The trend uniting Bernie Bros and Mattress Cos: Let’s talk rent strikes

Published on March 25, 2020

Denmark announced this week that it would address coronavirus-linked economic concerns by trying to implement an “economic freeze” — basically an attempt to press pause on ongoing financial obligations as we enter an indefinite period of home confinement.

It’s not just the Danes, though. A lot of us seem to be wondering: If economic life has ground to a halt, shouldn’t I get a break on my bills.

The Bernie bros:

Rent Strike 2020, an online project claiming 1.5 million signatories, asking that “every governor, in every state, must do what is necessary to ensure a 2-month freeze on the payment of rent, residential mortgages, and utility bills.” The initiative was launched by a long-shot Democratic congressional challenger in Washington State who is a supporter of Bernie Sanders and backed by a local chapter of the Democratic Socialists of America.

The Mattress Co’s:

Coverage Tuesday afternoon (March 24) in Bloomberg highlighted that some major retail corporations—chief among them Mattress Firm and Subway—are beginning to communicate to their landlords that they will be delaying or withholding rent due to the economic situation.

Wait, companies can do that? Just announce they’re not paying rent?

Well, yes and no. There are several differences between you deciding you don’t want to pay rent, and a multinational corporation deciding that. Differences including eviction laws, contract terms, bargaining power, and credit impact.

Eviction freeze, please

Cities and states are starting to take action halting the most immediate potential consequence of nonpayment of rent. (Evictions provisions generally fall under state and local laws.) Nolo.com has a good listing of the actions being taken in various states and cities.

He with the bread makes the rules

So far, there does not seem to have been coordinated action on delays of commercial rents. Does that mean we’ll see Subway thrown out on the street, though? It seems unlikely — kind of like foreclosing on the bank. While residential tenants tend to have special legal protections against evictions, the bargaining power and legal firepower of big business still seems like a better bet.

Paying your bills late is the responsible thing to do (if you’re a corporation)

According to a 2018 report, the top 1,000 corporations in the U.S. take an average of 57 days between receiving a bill and paying it. As anyone who has been on the vendor side of a relationship with a large corporation knows, respectable and prudent cash management practices generally include delaying payment of bills as long as is allowed, and sometimes longer. But don’t try this at home!

Will it hurt my credit if I go on rent strike?

Even with evictions frozen, a major fear of any individual considering delaying their bill payments is the potential impact on their credit report. There’s no simple answer here.

Are rent payments reflected on my credit report? 

Only 1% of rent payments are automatically reported to major credit bureaus. But that just means that historically paying your rent is rarely useful in building your credit. (New tools are trying to change that). Big apartment management companies may be more likely to report your rent payments automatically.

So no need to worry? 

Well, not exactly. Credit bureau Experian explains two ways in which rent non-payment can follow you. First, non-payment of rent can show up on a Tenant Screening Report. Experian helpfully adds that “A tenant screening report is not the same thing as a credit report, but it may prevent you from finding housing.”

And second, your landlord can sell your debts to a collection agency, who may report you to the credit bureaus

So what’s the deal? Should I rent strike?

We can’t give you financial advice. And the political situation seems to be evolving quickly here. So keep an eye on federal, state, and local developments.

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