https://reason.com/2020/03/25/...
The state of New York has a bill to CANCEL rent for 90 days for workers affected by the virus! This isn't deferring rent payment; it is waiving it.
Those landlords who have mortgages may not be affected by this if their lenders also waive/delay mortgage payments, but those of us whose only income is from a couple of properties that have no mortgages, it will be catastrophic. I am in that category.
I see this as theft of my private property sponsored by the state. Man has instituted governments to protect our rights (see: Declaration of Independence), not take my private property and give it to someone else. The state is guilty of that which it was commissioned to prevent - theft. Once again those of us who who made great sacrifices to do the best thing would be greatly penalized. The one who works hard would be forced to pay for those who make foolish decisions and live care free.
We're getting closer to mob rule and these LAWMAKERS in NY creating the hashtag: #cancelrent (found in the article) to whip everyone up in a frenzy, is as close to it as I've ever seen.
I wouldn't touch NY with a ten-foot pole.
The letter to send to Tenants needs to be revised to state that Lowes Home Improvement has just announced that they are paying $150 bonus to hire part-time employees. However, of course if the pay for part-time work is less than unemployment don't expect many takers. Tenants need to be informed about revenue generating opportunities and being reminded to cancel their cell phones, internet, sell their new car and buy something they can afford and that ramen noodles is the cheapest meal out there. That is how I made it as a renter and it should be no problem for them to do the same.
https://reason.com/2020/03/25/...
The state of New York has a bill to CANCEL rent for 90 days for workers affected by the virus! This isn't deferring rent payment; it is waiving it.
I would be asking my bank if they will give me mortgage forgiveness for 90 days since it is being legislated that you are not allowed to collect rent that is legally owed to you.
I agree that this legislation is overreaching, misguided and sends the wrong message--that even if you can pay your rent, you don't have to.
A better way this needs to be handled is everyone who is unemployed should be eligible for Section 8 and the Gov should be paying the Landlord Directly. This is a much better way to do this. Then the renter will receive a 1099 for the payment made and owe taxes on the benefit received. The landlord would receive a 1099 for the payment however as rent received it still subject to depreciation. An SBA "loan" is not what is needed.
I hope every property owners who has taken 10 minutes to read this thread and reply will apply the same degree of time to writing their local representatives with the self same thoughts right now. Complaining here is like Don Quixote fighting windmills: maybe it helps you relieve tension, but does little/nothing to enact change. There are a lot of knee-jerk reactions happening at both state and federal levels right now and (like it or not) NYC is being watched by the entire country. Don't think similar measures will not be proposed in other states as well.
As a parallel in other forums here on BP, consider that many states have already legally closed short term rentals across their state. Massachusetts just enacted a moratorium on short term rentals today. Atop the booking sites offering free cancellation of guest reservations, you have already shutdown an entire sector that many owners have been using to help pay mortgages (contrary to the belief that it's only exploitative "arbitragers" raising rents in the aggregate by institutionalizing sub-leasing at scale).
Additionally, what may soon be a nationwide moratorium on evictions fails to consider that many of those evictions were for reasons far beyond failure to pay rent and were in process long before renters lost their job. Given the average eviction is a 2-3 month process, many owners with problematic tenants are already looking at 6-12 months of rent loss.
Please take 10 minutes and take action by writing your elected representatives (regardless of what side of the debate you fall on this). Most representatives have little experience in this realm and are in all likelihood only seeing the headlines of #CancelRent or other PAC groups, national multifamily housing associations representing large-scale real estate firms versus smaller, independent property owners (at best) represented by regional/state landlord associations.
This is the correct way to do this.
If you believe certain actions by the state are unethical and immoral than you believe it. Thats not arguable.
You are defending your belief using a property rights argument to say such targeted actions are "tyranny". Call it what you will; the examples I gave tried to show its not unusual for the (elected) government to override individual property rights in the name of promoting the general welfare...especially during unusual circumstances. We actually fought a civil war over an unjust definition of "property". Top income tax bracket (over 200K) in WWII was 94% by the way.
But we are going down the wrong rabbit hole with a pure "property rights" discussion. The bill would NOT take your property, it would temporarily limit your economic use of it. Thats very different. Such actions--fair or unfair--are taken ALL THE TIME, just ask AB&B owners.
Grocery stores--your favorite example--or gas stations can be mandated to keep prices level during an emergency. The now invoked National Defense Production act can allow the executive to redirect industrial production and (with congressional assent) utilize price controls.
You don't have to like it, and the bill is probably awful legislation (haven't read it) but please keep in mind that many are dying in NYC and up here in Boston they are repurposing hotels for hospital beds even as we post these things...lets keep some perspective.
