How to Negotiate a Payment Plan with Your Landlord
Requiring rent payment during a pandemic may seem cruel, but many landlords are not rich and depend on rental income to pay their bills, including mortgage payments on their rental properties.
In Michigan, an executive order was signed by Governor Whitmer at the start of the shutdown that stopped evictions due to the pandemic, but that moratorium ended on July 15th. Up to 75,000 eviction cases are now expected to hit Michigan’s courts, many of which are due to unpaid rents during the moratorium period.
So, if you’ve fallen behind on rent over the past few months, or are struggling to make upcoming payments, what can you, as a tenant, do to avoid eviction? Not only that, but if you end up with an eviction in public records, it may be difficult convincing another landlord to rent to you.
First and foremost, you need to communicate with your landlord and then do your best to cooperate with their requests. Otherwise, you leave your landlord no choice but to assume the worst, forcing them to do their best to evict you ASAP!
Your saving grace could be a payment plan that benefits both you and your landlord, helping both of you to get through these unpredictable times. Both of you want to ensure a basic degree of stability right now: you need to pay your bills, and your landlord needs to be assured of income coming from you so that they can pay theirs, and a payment plan is the best way to establish that kind of certainty.
Let’s look at some steps to develop a payment plan that works for both you and your landlord.
Make a Budget: To develop your payment plan, start with a budget. A great budget template from the mortgage industry can be found here. Make sure to list all your sources of income, all your bills and expenses.
Prioritize your Expenses: You wouldn’t be behind in rent if you had a balanced budget, so you should figure out what you can cut back on. Can you cut your spending on food? Personal care? If you have 2 cars, can you get by with one and cut your insurance on the other? How badly do you need cable? If you want to keep a roof over your head, everything else should be considered optional, including credit card and car payments.
How Much Rent Can You Pay? Once you start cutting expenses in your budget, you should correspondingly be adjusting how much money is left in your budget for rent. Every dollar you cut from your other expenses increases how much you can pay in rent!
Negotiate a Payment Plan with Your Landlord:
– Agree what percentage of your original monthly rent you can pay.
– Decide on the frequency of payments.
– If the cost is still too much for you to pay in increments, have a past-due rent payment plan. This will let you agree with your landlord how you want the spread the accumulated outstanding rent across post-pandemic months, and Have a simple way to pay during lockdowns. (For example, you can pay through automated online transfers.)
– Finally, make sure the plan is flexible enough to adjust to the unpredictable future. Maintain a good relationship with your landlord for more forgiving negotiations.
Agree on What Happens when you Go Back to Work:
Revisit the payment plan for any changes that should be made once your financial situation improves, especially since the accumulated outstanding rent will now apply, on top of your standard rent amount.
Above all, make sure Everything is Documented in Writing:
Handshakes or verbal agreements mean nothing if it’s not put into black and white
Sometimes, your budget may show that you can’t pay enough rent to negotiate a payment plan fair to both you and your landlord. You may then try to negotiate “Cash for Keys” with your landlord. This is where you agree to accept an amount from your landlord to help with your moving costs and avoid an eviction on your record, but you have to leave the home in good condition. Just be reasonable about the amount.
Follow these guidelines to help ensure you can keep a roof over your head and will be able to plan accurately for how you’ll manage your finances during these uncertain times.
Getting a payment plan agreed with your landlord is better for both parties than going down the eviction road, so it’s always better to try to come to an arrangement, rather than just stop paying your rent without speaking to them first.
If any landlords or tenants have had experience getting a payment plan agreed during the coronavirus crisis, feel free to share your stories below!
Image courtesy of Andrea Piacquadio