Do COVID-19 Rent and Eviction Protections Just Delay Inevitable Bankruptcy?

It is important to note that eviction moratoria and related restrictions differ across states, counties, cities and regions. While city and local jurisdictions seek to employ their state's guidelines, they often take it a step or two further, or not far enough, based on local conditions, which can be impacted by politics and lobbying. New law, rules and ordinances are not relieving any tenants of rent liability, but rather merely extending the tenant's time to pay. Thus, unless a lease provides for rent abatement under these particular conditions, the burden of the pandemic is still left squarely on tenants' shoulders. Few, if any, leases shift the financial burden of the pandemic shut down to the landlord. Few, if any, insurance policies insure against pandemic shutdowns. However, although contractually it appears that landlords will not bear the burden of the shutdown, in fact many will lose a lot due to necessary evictions, vacancies, and the probability of a more competitive rental market and tenant insolvencies.

Tenants and landlords should be proactive and cooperative in strategizing solutions to minimize financial ruin on both sides, regardless of what the lease says. Tenants should be transparent and forthcoming with information that the landlord should consider in deciding on lease modification requests and terms. Hopefully, the landlord will be reasonable, empathetic and cooperative. If not, tenants still have options. For example, tenants can form alliances with other tenants of the same landlord, lobby politicians and, as a last resort, file bankruptcy to reorganize the debts. Whether you are a landlord or a tenant, the first step in the negotiation process is to know the laws that apply to you and make sure you meet the requirements in those laws.