Jonathan,
Of course it's tyranny. It's also unusual and unconstitutional. The government can't interfere with a private contract. Further the government can't take property (even for a limited time) without compensation. We are not a banana republic even though we act like it from time to time.
Property rights and the rule of law are the basis of this nation as well as the reason for its greatness. Lose this and we've lost everything.
Godspeed
Gary
I've been reading through the comments of the livid landlords about this new bill. Totally understand why they'd be up in arms. The originator of this post called it "theft" by the government. It was also assumed and stated that there wouldn't be any relief for the landlords, only the tenants.
But then I read through the proposed bill on the NY State Senate Bill site I found the language below. Correct me if I'm wrong, but according to the language below, landlords WILL get relief and the form of suspended mortgage payments for the same length of time rents will be suspended. Am I missing something here?
(b) (i) Any person or entity who faces a financial hardship as a result of being deprived rent payments for property pursuant to this section shall receive forgiveness on any mortgage payments for such property for ninety days, in an amount determined by the following frac- tion multiplied by such mortgage payment, up to the total dollar amount of lost rent: (A) The numerator shall be the total amount of rent payments suspended for his or her tenants over the ninety day period laid out in this section;I've been reading through the comments of the livid landlords about this new bill. Totally understand why they'd be up in arms. The originator of this post called it "theft" by the government. It was also assumed and stated that there wouldn't be any relief for the landlords, only the tenants.
But then I read through the proposed bill on the NY State Senate Bill site I found the language below. Correct me if I'm wrong, but according to the language below, landlords WILL get relief and the form of suspended mortgage payments for the same length of time rents will be suspended. Am I missing something here?
(b) (i) Any person or entity who faces a financial hardship as a result of being deprived rent payments for property pursuant to this section shall receive forgiveness on any mortgage payments for such property for ninety days, in an amount determined by the following frac- tion multiplied by such mortgage payment, up to the total dollar amount of lost rent: (A) The numerator shall be the total amount of rent payments suspended for his or her tenants over the ninety day period laid out in this sectionThere is a long list of costs to own and operate housing and after all the expenses are paid many housing providers use what is left over for their own living expenses. These expenses include property taxes (school, village/city, town and county) property insurance, regular maintenance contracts for things like lawn care and snow removal, maintenance reserves for unexpected repairs to plumbing, heating, etc and for large expense items like roofs, painting, and updates). A mortgage payment is only a portion of the overall payments. In NY State the property taxes are often higher than the mortgage. This bill only covers certain mortgages, and of those, it is not a full waiver all of the time. This bill falls terribly short of reimbursing the providers of housing.
In this case housing providers are being required to provide a
service without compensation. This is like requiring a restaurant or grocery store to
stay open for the next three months and serve all of its customers for free, with never being repaid.
If you carefully consider some of the implications and some of the recklessness of
the proposed bill you may feel differently. For example:
-Not only are people who become unemployed eligible for standard
unemployment, they are also eligible for enhanced stimulus unemployment,
and the one time stimulus check. Many of these people will be earning
more than they were before. For example, I know of a plant manager who
is losing workers because they know they will be earning more with the
enhanced stimulus benefits. These enhanced benefits are being provided
by the government so that people can pay their expenses, not so that
they can stiff their housing provider. Unfortunately, this bill will
allow them to do exactly that.
-This bill allows anybody who has lost any amount of income to not pay rent for three months. It does not
consider people's ability to pay or the amount of income lost. Many
renters have savings (sometimes more than their housing provider). Many
people are working part time to keep busy and are financially stable (retired
people,
students gaining work experience for a resume and whose parents are
funding them, etc) and this will allow them to withhold payments to
their housing provider regardless of their financial situation and
ability to pay.
-This bill places a massive burden only housing providers shoulders.
It does not require any other provider of a service or product that
people use to be provided for free for three months with no
reimbursement. It does not require grocery stores or restaurants to
serve people for three months without reimbursement.
-Self-employed housing providers are not eligible for unemployment
benefits, and for many of them the small percentage of revenue that is
left after expenses is their only income. An SBA loan is not a benefit,
it is more debt that must be repaid. Unemployment benefits that
unemployed people will be receiving are not repayable.
-The government should be subsidizing the rent if they are going to
deny it to people, and ensuring that people who are receiving
unemployment benefits use them responsibly. They can set up a section 8 style program so that this bill doesn't cause more economic problems for housing providers and the taxing entities, employees, insurers,and contractors that rely on them for payments.
-This is a reckless and poorly drafted bill that will do more harm than good.
