NVAR’s Board of Directors has approved two new forms to assist property managers representing landlords with tenants impacted by COVID-19. The forms, approved during the April 16th Board of Directors meeting, are in response to feedback from our members and volunteer leaders and are available for immediate use. They create a two-step process allowing tenants to request a rent deferment and landlords to either approve or deny that request. The 2 forms are:
Landlord Notice Regarding Economic Hardship
Request Due to Economic Hardship
1.) Request Due to Economic Hardship
– This form is provided by property managers upon request to a tenant requesting a lower rental amount due to temporary economic hardship. In this form, the tenant acknowledges that any misrepresentations on the form are a breach of the lease (like the NVAR Rental Application). The tenant is also advised that the total Rent is not being waived. The managing agent/landlord is specifically authorized to verify the information provided. Like the Inspection Contingency Removal Addendum (“ICRA”) and COVID-19 Addendum, this form may be used multiple times depending on the length of the economic hardship, further change in circumstance, or if the tenant needs to provide an updated request.
2.) Notice Regarding Request Due to Economic Hardship
– This form is used by the landlord/property manager to respond to the tenant’s Request Due to Economic Hardship. The landlord has the option of accepting or denying the request. In the event of denial, there are several reasons listed for the landlord to select. In the event the request is approved, the approval is subject to important conditions. The rent is deferred, not waived. The form allows the landlord to identify a specific reduced amount that is due on the usual due dates. The remaining terms of the lease remain in full force and effect. The deferment period is open-ended so that the landlord can define the period, but also update the deferment period if the time period needs to be extended. Like the ICRA and COVID-19 Addendum, this notice could be issued as many times as necessary to extend the deferment period or revise the Deferment Period Rent amount.
The Notice includes payment plan options for the tenant to make up the partially deferred rent, but this is intended to be flexible. The form intentionally does not include a lump sum option (although, it could be specified in “Other” if the Landlord insisted) because it’s unrealistic to require the tenant to make up the deferred rent in one lump sum when there is no way to forecast how long the economic hardship will last or what the tenant’s financial condition will be at the end of the deferment period. Since this is a deferment and not a waiver, the deferred rent is specifically accepted with the statutory reservation of rights language, so that the landlord retains all authority under the lease to pursue damages and eviction if tenant breaches and is not able to catch up on rent at a later date.
This form is a notice, not an addendum
. It does not modify the lease in any way. Instead, it provides maximum flexibility to the parties depending on the duration of the Deferment Period, the financial situation of the landlord and the amount of economic hardship experienced by the tenant.
Realtors® and their clients are understandably concerned about the rapidly evolving situation regarding COVID-19. It is more important than ever for professionals to provide expert service that is tailored to each individual client and specific transaction. This means managing your client’s expectations and finding creative solutions in these unprecedented times.
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