VOLUME 2 - ISSUE 4 LEGAL UPDATE
- Urgent Actions Needed to Avoid Major Litigation
- The Agreement to Vacate
- The Pet Addendum and Non-Pet Damage
URGENT ACTIONS NEEDED TO AVOID MAJOR LITIGATION
By Harry Anthony Heist, Attorney at law
More and more eviction cases are being contested by attorneys specializing in representing tenants, and a number of new class action lawsuits have been filed in Florida against major management companies and owners of multifamily housing. Items are of major concern right now, due to the increase in attorneys targeting landlords, and particularly a recent court decision which has completely confused what was assumed to be permissible practices. Almost every apartment community in Florida has now become a huge target.
TERMINATION FEES, RE-LET FEES AND LIQUIDATED DAMAGES
Landlords have historically had clauses in the lease agreements which impose a penalty, re-let fee or liquidated damages in the event a tenant breaks a lease before the term is completed or is evicted. A larger problem is that many landlords have been using the lease requirements for a voluntary and agreed upon lease break to impose these fees in the event of a skip or eviction. The recent case out of Palm Beach County has held that these fees or penalties are impermissible and that the remedies provided in Florida Statutes are exclusive and cannot be modified by the lease terms. The main holding of this case states that charging these fees, penalties, or liquidated damages is not allowed by law, and that the ONLY remedy a landlord has when the tenant vacates voluntarily or involuntarily, and the landlord puts the unit back on the market, is for the landlord to charge the tenant ONLY the rent that was lost at the time of the breach and AS IT BECOMES DUE. You cannot accelerate the rent or charge rent on top of a penalty, as this judge feels that this is charging “double rent”.
IMMEDIATE ACTION PLAN:
1. REMOVE ALL PENALTIES, LEASE BREAK FEES, And RE-LET CHARGES FROM YOUR LEASE NOW.
2. If you have charged these in the past to a tenant, NOTIFY YOUR COLLECTION AGENCY THAT THESE CHARGES ARE TO BE REMOVED FROM THE TENANT’S COLLECTION FILE.
3. Recompute only your LOST rent UNTIL THE UNIT WAS RERENTED and REVISE THE AMOUNT SENT TO COLLECTIONS if and only if the revised amount is LESS than what was previously sent to collections.
How will this all be resolved? The law needs to clarified to allow the landlord and tenant to contractually agree to these penalties and fees as they should be allowed to do, and in our opinion are allowed to do. Unfortunately the Circuit Court Judge in Palm Beach County disagrees. The case is being appealed by the attorneys handling the case.
SECURITY DEPOSIT CLAIMS
Landlords are required by law to make a claim upon a tenant’s security deposit within 30 days of the tenant vacating the premises, if the tenant vacates or is evicted owing the landlord money that the landlord is entitled to per the lease and/or Florida law.
The Security Deposit Problem: Landlords are charging amounts that are only wear and tear, amount that they cannot prove in court, accumulated late charges, fees, termination charges, liquidated damages or excessive amounts based on estimates. Tenants are disputing these charges, and landlords are not notifying the collection agency that the charge is “disputed”. Over the ensuing years, the tenant has a black mark on his credit, he retains an attorney and eventually demand that you prove the damages that you charged the tenant. This could be YEARS after the landlord initially made the claim. Most landlords cannot prove the damages in full, and as a result, the landlord’s charge now has resulted in a “slander of credit” for which the tenant can now sue. Attorneys are now specializing in representing the ex-tenant debtor and suing!
IMMEDIATE STEPS TO TAKE WHEN MAKING THE SECURITY DEPOSIT CLAIM
1. Do not charge the fees, liquidated damages, reletting charges as referred to earlier in this article.
2. Do not charge the tenant unpaid or accumulated late charges. Judges hate late charges and attorneys are beginning to set their sights on whether late charges are usury.
3. Always perform a DETAILED move in and move out inspection. The tenant should not be permitted to make this inspection. The landlord makes this inspection
4. Document the move in condition with a video and/or photos of the unit, interior and exterior. Leave NOTHING undocumented. Preferably have the tenant sign the “Move in Inspection Form, but if you cannot, take the move in inspection seriously, and do it right.
