Rent-Deferral Payback Plan Guidelines & What You Need to Know During COVID-19

Rent-Deferral Payback Plan Guidelines

Selecting the right rent-deferral payback plan requires a clear, disciplined approach.

By Ellen Calmas

With April 1 in the rear-view mirror, the next big challenge for rental-housing operators is figuring out how to implement fair and effective rent-deferral payback plans for their communities.

Finding the right payment plan is critical, although the answers are quite different for smaller landlords than for larger, better-capitalized REITS or privately owned corporations that can draw down lines of credit to smooth out rough patches. Large landlords also have better access to their lenders and greater ability to receive deferred or flexible loan payments than do many small landlords.

The National Multi Housing Council and the National Apartment Association both offer a host of resources. What both associations agree on is that automated payments fit well with social distancing while providing increased assurance of payment reliability even in the uncertain times of COVID-19.

Selecting the right rent-deferral payback plan requires a clear, disciplined approach that includes defined parameters for rent deferral (percentage and duration) as well as expectations for payback for participating residents who seek relief. Consistency is key in communications and execution to avoid potential fair-housing violations while maintaining reputational equity. Relief that operators receive in the form of mortgage forbearance or government stimulus should be shared, as possible, with the understanding that we’re all in this together. Real-time insights of resident status will guide decisions throughout the crisis.

Here are some key considerations for property owners and managers in assessing and adapting deferral-payback plans in these extraordinary times:

Rent-Deferral Payback – Let the C-Suite Lead

Already over-burdened community staff aren’t in a position to review each resident’s circumstances on a case-by-case basis to determine ability to pay, and the risks of community-based strategies are many. The appearance of bias can be greatest among residents most hurt by job loss or wage reduction, which could lead to fair-housing Issues and also could cause problems with lenders.  Offers should be consistent across communities.

Cover Your Bases

Involve corporate legal teams to develop documentation to reapply security deposits and accept partial payments for participating residents. Assistance on language for lease addendums is important to ensure that residents fulfill their promises to pay with partial rent deferrals. Consider extending lease duration to give residents time to recover from the current crisis and get caught up on rent without getting further into debt. As a simple gesture of goodwill, refrain from late-rent reporting for the remainder of the year for residents participating in deferral initiatives.  These steps are being articulated by the federal government and may affect the ability to receive relief from the  Coronavirus AidRelief, and Economic Security Act (CARES ACT).

Review Vendor Services w/Scrutiny

Viable, automated payback solutions that assure timely rent delivery will provide the greatest assurance of payment protection, particularly those that accommodate automated direct deposit for payments from unemployment checks. Removing residents from management of funds for rent and getting to the front the line from payroll and special benefits is critical, so your deferral payback plan should be able to deliver on these priorities.

Insert Control Measures

Speak with your enterprise operators about custom reporting and the ability to adjust systems so that residents aren’t constantly receiving late notices.  As importantly, determine access to real-time tracking of resident payback to provide insight into when your residents lose their jobs or have a reduction in hours and wages. Your deferral payback plan should be able to integrate with your system provider.

Stay focused

While March required scrambling to make communities safer, calls for rent strikes and complete rent forgiveness can be distracting and unproductive. Stay clear of the fray. Rent should be paid. How and when is what’s up for grabs.

In this environment, where residents are fearful of being able to get a hospital bed should they need one, it’s important that the rental-housing industry communicate the intent to work together to keep a roof overhead.

About the author:

Rent-Deferral Payback Plan Guidelines & What You Need to Know During COVID-19

Ellen Calmas is Co-Founder and Executive Vice President at Neighborhood Pay Services, the company that pioneered the only rent-from-payroll platform for the rental housing industry, NPS Rent Assurance. She can be reached at In an effort to help landlords in deploying rent deferral/payback initiatives, NPS will defer 30 percent of fees throughout the remainder of 2020, including ongoing disbursement of funds from payroll and/or unemployment benefits.

COVID-19: Landlord/Tenant Law in the Age of Global Pandemic

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