HOME HARDSHIPS
Pandemic undercuts landlords and tenants
When Joey Zucarro had to temporarily close his barber shop following Gov. Gretchen Whitmer’s stay at home order for non-essential businesses in March, among his main concerns other than employees was the rent.
How was he going to pay his landlord if Joey’s Barber Shop was closed.
“I was very worried until my landlord told me that he would work with me,” said Zucarro, who founded the modern salon with an old fashion feel to it about 10 years ago.
“He said, ‘It’s not your fault that this happened,’ and told me to try and apply for the small business loans and grant money being offered.”
When that failed, Jack Otto cut the barber a break.
“I choose to work with people,” said Otto, who owns the strip mall on Gratiot Avenue in New Haven where the barber shop is located. “It’s just smarter.”
Other tenants in the mall including a restaurant and the pawn shop operated by Otto have been allowed to remain open as they were considered essential businesses and excluded from the governor’s stay at home order.
The landlord also believes in karma.
“These are good people. They work hard their whole life and to throw them out (evict them) because of a situation that is not their fault isn’t right,” he said.
“He was very kind to me and I thank him every day,” said Zucarro, who was able to reopen his shop on June 15, following the governor’s order lifting the ban on barber shops, hair salons from operating during COVID-19.
Then he smiled and added, “He will never have to pay for a haircut.”
Not all barbers were as fortunate and some might never reopen. Those who do might have to pay a higher rent in order to make up for the months lost.
“One barber I know was paying $2,000 a month before COVID,” Zucarro said, in a previous story. “Now his landlord is asking him to pay $2,500.”
Some businesses have been able to secure loans and grant dollars from the county to help defray the cost of rent and while homeowners facing the same situation have been able to use their $1,200 stimulus checks and unemployment payments to cover rent.
Homeowners
Rachel Zivojnovity said the COVID-19 pandemic has impacted her family in many different ways.
The 29-year-old Hazel Park resident rents a home with her five young children and husband, Brad, who was temporarily laid off after the stay at home order.
With Brad off work and Rachel unable to have a job because of a stroke she suffered two years ago, it has been difficult, at times, for the family to pay their rent and other bills. Unemployment benefits were slow to trickle in and the federal stimulus money had yet to arrive.
“COVID-19 has affected our family in many ways including bills, kids, and jobs,” she said. “With schools shutting down and having to try my best to homeschool four children and chase after a toddler, it’s hard. At the beginning of COVID, we were unable to pay rent like most. It was an unexpected layoff. We were scared because even if you couldn’t be evicted (for non-payment of rent under Whitmer’s executive order) we don’t like being behind on our bills.”
When the pandemic first hit Michigan in mid-March, the family’s landlord had sent them a notice offering payment assistance, including payment plans, if dealing with job loss or other
hardships.
Zivojnovity, an active mother involved on the local PTA board and as a Brownie troop leader, said she used the stimulus checks to pay March and April’s rent and has used unemployment benefits to purchase the necessities and pay other bills. Brad returned to his job working as a truck driver for Roush.
“Having a roof over our heads is top priority!” she said. “We are currently all caught up on rent, but we now know that our landlord will work with us if our economy does shut back down.”
She joins the thousands of renters in metro Detroit and across the state who have found it difficult to make ends meet during the pandemic, which has caused millions of Michiganders to lose their jobs.
Hurting for rent
Renters already faced a dire situation before the pandemic hit, said Alexander Hermann, a researcher at the Harvard Joint Center for Housing Studies, which reported in January that vacancy rates for rentals had hit the lowest level in decades, pushing up rent far faster than income. At last count, one in four renters spent more than half their income on housing.
The pandemic has hit renters particularly hard financially as they tend to have lower incomes and more economically vulnerable than their homeowner counterparts.
In May, U.S. Census data shows about 19% of renters were late or deferred their rent payments. In June, about 31% of renters surveyed said they had little to no confidence they will be able to pay July’s rent.
Last week, about 22% of all Michigan households, a 5% increase from the prior week, reported missing last month’s rent or mortgage payment or having little
confidence they will be able to pay next month’s rent or mortgage on time. This number stood at 26.7% for all households in metro Detroit, an increase of nearly 6% over the prior week.
The National Multifamily Housing Council’s Rent Payment Tracker found 77.4 percent of apartment households made a full or partial rent payment by July 6 in its survey of 11.4 million units of professionally managed apartment units across the country. This is a 2.3-percentage point decrease from the share who, paid rent through July 6, 2019 and compares to 80.8 percent that had paid by June 6, 2020.