5. Document the move in condition with a video and/or photos of the unit, interior and exterior. Leave NOTHING undocumented. If you charge the tenant for ANY damage, be prepared to prove this damage in a court of law up to 5 years after the tenant vacates. Our clients who videotape units and videotape the damages RARELY have any security deposit disputes.
6. If something gets disputed, carefully weigh the risks of insisting upon the charge versus the benefits of settling with the tenant. Settlement is NOT a bad word.
7. Never write or call back an attorney who has contacted you regarding a dispute without having your attorney review the situation.
EVICTIONS – LOSE ONE AND GET SUED
The majority of evictions that come into our office have some sort of problem. It may be as blatant as an incorrect Three Day Notice, an error in the lease, an excessive late charge, an unregistered fictitious name or some underlying problem that the landlord failed to disclose to us when sending us the case. If the tenant gets and attorney and you lose, you will have to pay the tenant’s attorney. We recently had 2 cases where the landlord lost, and the attorneys are demanding in excess of $4000.00.
IMMEDIATE ACTION PLANS
1. Prepare and Serve your notices correctly. Us the Three Day Notice Checklist. Let your attorney prepare any Seven Day Notices for you. Do not non-renew unless you have carefully read the lease and have good reasons documented.
2. Tell your attorney everything strange about the case. Have you accepted rent late on a regular basis? Have you been accepting partial payments? Has the tenant complained about problems on the property? Has the tenant given you a rent withholding letter? Are you trying to remove the tenant for non-rent reasons but jumped on the tenant when she was late on the rent, and refused the rent from the tenant before filing the case?
3. Is your Fictitious Name filed with the Secretary of State? Do you even know what this means? Get it filed NOW.Click here for Fictitious Name Filing.
4. Do not accept rent during an eviction without calling your attorney first and possibly entering into a Stipulation.
5. Once an eviction is filed, do not take any other action without speaking with your attorney first.
REMINDER: CHECK AND FILE YOUR FICTITIOUS NAME NOW!
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Agreement to Vacate Advantages, Preparation and Use
By Harry Anthony Heist, Attorney at law
The most common cause for tenant removal is nonpayment of rent. In most cases the facts are limited and not in dispute. Did the tenant pay the rent? If not, a simple eviction usually occurs, with the landlord prevailing in most cases. Unfortunately there are many other non-rent related noncompliances which result in the landlord having a strong desire to have the tenant removed from the property. The problem is that the landlord’s desire to remove the tenant is often far greater than the landlord’s case or evidence against the tenant.
The Landlord’s options – In the event of a noncomplying tenant, the landlord is faced with a number of options: give the proper notices, gather evidence, prove the noncompliances, file an eviction action, and possibly have to prove the case in court. Another option would be to non-renew the tenant if the lease was near completion, and if the tenant failed to vacate, simply file an eviction based on the failure to vacate. Finally, there is the option of coming to an agreement with the tenant to vacate the premises on a fixed date.
Forced Tenant Removal for Noncompliances
In order to legally institute eviction procedures against a tenant for noncompliances, certain prerequisites must be met. Depending on the noncompliance, either a Seven Day Notice of Noncompliance with Opportunity to Cure, a Seven Day Notice of Noncompliance Notice of Termination, or both, must be given to the tenant. These actions entail informing the tenant of the noncompliance, giving the tenant time to cure the problem in most cases, if the offense is of a curable nature, and then terminating the tenant if the offense continues or occurs again. In the event of a serious non-curable type of noncompliance, the tenant is served with a Seven Day Notice of Termination, and an eviction begins right after this notice expires. Eviction cannot even begin until the notices have expired, and in the meantime, you have lost good tenants due to your noncomplying tenant. Once you file the eviction, you then have to win! This is not always guaranteed. While most landlords have served the Notice of Noncompliance with Opportunity to Cure, very few landlords have ever filed an eviction for noncompliance, as most tenants either cure or vacate prior to the eviction. Far fewer landlords have ever filed an eviction and ended up having to prove the noncompliance in court, as many of the tenants vacate shortly after getting served with eviction paperwork. The landlord who files an eviction for a non-rent related noncompliance and has the case contested is in for a real ride. It is amazing how difficult noncompliances are to prove in court, when your witnesses do not show up, or your solid proof melts away in front of a judge who was so tough on non-paying tenants, but now is so sympathetic to the tenant before them on a noncompliance case.
