Forbearance is Not a Standard Rental Agreement Clause

March 15, 2020 Mark Elliot Forbearance

Rental agreements are legally enforceable contracts that specify the terms of tenancy. Among the most clear of those terms is the timely payment of rent. Every rental agreement identifies the rent amount and the due date. But nowhere in the agreement will there be a forbearance clause: the provision that would keep the landlord from moving swiftly to retake possession of the premises in the event of nonpayment. What to do when a tenant is caught short when the first of the month comes around?

State law is unambiguous on the timely payment of rent for leased premises:

Hiring is a contract by which one gives to another the temporary possession and use of property, other than money, for reward, and the latter agrees to return the same to the former at a future time. — CIV §1925 (enacted 1872)

A tenant of real property, for a term less than life, or the executor or administrator of his or her estate heretofore qualified and now acting or hereafter to be qualified and act, is guilty of unlawful detainer… When he or she continues in possession, in person or by subtenant, without the permission of his or her landlord, or the successor in estate of his or her landlord, if applicable, after default in the payment of rent… — CIV §1161(2)

State law affords is no ‘grace period’ for the payment of rent. Indeed the courts put unlawful detainer proceedings on a fast track. Then after the trial the landlord will move immediately to retake possession of the premises.

Now, some leases do specify a grace period (after which a late fee will apply). But these grace periods are limited because no landlord wants an open-ended deferment on the payment of rent.

What is a tenant to do when economic circumstances make the timely payment of rent impossible? There are a few limited options and most involve the discretion of the landlord.

Proactive Options

Make arrangements for a late payment. Some landlords will understand that a tenant’s circumstances may change from time-to-time: job hours get trimmed, medical bills roll in or a death in the family can incur unexpected expenses. When the rent-due date falls at precisely the wrong time it may be prudent to ask the landlord for forbearance.

When asking for forbearance know that the landlord wants certainty. He wants to know that the rent will be paid and when it will be paid. ) So approach the landlord early, before rent is due, and with an offer to pay the rent and the late fee on a date certain. That will go a long way towards gaining his permission to pay late.

The important point here is to memorialize the agreement in writing. Despite an agreement the landlord can still move to evict based on the missed rent payment. For example we know of cases where the tenant believes there is underway a good-faith verbal negotiation to defer payment but in the meantime the landlord goes to the courthouse. Get the agreement in writing in case the tenant ultimately has to go to court.

Ask to make a partial rent payment. Here again anticipating the due date shows good faith. However know that the law does not recognize that a partial payment satisfies the tenant’s obligation; the full rent is required and anything less is a breach of the rental agreement. Even if the landlord agrees to the partial payment he can still go to court to retake possession of the premises. That makes it essential to get the agreement in writing

Nolo Press offers guidance to tenants:

The written agreement should state the amount of rent that you have paid, the date by which the rest of the rent must be paid, the amount of any late fee that is due, and the landlord’s agreement not to evict you if you pay the amount due by that date. Both you and the landlord should sign the agreement, and you should keep a copy. Such an agreement is legally binding. — What to Do and Not to Do If You Can’t Pay Rent on Time

Respond immediately to a three day notice to pay or quit if one is posted. The law says the three-day notice can be posted the day after rent is due, but landlords vary in their haste. Moreover, circumstances vary: rental agreements may have a late-fee and grace period and landlords may accept rent in person while others accept it by mail or electronically. Know that the law recognizes the rent is due on the date in the rental agreement. If the rent is mailed the postmark should be the due date or before.

If a three-day notice is posted the tenant should immediately contact the landlord and try to make an arrangement to pay late or make a partial payment. The objective is to get the unlawful detainer off the table. The tenant should emphasize her long tenure in the unit and/or a good payment history or any other factor that may suggest good faith in bargaining (for example a date certain of payment). When thee is no money available, then the tenant can only wait for the landlord’s next move.

Reactive Options

After a three-day notice expires the landlord may file with the court an action to recover the premises. This is called an ‘unlawful detainer’ and literally it means to allege that the tenant is in unlawful possession (“detention”) of the apartment. It is best to avoid this step as it involves the court, implicates additional fees for the tenant and generally puts the tenant on the defensive.

Respond to an unlawful detainer once it is filed. While it is always better to communication proactively with the landlord about a late or missed rent payment, there will be times when landlords will offer no forbearance and an unlawful detainer notice is inevitable. In these cases the tenant must respond to the summons. The law requires a tenant to respond in five working days not including weekend days (due to a recent change in state law).

Tenants can respond directly at the courthouse (there is some assistance available there to complete the forms) but a better step is to contact Bet Tzedek, the city’s housing rights legal services provider, for help. Call 323–939–0506 extension 499 (the extension is important!). Ongoing representation by Bet Tzedek is provided to low-to-moderate income tenants.

Attempt to settle the debt with the landlord prior to the pre-trial hearing.This is only possible when there is money is in hand to cover rent arrears, late fee, if any, and potentially court fees too. Here the tenant approaches the landlord with a cash-in-hand offer (or cash equivalent) for the outstanding debt. Make this in writing because the understanding is that, upon payment, the landlord withdraws the unlawful detainer. Once the landlord accepts rent then the tenancy is back on track.

Look to make an agreement at the pre-trial conference. Even if the case does go to court there is the opportunity for the tenant to arrive at an agreement with the landlord under the supervision of the court. The court does not want to toss people out in the midst of a rental affordability and homelessness crisis, after all, and a sympathetic tenant who makes a good-faith effort will find support for resolving the dispute and moving ahead. Legal representation at this stage is highly recommended!

Know going in what is the priority: retaining possession of the unit or escaping with some hide intact. This is really a function of whether the tenancy is ultimately sustainable. The tenant who wants to continue and can pay the rent may be able to resolve the dispute with the payment of arrears and fees. But some tenants will not be able to pay. The best option may be to leave at a date certain with some part of rent arrears forgiven and (important!) the record sealed.

Summing-Up

Property rights are the law of the land in the United States and no less so in California where right-of-possession law has been on the books for nearly a century-and-a-half. In general the law is on the side of the lessor and that makes the timely payment of rent important to the tenant. However the landlord at his discretion can extend forbearance and we have identified opportunities where that is a reasonable request. To boil it down:

When payment is iffy be proactive by contacting the landlord beforehand to explain the problem and, if possible, identify a date certain for payment.
Ask the landlord if he will accept a partial payment. This is less optimal as landlords are loathe to do bookkeeping for individual tenants; and because landlords can still move to evict until full payment is made.
Conduct all discussions in writing (or less optimally memorialize them in writing) and always communicate with the landlord from a place of good faith. Even though landlords can be difficult, the objective for the tenant is to establish a written record that when later reviewed by a decision-maker favors the tenant.
Be honest with the landlord about the situation. Be clear about when the landlord can expect the rent and, if not, what the timeline may look like. Good faith goes a long way!

Again it’s crucial that any communication with the landlord in these delicate matters — indeed all matters — be conducted in writing. Especially if the dispute goes to court (or a mediator) the written record will be essential to supporting the tenant’s account.