Cheesecake Factory No Rent Notice
Even large businesses are pausing rent payments

Americans have already filed 3.3 million unemployment claims — a number which may grow many times over in the coming weeks — as (predominantly) small businesses across the country have been ordered to close to slow the spread of coronavirus.  This, combined with what I’m seeing on social media, leads me to believe that there will be millions of Americans who are unable to pay their rent in a few days.

Right now, many (probably, most) courts nationwide are closed to all non-emergency matters. For example, in New York, state courts have been ordered closed “until further order” and attorneys are barred even from e-filing documents. California has done away with in-person hearings and the Chief Justice of the state supreme court has given all lower courts permission to close (an invitation which most courts have accepted). Needless to say, breach of contract and eviction proceedings are not considered emergency matters, and even when the courts re-open, the flood of cases will cause delays that I expect will add months to non-emergency matters.

While it’s hard to generalize for every circumstance and every state, if you can’t pay your rent right now, don’t stress. If you think paying your rent now might mean not being able to afford food later, don’t pay your rent. And still don’t stress. You are in a unique position to negotiate with your landlord because: 1) your landlord can’t immediately throw you out since the courts in most jurisdictions are either closed or backlogged for months, and 2) if landlords throw out everyone who didn’t pay April rent, there would be more vacancies than demand, causing landlords to lose massively on the value of their property — and they know this, so they will avoid it by negotiating your continued tenancy. For once, the free market is working in your favor.

Instead, do save what you can (preferably in a separate bank account) so that you have money to negotiate with. In June, saying, “I’ll pay you half what I owe you and starting July I’ll go back to paying full price if you’ll forgive the rest,” gives you a lot more leverage than, “I’ve got nothing for you, but trust me, I’ll start paying soon.”

Finally, while your state may be talking about some kind of rent bail-out bill, please understand that while this feels like the right thing to do, it might not be possible. Such a bill could demand that landlords eat the loss, but there are constitutional concerns with that.  In particular, the Constitution says, “No State shall enter into any … Law impairing the Obligation of Contracts.”  U.S. Const., Art. I, § X, Cl. 1 (the “contracts clause”). This problem could be solved by the state eating the loss, but can your state afford to pay everyone’s rent for a few months? Suffice to say, I don’t recommend counting on a bail-out to take care of all of your rent bills.

Be well, take care of yourself first, take care of your landlord later.

Edit – A commenter, Roland, brings up a good point: Is it better to negotiate with your landlord now? The answer depends on your landlord. If your apartment is owned by an individual or small group that you know and think would be willing to listen, that may be a viable strategy. But, larger companies often tend not to negotiate until upper management decides negotiation is in their interest. For example, if you’re current on your credit card and call your lender and say, “Hey, can we settle this account for 50 cents on the dollar?” they will assuredly tell you no, but if you do the same after 6 months of non-payment, you may get a different answer.


The above is not legal advice, which can only be given by an attorney who reviews your specific situation.