Can you really prove to the judge that there is an unauthorized occupant living in the unit? Did the tenant remove the unauthorized pet right after or before you filed the eviction? Was it a housekeeping issue that the judge just does not feel so strongly about? Did all your constantly complaining tenants who hounded you every Monday morning about the noise from parties suddenly decide not to show up in court? Is the allegation that the strange man who exposed himself by the pool now pretty difficult to prove? Were you surprised that your attorney informed you that affidavits signed by three tenants are not admissible in court? Were you shocked when the police officer that responded to two noise complaints decided not to show up in court? Did you think the tenant would get an attorney to fight the case and demand a jury trial? The bottom line is anything can happen in a noncompliance eviction, and they should be avoided at all costs.
The “Agreement to Vacate” Alternative – Probably the best possible way to have a tenant vacate is to have that tenant do so voluntarily. The tenant and the landlord simply sign an agreement whereby the tenancy is terminated, and the tenant agrees to vacate on a fixed date. The “Agreement to Vacate” is this wonderful form, and landlords who regularly use the form will attest to the fact that their evictions are reduced, their stress is reduced, and most tenants who sign such an agreement vacate on the date they have said that they will vacate.
When is an “Agreement to Vacate” appropriate? – In almost any situation when a noncompliance is occurring or has occurred, including nonpayment of rent, if the landlord and tenant can agree to a fixed vacating date and memorialize this in writing, the Agreement to Vacate is appropriate: suspected drug use, excessive traffic, domestic disputes, unauthorized occupants, unauthorized pets, noise disturbances, the list goes on. Get the tenant to agree to vacate, and you have probably won the battle.
How do you get the Tenant to agree? – This takes some skill and experience. Basically the landlord needs to approach the tenant, explain how things just are not working out, possibly threaten eviction, but give the tenant an easy way out. The easy way out is for the tenant and the landlord to agree to terminate the relationship without the need for further attorney or court intervention. How much time you give the tenant to vacate will depend upon the severity of the problem, if the tenant has paid rent, or any other factor which will assist you and the tenant in just coming to an agreement.
Will the tenant always sign an “Agreement to Vacate”? - Absolutely not, but more often than not. Let’s face it, just as the landlord is not completely sure that they will win an eviction, neither is the tenant. Many tenants do not want to go near the courthouse for obvious reasons and will welcome an opportunity to vacate voluntarily. Some of the most belligerent tenants, who will scream at you telling you how it will take you six months to evict them, will after some thought sign an Agreement to Vacate. On the sample form below, there is a date that the tenant must sign the form by in order for it to be valid. This is used when you want to leave the Agreement to Vacate with the tenant, so they can ponder their options, or you feel it would be better for you not to have a face-to-face confrontation with the tenant. Once the tenant signs the agreement and it is returned to you, you will then sign the agreement and this will create a binding contract. An Agreement to Vacate is no good unless you get all the tenants to sign.
What if the tenant signs the “Agreement to Vacate” and fails to vacate? – Fortunately most tenants who sign the Agreement to Vacate actually leave when they say they are going to leave. If the tenant fails to leave, the landlord can then immediately begin an eviction action with no further notice, and the landlord simply has to prove that the tenant has failed to vacate rather than try to prove the underlying reasons why the landlord wants the tenant gone.
What about the money the tenant may owe to the landlord? Our sample Agreement to Vacate states that the agreement does not address money issues unless otherwise noted in the agreement. In the space provided, the parties may agree that the security deposit is forfeited, possibly will be returned if there is no damage, or any other financial arrangements can be dealt with directly in the form.
Advantages of the “Agreement to Vacate” – The main advantage is that it is an “agreement”. Emotions do not run as high, eviction may not be necessary, money may be saved, and there is a much higher chance that the tenant will not do any intentional damage, as so often occurs in an angry eviction where your success is by no means guaranteed. The next time you have a noncompliance where you “just want them to go”, remember that they just might want to go as well. The Agreement to Vacate is a wonderful form. Help the tenant out the door.
SAMPLE AGREEMENT TO VACATE:
AGREEMENT TO VACATE
I/WE ________________________________ hereby agree to vacate the premises which we now are renting no later than _______/______/______. In exchange for vacating at this time, Management agrees to not file any legal action for eviction prior to this time if I/WE continue to comply with the terms of our lease and Florida Law.