In Macomb County, there are 331,667 housing units, of which 253,468 are owneroccupied and 78,199 are renter-occupied. Around 24,000 of these housing units are vacant, according to the Southeast Michigan Council of Governments.
Help for landlords
In late-March, Whitmer issued an executive order suspending evictions for non-payment of rent, which was recently extended through July 15. The order also established the $50 million Eviction Diversion
Program that outlines a process for renters to get rental assistance or establish a manageable payment plan. The rental assistance will be made available in the form of lump sum payments to landlords in exchange for allowing tenants 12 months to pay their outstanding balances, and forgiving late fees and up to 10% of the amount due.
Matthew Paletz, a Troybased attorney who represents landlords across the state, said landlords, as small business owners, have also been hit hard by the pandemic and the resulting executive order allowing tenants to remain in their homes, despite not having to pay rent. Many depend on those monthly rent payments to pay off mortgages and other bills.
While renters statewide have received temporary relief from eviction for nonpayment of rent, the rent is still due to the landlord. Tenants are being encouraged to communicate with their landlords to arrange payment plans, with some willing to negotiate discounted or deferred payments to avoid eviction.
“Any fund available to landlords is positive, especially when it’s tied in with
the governor finally allowing the judicial branch to handle landlord-tenant cases after July 15,” he said. “The administration of these funds is no doubt going to be slow, and mandating that tenants be allowed 12 months to pay the balances, as well as a 10% discount, is unfortunately going to deter many landlords from opting in.
In 2018, the state’s 191,512 eviction filings were the fewest since 2011, according to the Michigan Eviction Project. Of the ten counties with the highest eviction filing rates, Macomb County ranked second at 24.4%, followed by Wayne County at 23.5%, Monroe County, 22.6% and Calhoun County at 21.6%. Topping the list of counties with the highest average annual eviction filing rates between 2014 and 2018 was Genesee County with 27%. Oakland County was ranked seventh with 19%.
Tenants whose back rent is not completely covered by the program will be enrolled in payment plans facilitated by Supreme Court Administrative Order 202017, which also defines how district courts statewide will resume processing landlord and tenant cases once the state’s suspension on eviction filings expires July 16. The order requires courts to set a specific time for each hearing in order to safeguard public health.
Paltez said for small family-owned landlords who operate on thin margins, this relief from the state may be too little, too late. He added judges will not simply be throwing people “out on the streets” once the eviction ban expires and the courts begin processing any potential eviction filings.
“They were already in dire straits back in the spring,” he said. “To now have to wait even longer, if they opt-in to the eviction diversion program, is simply not practical. Being precluded from their legal remedies for what could amount to four months or more may be too long of a time without significant revenue for them to stay current with their underlying mortgages, utilities, payroll, and property taxes, not to mention the cost of maintenance and upkeep of the property.”
The State Court Administrative Office estimates more than 75,000 cases could potentially be filed in district courts statewide once the pause in case filing ends next week. The COVID-19 Eviction Defense Project, a coalition of economic researchers and legal experts, estimates that 19 million to 23 million Americans are at risk for eviction by the end of September.
Bridget McCormack, Michigan Chief Supreme Court Justice, said while the pandemic was not the disruption we wanted, it may be the disruption we needed to transform the landlord/tenant docket into a resource that serves the community.
“By funding a statewide eviction diversion program, we have the opportunity to build on the success of local court programs that have kept people in their homes and supported stronger neighborhoods,” she said. “Judges across Michigan are ready to take advantage of this win-win plan that helps families to stop worrying about losing their housing and helps landlords get paid so they can stay in business.”
Resources are available for landlords and renters on the Michigan State Housing Development Authority website at https://www. michigan.gov/mshda.
Renter protections and resources
A number of other cities and states have put some assistance programs in place, as well as moratoriums on evictions amid the pandemic.
The National Low Income Housing Coalition has a list of state and local rent assistance programs on its website. United Way’s 211. org website also has links to local charitable assistance for housing, food and other essentials.
The Eviction Lab maintains a list of local and regional actions to pause evictions of renters. Its policy scorecard provides useful detail on actions in your state.
In addition to protections at the state level, there are also some renter protections for renters at the federal level.
Congress put a temporary nationwide eviction moratorium in place for renters who live in a federally subsidized building or one with a federally-backed mortgage through July 25. Landlords cannot charge fees or penalties for nonpayment during this time as well. Tenants can search the Fannie Mae website or the Freddie Mac site to find out if their building has a federally backed mortgage.
The Consumer Financial Protection Bureau has helpful information on its website as well.