential work, to get essential supplies and to exercise — many are facing their own financial challenges.
Much of the ire of those arguing for relief on behalf of tenants is focused on large companies that own or manage a large number of properties. But, many landlords in Maine own just a few properties to boost their incomes. They, too, have bills to pay. Many landlords are small business owners who use the rental income to supplement their cash flow, which now may be near zero.
Some property owners can apply for mortgage relief as part of the stimulus bill passed by Congress last month. The same law barred evictions from buildings secured by federally backed mortgages for up to 120 days, but it did not include similar forbearance programs for tenants.
This dynamic makes crafting a rental relief program difficult.
Gov. Janet Mills said last week that she is preparing an executive order to ban some evictions during the COVID-19 pandemic. She is also working on a statewide rent relief plan.
“Whether it’s a shop owner on Exchange Street, or an apartment dweller on Munjoy Hill, or in Kennedy Park or elsewhere anywhere in the State of Maine, this is not the right time for any landlords to be evicting anybody,” Mills said.
She added that the evictions she was focused on would be related to the coronavirus situation and its consequences, such as job losses and layoffs.
Forgiving rent, she said, was a different matter.
Dozens of Portland business owners are seeking formal rent relief from the city. The businesses have signed onto a letter to the Portland City Council seeking a rent freeze as the coronavirus puts them in a difficult situation of having to pay rent when their businesses are closed.
Many residential tenants face similar pressures of paying rent when they are out of work.
As cities and Mills look for solutions, the best policy for now is for tenants and landowners to work together, if possible, on an agreement that is manageable for both.
The Holy Donut, which operates three retail locations and an office in Portland and Scarborough, recently approached its four landlords with rent compromises. Three agreed.
“I consider our landlords partners,” CEO Jeff Buckwalter told the BDN. “None of us should have to [weather] this pain alone. We all share in this pain together.”
This follows advice given by business lawyer attorney Paul McDonald of Bernstein Shur. During a webinar the firm hosted in March, he stressed that communication now can avoid problems down the road.
“If you’re a business owner and you have contracts that you’re worried about being able to meet, call and talk it through — today. If you’re not sure that you will be able to make your rent payment, call your landlord and have a discussion about it. If you’re not sure you can deliver on an obligation, begin the conversations now,” David Farmer wrote in a BDN column about McDonald’s remarks.
Discussing your inability to pay rent, of course, is not the same as not having to pay the rent. But such a conversation is an important starting point for resolving the problem, potentially in a way that works for both tenant and landlord. Likewise, landlords should be having conversations with their banks to see what assistance can be offered, such as delaying or temporarily reducing mortgage payments.