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Mar 26
2009
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More and more I've reading about companies who are implementing programs that make it easier for residents to get out of their lease if they lose their job (see links below). They are doing so in hopes of attracting new residents and keep existing ones. Companies I've worked for in recent years have implemented practices of releasing resident's from their leases without penalty if their home becomes uninhabitable due to no fault of their own or that of their occupants/guests and for heath related reasons specifically for a terminal illness or the need for hospice, rehabilitation or nursing care. We are now considering doing something similar for residents that lose their job. As it stands now residents that lose their job cannot afford pay early lease termination fees anyway. On February 11, 2009, I published an article "Recession Proof Your Rent Payments" http://www.multifamilymanagementconsultants.com/journal/2009/2/11/recession-proof-your-rent-payments.html that garnered a lot of attention. In light of this article, I'd like to emphasize that there is a way companies can let residents who lose their job out of their lease and minimize their loss of income. In the article I wrote:
"...renter's insurance providers offer an option for Involuntary Unemployment Insurance. This optional coverage offers protection when the insured is affected by unemployment due to a lay-off or termination by an employer. One such known provider offers a policy that features monthly benefits paying up to $500 per month for two months directly to the landlord. Resident's can purchase as many policies as needed to cover their monthly rent payment. The cost per policy ranges from $60 to $80 per year..."
By telling residents about renter's insurance companies that offer this option and encouraging them to purchase it or even reimbursing them for purchasing an adequate amount to cover their rent payment for two months, companies can make it easier for residents who need to terminate their lease due to a job loss. With this Involuntary Unemployment Insurance option the apartment owner will receive two month's rent while he/she or the management company tries to re-lease the home. Companies can still give the resident the preferred choice of staying in their home while they look for a new job and the first right of refusal if another resident is found before the expiration of the two month period.
The goal of course is to keep residents in their home. Anything that can be done to support the resident during their job search is advantages to the apartment owner. I would also suggest companies think about ways of attracting their former residents back to the apartment community after they have regained employment. Those that lose their jobs often cannot pay their bills for a period of time and end up with credit issues. If apartment owners and management companies can recognize this now and help those former residents move back to their community(s) while they catch up on their bills and clean-up their credit they may come back.
Posts and article about referenced topic:
Urbane Apartments Gives Renters Hit By Recession a Way Out
Posted by Eric Brown on January 6, 2009
http://www.apartmentveteran.com/2009/01/urbane-follows-hyundai.html
Renters who experience an "involuntary loss of income" in 2009 can get out of their lease with the local apartment company's "carefree Freedom Lease."
Apartment Owner Offering Layoff-Proof Leases in Northeast Ohio
Digested From "Goldberg Companies Is Offering Layoff-Proof Apartment Leases in Northeast Ohio"
Cleveland Plain Dealer (OH) (03/18/09) by Michelle Jarboe http://blog.cleveland.com/business/2009/03/goldberg_companies_is_offering.html
Goldberg Cos. Inc. is trying to attract new apartment residents with its recently launched "Layoff Proof Lease" program. Under terms of the program, if a resident loses his/her job, Goldberg will give them 60 days of free rent to look for new employment with peace of mind... If in the two months of free rent a resident has not found replacement work, they will be permitted to opt out of their lease without penalties."
The Cut-and-Run Lease: The Ultimate Tenant Incentive
Posted by Kim Ezzell on 03.23.2009
Morgan Management Company is cutting to the chase by offering an ‘out' to those who lose their jobs during the term of the lease. Dubbed the "No Fear Lease", tenants who lose their jobs will have the option of either terminating early, or receiving a 20% reduction in rent for 90 days while they look for another job."
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Thank you for the mention of Urbane Apartments, much appreciated. With that, I thought perhaps an update of "How it is going" is in order.
The local economy in SE MI/Detroit is pretty rough. When unemployment hits double digits it begins to affect a lot of folks. We have had a few residents that have lost their income, and some of those have had to move, a few have been able to work some things out.
Here is the biggest takeaway, the communication line has opened up and residents are not as afraid to pick up the phone and talk with us about the issue. We have not had any skips and no evictions. If someone had to leave, we have been able to handle it absent any court proceedings.