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Is Unemployment Reliable Proof of Income for My PG County Rental Property?

Under Maryland law, you do not have to accept housing applications for those on unemployment in Prince George’s County (PG County). However, some landlords do accept applicants whose income comes from unemployment insurance under specific stipulations, especially with how high the unemployment rate is right now due to the COVID-19 Pandemic.

There are, of course, associated risks with accepting applications from those on unemployment. The risks are essential to weigh in combination with other deciding factors, like their rental history and credit score. In this post, we will outline the dangers of accepting applications from individuals on unemployment, tips for accepting those applications should you choose to, the current eviction policy amid to COVID-19, and other tips for collecting rent from existing tenants that may be on unemployment due to the Pandemic.

Accepting Unemployment as Proof of Income for Rental Applications

There are risks associated with accepting unemployment as proof of income for rental applications. Risks and consequences include the potential for late or non-payment of rent. This is the most significant risk associated with accepting applicants that are unemployed or on unemployment. Typically, those on unemployment have to adjust to less income than when they were employed. It may not be enough to cover rent, utilities, and other bills they may have.

Tips for Accepting Unemployment as Proof of Income for Tenants

The circumstances that landed your prospective tenant on unemployment is probably out of their control. Unemployment is usually temporary, but we are currently experiencing widespread layoffs due to the Pandemic. If you’re considering applicants on unemployment, keep the following tips in mind:

  • Verify Benefits: Always verify that they are, in fact, on unemployment benefits and not just unemployed. Check the amount received from unemployment and compare to previous income from when they were actively employed. Ensure they still have the ability to meet their rental obligations each month.
  • Thorough Background Check: Always be sure you have a credit score minimum that you’re sticking to with all applicants (600 is a standard threshold). Look out for any extensive collections accounts or debts owed — particularly if those debts have to do with charges from past landlords. Check landlord references and rent ledgers, as they will paint a fuller picture of what kind of tenant your applicant will be.

These risks and tips are the reason why a reliable screening process is so important. If you’ve been a landlord for a while, chances are you already have a system in place for background checks and income verification. If you’re new to the property management world or don’t have a screening process yet, we recommend reaching out to a local property management company in PG county to help you get one in place.

COVID-19 Eviction Policy in Maryland 

Tenants may not always start on unemployment. Circumstances may arise while they are already living in your property that causes them to lose their job, like the current Pandemic. Keep in mind that if an existing tenant becomes unemployed right now during COVID-19, you may not evict them. They will still have to pay rent, but new laws allow them to pay it back after the Pandemic ends. As frustrating as this may be for you as a landlord and your income, it is the law, and attempting to evict a tenant due to unemployment will set you up for severe fines and other legal consequences.

Also, keep in mind that it is always illegal to evict a tenant solely due to unemployment! If a tenant becomes unemployed, this isn’t grounds for eviction. Evicting a tenant based on their new employment status could be considered discrimination. In this case, you risk having your eviction request denied as well as damaging your reputation and possible fines.

Tips for Collecting Rent During COVID-19 Pandemic 

  • Encourage Timely Payments: Those who can pay and are working from home or are essential employees should still pay rent amid COVID-19. Only those directly impacted by the Pandemic should be considered for leniency or alternate payment options. However, they will eventually be required to pay back any owed rent, so it’s in their best interest to pay now. This message must be made clear to tenants.
  • Share Tenant Resources: Be available to help tenants locate all resources possible to pay rent if they have lost their job or had their hours cut. Send them information on the CARES Act, unemployment insurance, and other available local resources. Resources are in place for those that can prove loss of income due to COVID-19.
  • Patience and Assistance: If you can offer rent discounts, cancel rent for a month, or arrange payment plans for those that genuinely can’t make rent, do so. Not only will this ensure that you get paid (even if it isn’t right away), but it’s an excellent way to retain tenants.
  • After COVID-19: follow legal procedures but do collect rent! As previously mentioned, the eviction policy allows 120-days for tenants to repay past due rent on after Pandemic is over, and the economy and small businesses open back up. Collect the rent you are owed and evict after the allotted time if a tenant isn’t adhering to their payment plan.

Do you have a reliable application screening policy? Consider a Prince George’s County property manager to take the guesswork out of tenant screening. Bay Property Management Group, Prince George’s County, offers full tenant services, including applicant screening that includes a comprehensive background and credit check plus income and landlord verification.