We’ve recently heard from a number of Colorado landlord and property management clients whose tenants have encountered financial hardships due to the COVID-19 coronavirus and are therefore unable to make their next rent payment. This is a quickly-evolving situation, which we’ll continue to monitor and update.
Typically if a tenant can’t pay their rent, the landlord’s recourse is to evict. But eviction isn’t a practical solution in our current environment. Courts are closed. Eviction actions are being automatically delayed upon filing as not essential. Law enforcement is being ordered to not carry out eviction displacement orders.
UPDATE (3/31/2020): The federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) prohibits owners of properties which secure any federally backed mortgage loan from evicting tenants for nonpayment of rent or other lease fees or charges. The CARES Act also prohibits owners of such properties from charging fees, penalties, or other charges to tenants related to nonpayment of rent. These provisions are currently in effect from March 27, 2020 through July 25, 2020.
What can a Colorado rental property owner do if their tenant can’t pay rent due to COVID-19?
Some landlords might think about displacing tenants themselves (“self-help”), without going through the proper legal channels while those legal channels are frozen. However, landlords should not engage in self-help evictions, as doing so exposes landlords to claims for damages, costs, and fees incurred by the tenant.
The reality for most COVID-19 situations is that property owners and tenants have to work together to come up with a solution. As of now, there’s no one-size-fits-all answer. If any sort of change to the lease is necessary due to COVID-19, the parties should absolutely document the agreement in writing, so there’s no question later about the terms of the understanding.
I developed a lease amendment template designed for this situation; send me an inquiry here. This template may not cover every situation, but if you are a landlord or property manager and need to document changes to your existing lease due to the coronavirus, this amendment will get you started.
Some items to think about when considering COVID-19 related amendments to your lease:
- Tenant’s description & documentation of financial hardship
- Type of rent relief:
- Delayed payments
- Reduced payments
- Abated payments
- Application of security deposit
- Financial obligations for other lease items (utilities, maintenance, etc…)
- Financial assistance programs:
- Tenant required to apply for any financial assistance programs?
- Tenant required to apply proceeds from such programs to rent before other financial obligations?
This is a fast-moving situation that continues to develop by the day. Contact me if you are a landlord, property manager or tenant with questions about your lease during this period of unprecedented events.