COVID, Lease Renewal, and Divorce: What would you do?

Question

We have some tenants that divorced, and one moved out. Their renewal is this June. I have let the tenant know that a new lease will need to be drawn up, and that he would need to meet our income requirements. He works in a non-essential industry and has picked up a temporary job. I don't think he's income will meet the requirements, and he's asking for us to base things on what he was and hopes to be making once things re-open. Typically, we would be strict to our policy, but these are new waters for us. What are your thoughts?

James Wise · Answer

You utilize screening requirement such as income to lower your shot at loosing money due to non payment and costly turnovers. However, this is only effective when done BEFORE the tenant is in your property. There is no reason for you to give him a hard time about income requirements now as he's already in there and paying. If you remove him you've got a turnover and vacancy to deal with. If he pays rent, you don't. If he stops paying rent you just evict him and deal with the turnover and vacancy at that time. You should never be in a hurry to remove an income stream.

Robert Posta · Answer

Maybe ask that person to go on month/month agreement for the next 60 days and then once he gets his job back you can re-sign an annual lease..

James Wise · Answer

If he doesn't pay you'll be able to evict him for non payment. There is no reason you would need his lease to expire monthly.

Kim Meredith Hampton · Answer

@Briana Bean

I would really wait another thirty days before offering a lease renewal and see if he picks up a job again. No need to create a problem for someone that cant qualify for paying the rent.

Anthony Wick · Answer

@Briana Bean. When was his divorce? When did the ex move out? How has he been paying the rent? How long has he been paying the rent on his own? Is he getting unemployment benefits and/or the $600 "bonus"? What evidence is there he will be back to full income, and when? What is the likelihood that he will not be able to make the rent payment, and on time?

I wouldn't necessarily just go with "what have you got to lose" or "evict him if he doesn't pay". You have a lot to lose, and evictions take time and money and nobody wants that. But, if he's been paying the rent, he is likely to continue paying the rent.

Marlen Weber · Answer

I would follow @James Wise advice on this situation. Whether they can pay or not, there's a solution for both and you have a guaranteed tenant that has otherwise been okay. Best of luck.

Account Closed · Answer

@Briana Bean

If he is unemployed due to covid he qualifies for roughly $1000 a week in unemployment. I believe it’s over 6 months.

Jose Clavijo · Answer

I was in the same situation 8 months ago. Tenants divorced and one decided to stay, this took place precisely at the time of lease renewal. These tenants were on a 1 year lease when i bought the house and came from a renewal with good payment history. We signed a new lease with only one tenant, no issue with payments until now due to Covid 19 and reduced work hours.

Briana Bean · Answer

@james wise Good point. Thanks for your response!

COVID, Lease Renewal, and Divorce: What would you do?

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