Couple of things are going to happen if the tenants refuse to pay rent for the next 90 days.
1) major spike in evictions come the end of the 90 day period.
2) market will get flooded with delinquent tenants in the market looking for new homes prior to the 90 day period ending to avoid evictions and ruining their credit
So everyone be aware if you randomly have so many calls for your vacancy say around mod June .
Us landlord should stick together and refuse these opportunist move into our properties because they just decided to be irresponsible
And not pay their rent when they could.
One other thing
- what relieve is provided for landlords that don’t have mortgages on their investments? They simply rely on rents to run their own homes and expenses. SMH the government needs to think beyond their nose and actually
Dig deeper before putting forth such a ridiculous bill
I've been reading through the comments of the livid landlords about this new bill. Totally understand why they'd be up in arms. The originator of this post called it "theft" by the government. It was also assumed and stated that there wouldn't be any relief for the landlords, only the tenants.
But then I read through the proposed bill on the NY State Senate Bill site I found the language below. Correct me if I'm wrong, but according to the language below, landlords WILL get relief and the form of suspended mortgage payments for the same length of time rents will be suspended. Am I missing something here?
(b) (i) Any person or entity who faces a financial hardship as a result of being deprived rent payments for property pursuant to this section shall receive forgiveness on any mortgage payments for such property for ninety days, in an amount determined by the following frac- tion multiplied by such mortgage payment, up to the total dollar amount of lost rent: (A) The numerator shall be the total amount of rent payments suspended for his or her tenants over the ninety day period laid out in this section;Frank, as a NYC Landlord with Properties in B Neighborhoods, 90% of my tenants make over $100k EACH and couples make over $200k per couple.
Many of my tenants will have over $100k of Savings.
There is no MEANS TEST on the proposal.
There is a reason why Landlords like me have required criteria when we approve a new Tenant. It's because they have the MEANS to support themselves should they lose their jobs, even for a prolonged period of time.
Part of accepting a low CAP Rate (5% or below) on NYC Properties is to balance it out with Quality and consistent income stream.
While I don't mind helping Tenants that are NOT WEALTHY.... I absolutely mind helping tenants that would otherwise be in the top 10% economically.
Why isn't there a Means Test in this proposal?
In fact, it should be done with all Rent Stabilized Apts as well. We should NOT be subsidizing Wealthy people just because we collect their rent.
Does this make sense?
Honestly, why can't they just delete the next 3 months from fiscal history?
No rent
No mortages
No taxes
No transfer of ownership unless previously agreed to
Just wait , the government will add "evictions " to the protected class . So you cant use their past against them
Even if they waive or postpone payments to the bank, you still OWE the original amount - the bank loses nothing, they're not waiving 3 payments from your balance. NY would be giving away your income for 3 months, incurring massive losses. It would be like forcing grocery stores to give away food for 3 months with no reimbursement, or gas stations to give away gas with no reimbursement. There IS no such thing as ORDERING a merchant to give away their product, except for these NY lawmakers who think a landowner should. This is unthinkable - that someone a citizen could be ordered to give away their product.
I whole-heartedly disagree with this approach and the City is overstepping their boundaries even proposing something so ridiculous. With that said, its your responsibility (and any other LL's) to practice what we often preach. Have plenty of emergency reserves, multiple streams of income from different business sectors (multiple properties is not multiple streams, technically).
We all have a storm to weather. Some of us are new to REI and some of been in it for decades so obviously reserves, knowledge and preparation are key but a tenant having just one income and you having just one source of income I guess ultimately falls on the both of you. Honestly more so the LL, IMHO.
@Tre James: Storming the weather with reserves isn't the issue, nor the reason for this post. Some landlords will and some won't; that's a totally different topic we could debate. The topis is: The state would be forcing small business owners (landlords) to give away their labor and product for free.
@Tre James: Storming the weather with reserves isn't the issue, nor the reason for this post. Some landlords will and some won't; that's a totally different topic we could debate. The topis is: The state would be forcing small business owners (landlords) to give away their labor and product for free.
And that is 100% wrong and overreach.
@Joe Splitrock: It's a true statement that the state would be causing losses to both normal business and landlords under this proposal, but one is truly unethical. It's like saying that there were two men that were killed, but one may have been murdered, and the other was killed in self defense; one was justified and one wasn't. The state would indeed be causing losses but two VERY different kinds of losses. The big difference is:
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Existing losses of income cause by the state is not allowing the FAIR exchange of certain goods and services, but the proposed NY bill would order/force one citizen to give their goods/services away directly to another citizen for free with no reimbursement.
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I feel like you're not seeing my point. Asking people to refrain from making fair trades is TOTALLY different than ordering a trade where one party must receive $0 for their product/labor.
