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Is the Rent-Eviction Moratorium Fair for Landlords? By- Gary Whitehead

Posted on 01. Aug, 2020 by in all

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As the owner of a Paralegal Business that specializes in Landlord-Tenant evictions, I also have seen my 15 year old business drop about 90 % in the last three months. Because I operate in two counties and have other services to perform, I will survive, but its close. Right now, I have clients with twenty-seven properties with non-paying tenants and there’s NOTHING that can be done. The San Diego Superior Court WILL accept a filing fee for an eviction, but will NOT issue a Summons and Complaint rendering the process useless! The earliest date will be September 30th. However, the current Governor’s ‘STAY’ is to be in effect a full 90 days after the eviction moratorium is lifted, with no date offered yet. AND, it is rumored that once the tenant is finally served, the tenant will have up to 60 days to prepare and file an ‘Answer!’

Sympathy for Landlords

I truly sympathize with landlords who are caught up in this mess. You have your obligations; you have saved and worked hard for your savings or retirement and you deserve, and have earned, a return on your real estate investment. Without rent from your tenants to support the obligations, many will have to draw from other resources or borrow to survive this current rent–eviction moratorium. But they will survive. Let’s remember that landlords have much greater borrowing resources available to rescue them. With minimal equity position, banks often throw themselves at a property owner with great terms and options. Not so for the renter. Not even close. Many landlords belly-ache about their retirement savings, forgetting that MOST Americans will have to work until they drop as they HAVE no retirement!

 

Tenant’s Dilemma

So let’s remember that housing in San Diego usually takes about half or more of a net paycheck to pay the rent. And this isn’t for some fancy-pants La Jolla ocean-front palace. San Diego is #3 in our state as being the most expensive place to live. $1,800.00 for a simple one-bedroom apartment in a marginal area of town is common.  Renters want to pay their rent and want to work, but most live ‘on the line’ paycheck to paycheck. And now we have the COVID virus issue and they can’t even work! And when they do return, many will find pay reductions or worse, no job at all!

So is the rent-eviction moratorium fair for the landlords?  Of course, not. But what is the option? Throw the tenants out onto the street?  Exacerbate an already contagious and deadly virus?  Watch them die in some gutter because they have no home?  Surely, we as a society are more compassionate than that.

Since the Reagan ‘Reaganomics’ era, we have seen an erosion of the middle class. The gap between the wealthy and working-class is huge. We have also seen residential real estate soar in value creating great wealth for these landlords. Renters have not been so lucky. With unstable employment and wages that are not in line with housing costs, renters are left behind.  Imagine what it takes to buy a low-end dwelling in our city. Credit must be perfect; income must be high and down payments large. Renting is the only option for most and is often a life-long option.

 

Time of Reckoning?

Personally, as much as I love my property clients, it’s time for many to wake up and smell the privilege. They are the lucky ones that have experienced enormous appreciation on their investments in just the last five years – some rentals more than doubling or more in value. This appreciation of the Appreciation will need to be recalled when the rent moratorium is lifted and tenants, already cash-strapped and facing a sure bankruptcy, will have no way to repay this unpaid rent and any landlord who thinks they will be repaid is living in dream land!

I have been asked numerous times by landlords for advice. I say, negotiate with the tenant and see what they CAN pay. Something is better than nothing. BUT, not one that I know of has followed that advice, preferring to ‘stick to the rental rate.’  One lofty client refused $ 5,000.00 out of $12,500.00 rent accumulated due and turned down the tenant’s offer of $1,500.00 rent wanting the lease amount of $2,500.00!  Fine. They can all wait until the September 25th due date and watch the bankruptcy attorneys wipe it ALL out!  Bankruptcy attorney ads are already appearing.

We are in a time of reckoning – a time of re-evaluation of values and standards. Again, compassion is the key. And this feeling of compassion needs to be expressed between both tenant and landlord. Negotiation and compromise will be critical; but, as is already in denial by various “real estate experts” who cater to Realtors, rents are NOT going up. The days of persnickety requirements for tenants to jump in obedience will be replaced with landlords wanting breathing bodies who can demonstrate financial stability.  Vacancy time will increase. Rent credits, already surfacing will proliferate.

We’re in for a challenging ride in the next few months, but we’ll make it; we resilient Americans always have with lessons learned by our parents and grandparents during The Great Depression. We WILL make it after all!

 

The above article was written by Gary Whitehead. He is a native San Diegan, born in La Mesa and educated at San Diego State University. He holds a Bachelor of Science in Accounting, a Master’s in Finance, and an Associates in Paralegal Studies. He presently is a licensed and bonded Notary in California, as well as a Licensed Document Assistant (LDA) and Licensed and Bonded Process Server in both Riverside and San Diego Counties. Please feel free to contact Gary at (858) 705-9270.

 

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