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Handling Early Lease Termination During COVID-19

In the COVID-19 world, property managers have to make tough decisions with tenants unable to pay rent during this time.

Government-mandated lockdowns and business closures have diminished many tenants’ ability to earn a living and pay rent. President Trump issued an executive order prohibiting landlords from evicting tenants due to non-payment, but that order did not cancel rent.

Tenants must still pay any amount owed on a lease after the eviction prohibition is lifted. 

tenant in apartment standing in their living room office in front of windows on second level of building contemplating lease payments on cell phone in their hands
Photo by Bench Accounting on Unsplash

What actions should property managers take? 

Tenants are not willfully refusing to pay rent. New circumstances have forced most people to prioritize other bills, especially with the non-eviction order in place.

During this time, some tenants might be looking to terminate leasing agreements early or are planning not to resign because they fear not being able to meet the payments even after the no-eviction order is lifted.

A great way to prepare for this type of financial setback is to analyze your property’s finances and be flexible to help retain tenants and keep business flowing.

Offer a free month of rent for new and existing tenants.

Offer tenants who are facing hardship or new tenants a FREE month of rent. This is a great incentive to increase unit sales and retain existing customers.

Make sure to research other neighboring properties and know what your competition is offering, so you are within the competitive market.  

Offer non-resigning tenants a month to month contract 

If some tenants are unwilling to resign, another way to keep them renting with you is to offer a month-to-month contract, giving the tenant more flexibility to stay knowing if things get even hard, they have the option to discuss and terminate the lease with adequate notice.

If laws within your state permit you to do so, you can add other conditions that benefit you as the landlord.

For example, you can stipulate that tenants on a month-to-month lease will need to find someone to take over their lease before moving out if they would like to pay no lease termination fees.

Enforce early lease termination policies

Another way landlords can protect themselves will be to enforce their early lease termination policies. This route could be seen as unreasonable and might put the property at risk of not gaining new tenants. However, it’s not against the law to enforce the policies set in place and signed by the tenant upon moving in.

This might be the only option for property managers struggling to meet property bills or looking to make a return on investment. 

Create a payment plan 

Payment plans are becoming more common, particularly for large purchases and significant financial investments. Most properties require rent paid on the 1st of the month.

If tenants are already behind on rent and protected by the no-eviction executive order, consider breaking down their payments. Payment plan options can help strengthen your relationship with the tenants and ensure they pay you. 

Provide early payment incentives 

Offer a discount on rent for tenants who pay several months in advance. This benefits you by securing a payment that could be used for advanced property financing needs. 

It is vital to communicate with your tenants and reach a consensus during a time like this. Open and effective communication ensures that your property is not left suffering financially. When you communicate, your tenants see that you are doing everything possible to keep them happy.


Need helping tracking your policies and plans?

Jervis Systems provides users with the ability to manage rental agreements, policies, property rules and communication among their teams and tenants.

These abilities allow property managers to create “evergreen” templates, checklists and policy communications. Automate these functions to save valuable time in the future.

We’re currently offering users the chance to beta test our features before we reveal them to property managers everywhere. Contact us here to gain early access and learn more about our official launch!

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