Do you think it would be fair, currently, for the state to force a grocery store owner to give away his product? You'd have to say "yes" to be consistent, but I'm guessing you'd say "No" because the state simply subsidizes each individual to buy food instead of incurring harm on store owners.
Do you think it would be fair, currently, for the state to order all employers to pay their employees full wages if they have no work? No, it would be immoral. The state subsidizes these loss of wages with an unemployment program instead of ordering a citizen to give away their labor or treasure directly to other citizens with no reimbursement.
Why do you think this is OK; do you have other examples of the state ordering the awarding of private property to another citizen directly with no reimbursement?
It is not different at all.
I think the information you are missing is that a store front is a service. You can buy alcohol at a liqueur store or a bar. People to go to a bar to use the space. When you force a space to close, the business is still forced to occupy the space and pay for the space, but gains no income for the space. Do you believe the government can take away income from the business, yet force the business to pay the landlord? Why is that ok, but the mere suggestion of taking rent from a landlord is morally wrong?
Government is forcing a business to lock their doors, yet they are still required to pay their landlord, suppliers, utilities, taxes. No different than the "cancel rent proposal" and forcing a landlord to pay expenses. In either situation, the space is still occupied but unable to generate income.
I don't believe taking rent or forcing a business to close, without compensation from the government, is constitutional. States that are forcing businesses to close are pissing all over the constitution. I don't think it is OK.
Couple of things are going to happen if the tenants refuse to pay rent for the next 90 days.
Agreed.
1) Once tenants realize that they can get away with paying no rent, emboldened by policies implemented by spineless lawmakers,they will continue doing it as long as possible, even after the 90 day moratorium is up.
2) Lenders will have no problem asking for their pound of flesh from landlords but lawmakers will not want to be the bad guys who forced people to start paying rent again or allowed landlords to evict.
3) Mob rule. Clusterf*ck ensues.
@Tracy Munger my thought too. If they would do a pause across the board, the economy would start back fast.
@Joe Splitrock: The difference between you comparing closing a business and ordering free rent is this: The ordering of a business to cease operation is totally different from ordering a business to give away their product or service for free.
Secondly, your example of a bar focuses on the occupying of that space is not valid, because the customer is not paying to occupy the space, he is paying to make a purchase ...occupying a space for 5-30 minutes isn't what he's paying for; it's complimentary. Occupying a PRIVATE home/apartment is the only reason there is money exchanged; it's the essence of the contract. So you'll have to show me where the government forces a private citizen to give away their product or service for free with no compensation to make your argument.
The 5th Amendment of the Constitution says: "...nor shall private property be taken for public use, without just compensation."
Ordering businesses to close does not violate the 5th Amendment; ordering the giveaway of a product or service does. Do you know why this concept is in the Constitution? Because it's tyranny! These lawmakers aren't the guards of your liberty, they are part of mob rule that would take as much as they can from anyone, in exchange for votes.
You say: "Do you believe the government can take away income from the business, yet force the business to pay the landlord?" First of all, they are not taking away income, they are forbidding an activity that leads to income. They shouldn't close businesses, but if they do, NO, I do not believe the state can forgive a private debt between two individuals (the lease). Doing so would be making "two wrongs" instead of one.
Also, the state doesn't "force the business to pay the landlord" ...it's a contract the owner made voluntarily. It's the state's JOB to enforce contracts, otherwise we have no civilization or economy.
@Joe Splitrock: Also: Your thoughts above follow this reasoning: If I lose my job or something negative happens to me, those I rely on for products and services should also be affected. But we know that's not ethical.
If we lose our job, do we expect the grocery store owner to give us food for free? No we do not. If we lose our job, do we expect the bank to subtract principle from our mortgage balance? No we do not.
All of your reasoning above is predicated on "If something bad happens to me, anyone I use for services/products in my life should ALSO be negatively affected."
So if the state orders no fair exchange of goods/services may take place, you automatically require those you owe to bear the burden?
@Karen Margrave: A "pause across the board" still would require forcing tens of thousands of landlords to give their labor, product, and service for free with no reimbursement. Landlords do not qualify for unemployment compensation, so the burden would be unfairly be put on a certain citizen. The state's solution would need to reimburse property owners for their product, just like grocery stores aren't forced to give away their food for free when someone is in need; it is subsidized by the state. When when someone needs HOUSING, the state provides reimbursement through programs like section 8, etc. and does not force property owners to give away their product/services/labor.
Also, the 5th amendment of the Constitution says: "nor shall private property be taken for public use, without just compensation." This is why it's never been done before.