An unfortunate side effect of Congress’s showdown over the wall is that many federal employees are struggling to pay rent and, naturally, their landlords are struggling to respond to this situation. Federal employees stopped receiving pay as of December 21, 2018. At the time I wrote this, we were thirty-one days into the shutdown and there was no end in sight. So how is a landlord to respond? Here’s a hint: not the way you would respond to any other delinquent tenant.
I’ve written this blog for those of you who have tenants who are federal employees who are now finding it impossible to pay rent. One rule of engagement about this blog, though: I’m not getting into the politics of the government shutdown. That’s just not what this website is about. However, there are aspects of politics that will affect your decisions. This blog is going to operate from the assumption that money is your bottom line when you are wearing your landlord hat.
The Federal Shutdown Has Created a MAJOR Problem for Texas Landlords
You probably know that being a federal employee is no guarantee of high pay. Many federal employees make modest incomes and live paycheck to paycheck. Some of you might be saying, “not my problem….” Actually – in this situation – it kinda is.
As with all evictions, this one will begin in the Justice of the Peace Court. With rare exceptions, Justices of the Peace are elected officials; they are politicians. Do you see where this is going? Whether your Justice of the Peace is red or blue, you should expect your Judge to be very sympathetic to this tenant.
Hey – I say this all the time: I’m not the guy who’s going to tell you what you want to hear. I’m the guy who’s going to tell you what you NEED to hear!
The Federal Shutdown: A Justice of the Peace’s Perspective
Let’s look at this government shutdown briefly from the Judge’s perspective. The blue Judges are not going to want your tenant to suffer because of a policy they don’t like, particularly a policy spearheaded by a President whom they like even less. The Red Judges are going to perceive those blue members of Congress as obstructing the construction of the President’s wall initiative and victimizing federal employees in the process. They are going to see their role as one of easing the effects of this process on an innocent federal employee. And you, my landlord friend, are going to be left holding a stinking bag of – politics.
One thing is for certain. If you handle this situation poorly, this will be a recipe for disaster for you…
Best Practices for Evicting a Federal Employee During the Government Shutdown
The key to a successful outcome during this risky time for landlords is starting early, maintaining records of your many communications, and being generous with your attempts to resolve your federal employee tenant’s challenges. I cannot emphasize enough the importance of being able to prove to your Justice of the Peace your patience and generosity.
Communication is Important; Proving it is Essential
Reach out to your federal employee tenants early. They are likely in a state of shock, even after the passing of all this time. Tenants who are used to stable incomes will often stick their head in the sand when their financial situation goes off the rails. A little hand holding here makes sense. This is a tenant with a very dependable source of income. Despite the fact they don’t have a huge income and despite the fact they might live paycheck-to-paycheck, you probably want to keep this tenant.
But it isn’t enough to just reach out. Make sure you can PROVE you reached out. Text messages work the best. If the time comes to start an eviction, you will want to show the Judge 1) you took the initiative to reach out early (even before any delinquency); 2) you offered to help them solve this problem; and 3) you communicated with the tenant frequently.
Another important tip: prepare your tenant for your communications. Set some rules. Begin by telling your tenant you are concerned about them and you feel it is important for both of you to communicate often during the next several weeks. Obtain their commitment to respond to you promptly. Make sure they understand your preferred method of communication is by text message.
Direct Your Tenants to Local Charitable and Government Organizations
If your tenant’s non-payment is inevitable, tell your tenant to start reaching out to organizations like The Salvation Army, Catholic Charities, and other local non-profit organizations that provide rental assistance. These organizations have great programs to help folks with a temporary loss of income. Organizations with whom your tenants have some connection are more likely to provide rental assistance. Tell them to reach out to their own religious organization if you know they belong to one. If that fails or they don’t have one, have them call yours. Failing that, just urge your tenants to start reaching out to religious organizations near their home. The worst that can happen is someone will tell them “no.” Also reach out to the county’s housing department. Many counties – particularly the higher population counties – provide emergency housing assistance.
Be Open to Working with Your Tenant
Below are three methods you can offer to make your federal employee tenant’s life easier during the shutdown. Just like communicating with your tenant, it is important to maintain written records of these offers. You will want to show these offers to your Judge (normally not allowed, but you will want to try). It is even more important to document any of these modifications to the lease agreement and have both parties sign the written, modified, temporary terms.
In case you’re wondering: yes – I would normally NEVER endorse any of these options. I am recommending that you do this ONLY in this circumstance and only for federal employees affected by the shutdown.
Would you like templates for these lease addenda? Call my office at 817 659-2033 to request yours. They cost nothing if you agree to join my mailing list!!
