Unpaid Rent and Lagging Courts Strain Rental Housing Communities

Part III of AOBA’s six-part series examining the state of rental housing in Suburban Maryland. Click here to see parts I and II. 

Declining rent collection rates and elongated court timeliness are damaging our rental housing communities.   

Housing providers fund operations through a single revenue stream – rent.  When a property experiences a significant amount of uncollectible rent, it directly impacts the property owner's ability to maintain the community and keep up with expenses. Moreover, similar to rising operating expenses, it creates upward pressure on rents to cover those losses.

Since the COVID-19 pandemic, housing providers in Suburban Maryland have experienced a significant spike in rent delinquency.  Let's examine an example of an AOBA member property in Prince George’s County.  Initially constructed in the 1950s, this approximately 320-unit workforce housing community offers rents significantly below the market average. It’s an example of “naturally occurring affordable housing,” meaning the building does not receive any public funds yet still has rents affordable to lower-income households. This form of housing is incredibly valuable as it offers below-market rents without the need for government subsidy.  Such properties cannot survive if they cannot reliably collect rent.

Since 2019, this community has seen a sharp and concerning decline in rent collection.  The delinquency rate has grown to $664.52 per unit, roughly 50% of the average rent for the community.  Nearly half of the community’s residents are behind on rent.  In total, uncollectable rent accounted for a net loss of almost $2 million in 2024, forcing management to dip into reserves, which prevented them from performing much-needed renovations and upgrades to the property.

The property’s mortgages are due to be refinanced in 2026. Management fears that they cannot demonstrate they are collecting enough income to secure a refinanced loan due to the heightened delinquency rates, let alone to cover operating expenses such as labor, maintenance, landscaping, cleaning, insurance, and taxes.

This increase in rent delinquency is not uncommon for housing providers operating in Suburban Maryland, particularly in these workforce housing communities. Ultimately, this translates to upward pressure on the rents for the entire property.  That is to say, the other residents end up footing the bill for those who fail to pay.   The longer residents remain in place without paying, the greater the impact on the property and its residents. 

Sluggish Legal Processes Fuel Severe Rent Delinquency

Elongated court timelines further exacerbate the strain created by heightened delinquency for housing providers like this.  Our neighbor to the south provides a cautionary tale in this regard.  The District of Columbia is facing a full-blown crisis.   Having seen a similar increase in failure-to-pay rent cases, a drawn-out judicial process has helped dig tenants into deep financial holes, leading to accumulated debts of tens of thousands of dollars, with devastating impacts on the individual tenant, the housing provider, and the operations of the entire community. 

For its part, the Maryland District Courts have made significant strides in reducing backlogs and improving judicial efficiency.  Following the eviction moratoria and court closures associated with the COVID-19 pandemic, the timelines for scheduling an initial hearing for a Failure to Pay Rent (FTPR) case peaked at around 10 months in Montgomery County and more than a year in Prince George’s County.  From start to finish, the eviction process has since been reduced to between 4 and 9 months, a marked improvement, albeit still roughly twice as long as before the pandemic.  However, certain procedural bottlenecks persist. 

After providing the required 10-day notice, a housing provider may file a complaint with the District court for failure to pay rent.  An initial trial is generally scheduled within two to three months.  A judgment can be granted at this initial hearing.  However, if the tenant disputes the case, a judge will generally issue a continuance for a subsequent hearing to be held at a later date.  These are typically scheduled one to two weeks in advance in Montgomery County.  But continuances can be lengthy in Prince George’s, adding up to six weeks to the process.  More often than not, this means another six weeks of lost rent. 

Even after the judge rules in favor of the housing provider and orders a warrant of restitution, the process remains far from over.  Upon the court’s ruling, a resident has four days to appeal the decision or seven to pay outstanding rent owed and stay in the apartment.  On the eighth day, the housing provider may file for a writ of restitution.  The simple administrative process of signing and issuing the writ typically takes approximately 7-10 days in Montgomery County but can take six to eight weeks in Prince George’s.  Again, that’s another six to eight weeks added to the total process and another six to eight weeks of lost rent.  This represents a significant increase compared to pre-pandemic scheduling timeframes in 2019 and is attributed to a new system of judicial review instituted by the court. 

Once the writ is signed, it is transmitted to the Sheriff’s office for the eviction to be executed.  Scheduling and performing the eviction takes six weeks in Montgomery County and another three months in Prince George’s. 

In total, this can add up to another six months after a judge has already ruled in favor of the housing provider.  At the risk of sounding repetitive, this equates to yet another six months of lost rent after a judge has ruled to award possession of the apartment back to the housing provider. 

The Financial Costs of Eviction

The costs of this drawn-out legal process add up for all parties involved.  A single eviction costs apartment communities an average of $12,000. 

Consider the example of a two-bedroom apartment unit in Montgomery County, which rents at a market average rate of $2,095 per month.  Assuming an optimistic 4-month timeframe from when the resident fails to make rent to when the eviction is executed, this will typically result in $8,380 in lost rent. 

Then we factor in turnover costs.  Some housing providers have reported that the cost of turning over a unit in a naturally occurring affordable community ranges from $10,000 to $20,000 due to the property's relative age.  But let’s assume for this example that the vacated unit is in relatively good condition, with only normal wear and tear and no significant damage.  Even at the low end of the spectrum, the turnover cost will run approximately two months’ rent to touch up, market, and relet the unit.  Even without accounting for legal expenses, which can vary widely, the final cost to the community can easily exceed $12,000.

A similar unit in Prince George’s County rents for a market average rate of $1,702.  The eviction timeline, however, runs about 4-9 months.  Assuming similar minimal costs for turning over the unit as in our Montgomery County example, the final cost to the community comes in at approximately $15,000.

This figure represents the financial impact for just a single unit.  Spread across an entire property or portfolio, the economic damage caused can be fatal.  And none of this accounts for cases that fall outside the average timelines.  For example, writs are generally not executed during the winter months.  This can more than double the time it takes to repossess a unit. 

The longer the process runs, the deeper it buries the resident in debt and the more significant the impact becomes on the rest of the apartment community.