Being Responsible Landlords and Tenants During COVID-19

By Alec Wang, Tana Investment Group

April 17, 2020

The relationship between landlords and tenants is being put to test as we entered April, when rents are due for the first time since the COVID-19 pandemic is sweeping across the US amid unprecedented waves of unemployment. As a landlord of residential and commercial properties, with tenants occupying properties from one-bedroom apartments to office buildings, navigating this complicated relationship has prompted me to consider both the issues on hand and their underlying causes.

Well before COVID-19 arrived in the US and any moratorium on evictions were announced, I’ve been observing the shutdown in China and its economic effects. My wife and I concluded that if similar things happened in America, we would not pursue evictions but give our tenants more time for resolution. We’ve made similar arrangements with tenants before in isolated cases, without this global crisis as a backdrop.

This is the right thing to do, even though we didn’t have any legal obligation to be lenient towards defaults. As landlords, we know our role in society has a big impact on people’s livelihoods, and thus the social and moral obligations to work things out reasonably when time gets tough.

However, we can also afford this route, because we have been building our own financial cushion, so we can support our family even though the pandemic is causing much financial stress throughout the world.

Sadly, that is not the case for many other landlords I know. Some are solo owners relying on rent for retirement. Some are divorced single parents who depend on rent as their main regular income. Some have accumulated a couple of small apartment buildings through decades of investments, who pour concrete or do repairs themselves to save on expenses. These landlords cannot afford to forego months of rent at a time. Even the larger real estate companies whose cash reserve is limited, would face dire financial situations if a large percentage of tenants don’t pay.

This is why even though I would personally work with specific tenants who need the assistance, a legally enforced waiver on rent in general should not be taken for granted or as a long-term solution. I understand the motivation of tenant unions and legislators to seek protection for the vulnerable population, but when I read about one union asking tenants who can pay to withhold rent for the purpose of “showing solidarity” in order to “amplify the demand”, or several proposed measures in California to enforce a waiver on a portion or all of the rent for several months, I found them counterproductive, if not destructive.

Landlords have obligations to their tenants, and tenants have obligations to their landlords; these obligations are enshrined in the contracts we sign and should always be fulfilled with our best efforts and in good faith. The mutual social and moral responsibilities should be recognized beyond rules and regulations, in a relationship that should be reciprocal and cooperative, not confrontational and antagonistic. Difficult situations could befall upon any of us. It would be wrong for landlords to squeeze tenants, knowing that their action could push those people or families into bankruptcy. It would also be wrong for tenants to abuse the eviction process, court closure, and this moment of much-needed solidarity to live for free when they could afford to pay.

This problem, of course, exists in the deeper underlying current of income inequalityfinancial instability, and lack of social safety nets. If in “good” economic times, a disproportionately large chunk of profit goes to a small group of people beyond what a truly merit-based society warrants; if many sectors of jobs become more insecure due to technological advancements and “efficiency improvements” to certain business models; and if social safety nets are insufficient in protecting the most vulnerable, of course lots of people, most of whom are renters, will lack the savings needed to weather a storm. And when good times turn bad, people must fight for survival first and seek protection wherever it’s available, in an environment of panic that has little room for level-headed reciprocity and cooperation.

Yet, we must try.

In the long run, I hope this COVID-19 crisis will create momentum for more equitable economic growth during good times and develop the type of social safety nets necessary for today’s tech-drive and globalized economy. In building a future that strengthens the wellbeing of different income classes — landlords, tenants, business owners, employees, when bad times hit, we will all be better prepared to protect ourselves and have the capacity to help others.

But in the meantime, let’s each do our part to help keep each other afloat.

This article was authored by Alec Wang of the Tana Investment Group