Offer Payment Delays
Some tenants may be working on obtaining funds from a retirement account. Obtaining funds from a retirement account can involve delays of several weeks; sometimes months. Worse, tenants will often claim they are obtaining money from a retirement account, but the money never materializes (because they never had such an account). If you are going to agree to this, require proof that your tenant has these funds in a retirement account. It is entirely reasonable for you to demand proof of a retirement account under these circumstances. But be smart about this. I have seen tenants apply for a rental property by showing a retirement account statement that was entirely forged. Require that your tenant call into their broker and provide you the right to obtain a balance inquiry on their account. The broker will typically want to provide their own power of attorney for this purpose.
If you are going to wait for your federal employee tenant’s rent payment – especially if you are covering a mortgage payment on your rental property during this time – you should demand that the tenant make some advance rent payments after their money comes in. Your tenant needs to understand this before they apply for that loan or withdrawal. Try to get the tenant to provide you six months of advance rent payments in exchange for agreeing to such a delay.
Offer Reduced Rent Payments
You must be very careful about this. If you handle a rent reduction incorrectly, it could become permanent. Agree on what the new, temporary payment will be and – most importantly – when that temporary reduced payment will stop. The payments can stop upon the federal government’s shutdown ending. But never state that it is when the tenant returns to work. You don’t want them burning you by taking leave under the Family Medical Leave Act. Once you have agreed with your tenant about the amount and length of time for reduced payments, put that in writing and sign the document along with your tenant.
Waiving Rent and No-Consequence Lease Terminations
Your federal employee tenant’s best option right now may be to move in with a relative. It’s hard to always understand your tenant’s situation and options. Worse, they are often in such a mental state they won’t volunteer details to you. If they have opportunities like this, they may have not given much thought to seizing upon them. Making an offer to let your federal employee tenant remain in the property for several more weeks and forgiving their rent arrears might be a much cheaper outcome for you than would be proceeding with an eviction and giving your tenant an opportunity for a free appeal.
Don’t document this agreement, though. Tell your federal employee tenant that if they move out AND leave your property in broom swept condition, you are willing to forgive any outstanding balances (or a portion of it, if that is what you prefer). But also tell them that if they text or email anything to you about this, you will respond by denying the agreement and you will withdraw it. This keeps open the opportunity for you to decide whether they returned the property to you in acceptable condition. If you’re going to give them some free rent, they’re just going to have to trust you. This will inspire your tenant to clean the property much more diligently than they normally would!
Bearing your Federal Employee Tenant’s Cross
If you find you must proceed with evicting your federal employee tenant, it will be important to show the Judge you have suffered along with your tenant. Remember: your Judge will likely want to find a reason to dismiss this eviction. I don’t care how well prepared you are for trial. I don’t care if you property served your notice to vacate and properly completed your pleadings. If the Judge wants to find a way to dismiss your eviction, the Judge WILL find a way!! If you must pull the trigger on evicting your federal employee tenant, you want to make the prospect of dismissing your case as difficult as possible for the Judge.
If you must start the eviction process, you want to show the judge the following:
- You worked with the tenant. Show – DO NOT EXPLAIN – how diligent you were in communicating with your tenant early and often. Show – DO NOT EXPLAIN – all the things you did to help this federal employee tenant.
- Your tenant is more than one month behind. I normally want landlords to start the eviction process only days after the first missed payment. Not under these circumstances. The Judge is going to be MUCH LESS sympathetic to your federal employee tenant if you can show you were patient and shouldered some of your tenant’s burden. I get it – that’s not your job. Don’t confuse justice with increasing the likelihood of getting a judgment under these circumstances. Justice of the Peace courts are 90% sales and emotion and 10% law. I have actually had one of these Judges look at me and say, “Mr. Girling, I know what the law says and I don’t care. I’m not doing it!”
- You have covered mortgage payments (if this applies). Bring your mortgage statements or bank statements showing where you have made mortgage payments during the tenant’s period of non-payment. Use a highlighter to show where and when you mad the payments during your federal employee’s term of delinquency.
You are Walking on Thin Ice – Wear the White Hat to Court
You don’t want to attempt to evict a federal employee during the shutdown without being able to show you have made a good faith effort to work with the tenant, you have offered solutions to the tenant, and you have personally suffered financially. I know. This sucks. It’s unfair. But if you don’t do this, you’re almost certain to experience a dismissal. You have no control over the Judge’s politics. And you certainly won’t change the Judge’s politics with an impassioned 2-minute speech. But you can control your Judge’s willingness to protect your tenant. Showing a little suffering on your part will go a long way towards making your case more sympathetic than your tenant’s.