The Paletz Law Blog

Landlords Caught in the COVID-19 Crossfire

In our continuing efforts to provide a voice on behalf of our property owner clients and their rights during the COVID-19 pandemic, CEO Matthew I. Paletz was published in Crain’s Detroit Business to express the need for the State of MI to refrain from further action that would infringe upon the rights of landlords. The original publication can be found here.

I know there’s not a lot of sympathy right now for landlords and property owners in the midst of this COVID-19 pandemic, but they are paying a price, too. A big one.

In my job as an attorney focused in landlord-tenant disputes, I’ve seen both sides of the rental equation. Although I’m keenly aware that tens of thousands of Michiganders have filed for unemployment benefits after losing jobs and businesses, one of the least-reported victims of this state shutdown has been apartment owners and manufactured housing operators.

I think most people, when they hear the term “landlord,” may think of big corporations and New York tycoons like Leona Helmsley and Donald Trump. In fact, many of my landlord clients in Michigan are individuals or smaller companies who purchased apartments, condos and manufactured housing properties as not only investments but as a means of having a regular income to pay for food, their own housing, college educations and car payments, like everyone else.

Most of my clients weathered the storm in April, but May is going to be a different story altogether. As they look at the May 15 deadline for the governor to potentially extend the moratorium on a landlord’s right to seek nonpayment relief through the legal process, there are some real concerns not only for the property owners themselves, but the communities their properties reside in.

Here are a couple of the biggest issues right now from a community standpoint:

Affordable housing was a crisis before COVID-19. Destabilizing otherwise secure housing providers will only exacerbate the current situation.

Some property owners in this state own multiple buildings and thousands of units. They can’t manage these properties themselves, and if this eviction moratorium is extended then hundreds more jobs will be lost, because the landlords tell me they’ll no longer be able to afford to keep them on staff.

From a municipality perspective, if the eviction moratorium is extended, you could have massive defaults on properties. That means a huge loss in property tax revenue funding our community infrastructure and schools. We all remember how properties going into default hurt us during the last recession. We are at the precipice of this happening again.

Let me be clear ⁠— no one is an advocate of people being kicked out of their homes and sent to the street in the middle of a public health crisis. This is about preserving the rights of property owners and not leaving their fate solely to the discretion of the governor’s office.

One of my clients is Allen Amber, who owns 29 apartment locations and 1,500 units in metro Detroit and is the former president of the Apartment Association of Michigan. One of his biggest issues with how this is being handled is the fact that he believes his tenants are being given a reason not to pay in spite of receiving checks from the state and federal government. He assumes his tenants have the money to pay rent because they live in complexes in good areas, pay more on average than others, and his company is extremely conservative in how they financially vet their potential renters.

In other words, not all tenants are created equal, but all of them are being given a pass. This is in addition to protections under the federal Coronavirus Aid, Relief, and Economic Security Act, which imposes other restrictions on landlords who have mortgages backed by the federal government.

The answer to all of this is that we need to safely reopen the state and allow businesses to survive. In the midst of that, we need to restart the landlord-tenant relationship. If tenants have a legitimate dispute, that’s what the courts are for (when they’re open again), not the governor.