What if I cannot pay rent?
By Chang Se-moon
One of the most heart-breaking occurrences during the current COVID-19 pandemic relates to people who can no longer pay rent for the apartment they live in or for the space where they run their small business. This cruel development is impacting most, if not all, countries currently suffering from the pandemic, including Korea, the United States and beyond.
Many employees who lose their jobs have little, if any, savings to begin with. When they lose their jobs due to the pandemic, they have no means to pay the rent. Many small businesses have survived on small profit margins to begin with. When sales plummet due to the pandemic, these businesses have no means to make their rental payments.
What should policymakers do? An easy, perhaps too easy, way out is to enact a law that prevents property owners from evicting renters, say, for the next three or six months as many jurisdictions have done. There are several problems with this approach.
For one example, what happens after the three to six months of no eviction period ends and tenants continue to be unemployed or suffer from no sales? For another, what should some property owners do who have to make their own mortgage payments or incur urgent maintenance expenses?
Let us review how the U.S. government has been handling this eviction issue as explained in the Oct. 27 Consumer Alerts that was released by the Federal Trade Commission. The approach is explained by Shameka Walker, who is an attorney at the Federal Trade Commission (FTC) Division of Consumer & Business Education.
In September, the U.S. Department of Health and Human Services (HHS) issued a temporary order to stop evictions due to the COVID-19 pandemic. There are several items in the order that both renters who rent the property and landlords who own the property need to be aware of.
First, the order protects only those “renters who meet certain requirements and who sign a form and give it to their landlord.” I will explain the form later in this article. Second, landlords can still charge late fees during the temporary relief period. Third, if renters break certain terms of the lease, they may still be evicted. Fourth, the order does not apply to homeowners facing foreclosure. Finally, the order does not apply if renters live in an area that already has the same or better eviction protections. Many local governments, including Washington DC, have their own local rules that ban evictions.
The September order is in effect until Dec. 31, this year. It may be renewed, or it may not. If not and if renters cannot pay rents in January, the landlord can take the renter to court, and ask a judge to order the renter to either pay or move out of the property.
Prospective renters as well as landlords may want to know how the form is worded that renters have to sign to avoid eviction. The form is OMB Control No. 0920-1303, and expires Dec. 31, 2020.
Key sentences are the following. The renter has “used best efforts to obtain all available government assistance for rent or housing,” and is “unable to pay my full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, lay-offs, or extraordinary out-of-pocket medical expenses.”
The renter should also declare that he or she “is using best efforts to make timely partial payments that are as close to the full payment as the individual's circumstances may permit, taking into account other nondiscretionary expenses,” and, “If evicted I would likely become homeless, need to move into a homeless shelter, or need to move into a new residence shared by other people who live in close quarters because I have no other available housing options.”
Sadly, the form that the renter has to sign ends with the statement that at the end of this temporary halt on evictions on Dec. 31, 2020, “my housing provider may require payment in full for all payments not made prior to and during the temporary halt and failure to pay may make me subject to eviction pursuant to state and local laws.”
Having reviewed these documents, I still believe my idea of Coronavirus Civic Mediation Board that I proposed in this Korea Times column on March 29, this year, is the least painful solution. (See “How to minimize likely lawsuits from COVID-19” (
https://www.koreatimes.co.kr/www/opinion/2020/03/137_286682.html
).
The proposed board is based on the premise that this pandemic is not an ordinary crisis and we all have to make sacrifices to get over it. It will have all volunteer mediation members, hear from both sides without charging any fees to either, and make recommendations to both based on the idea of mutual assistance and survival. Both sides will retain the right to go to court, but hopefully, the solutions recommended by the board would be a final resolution.
Chang Se-moon (changsemoon@yahoo.com) is the director of the Gulf Coast Center for Impact Studies.