I/WE agree that any abandoned property that is left behind after the above date may be disposed of by Management without notice and I/WE agree to hold Management, the owners of the premises and any agents or employees harmless for such abandoned property.
I/WE agree that this AGREEMENT TO VACATE must be signed by us AND returned to Management by hand delivery to the property manager/landlord or assistant manager no later than 5:00 PM on ______/_____/_____ or Management may begin legal procedures at any time.
I/WE agree that this document and our vacating shall have no effect upon any financial obligations, forfeitures, security deposit forfeitures, early termination clauses etc under the lease or Florida law unless otherwise agreed to in writing by Management.
______________________________ ________________________________ RESIDENT RESIDENT
Additional agreements by Management if Residents vacate per this agreement:____________________________________________________
__________________________ ______/______/______ MANAGEMENT SIGNATURE
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USING A PET DEPOSIT FOR NON-PET RELATED DAMAGES OR MONIES OWED
By Harry Anthony Heist, Attorney at law
Occasionally a landlord will be faced with that unfortunate situation where a tenant who has an authorized pet, signed a pet addendum and paid a pet deposit, vacates owing rent, has damaged the premises, but none of the damage is pet related. It is extremely difficult for the landlord to accept that the tenant may be entitled to a refund of the pet deposit, in light of all the other money that is owed by the tenant who breached the lease agreement. Unless the landlord has structured the deposit agreement the correct way, the landlord has no choice but to refund the pet deposit. Having to return a pet deposit to a resident who owes you money, or worse yet, a resident who was evicted, can be frustrating indeed. The problem can be solved simply by proper lease and/or pet addendum wording.
Collecting a Pet Deposit - A pet deposit is by its nature refundable. All “deposits” are refundable, while fees are non-refundable. If something is designated a pet deposit with no other qualifying language, that refundable deposit is for pet damage, and in the event there is no pet damage, the deposit gets refunded. There is no such thing as a non-refundable pet deposit. This is an oxymoron, since all deposits are refundable. If the landlord collects a pet deposit, this amount must be kept in the same account that the landlord keeps the security deposit or any other advanced rent, and the deposit is treated the same as a security deposit. The deposit cannot be used by the landlord while the tenant is residing on the premises, unless the tenant specifically agrees in writing that the landlord is permitted to use this money.
Collecting a “Pet Fee” – A pet fee is an amount paid to the landlord for the tenant to have the privilege of having a pet on the premises. Once paid, this fee belongs to the landlord at the time of payment. It is never refundable, as it would then be a deposit.
Should you collect a Fee or Deposit? – We recommend collecting both a pet fee and a deposit, as there is a high likelihood that even if there is no obvious pet damage, the unit will have fleas which will become evident 1-2 weeks after the tenants and their pet(s) vacate the premises. As most pet owners do not believe that their pets have fleas, but most landlords know what occurs when a pet is taken from the premises, and the flea eggs hatch and do not have an animal on which to live, there is an almost guaranteed problem and dispute with the tenant when the tenant is told that he or she will be charged for flea extermination. Since the damage to the premises could be more substantial than just a flea infestation, taking a deposit in addition to a fee is advisable.
The Pet Addendum problem – Most pet addendums simply make a statement that there will be a pet deposit or a pet fee which will be used for pet damage. Even if it does not specifically state that it will be used for pet damage, there is an implication that a pet deposit will only be used for pet related damages. This prevents the landlord from using the money for anything other than pet related damage.
The easy solution - In your lease or pet addendum, there needs to be a sentence similar to this:“The pet deposit may be used by management/landlord for any damage related to the pet(s) and for ANY other monies owed by resident under the terms of the lease and for physical premises damages, whether pet related or not”.
As you can see, this clause allows you to use the pet deposit for non-pet related damages or other monies which the resident may owe. Some property managers avoid the pet deposit issue altogether by simply charging a higher security deposit which can be used for any monies owed under the lease terms. If you make a decision to charge tenants with pets a higher security deposit, make sure that it is clear that the higher security deposit requirement is due to the fact that the tenant has a pet. One of our clients was wrongfully charged with discrimination when a fair housing tester who was a member of a protected class was quoted a higher security deposit by the landlord, and another tester who was not from a protected class was quoted a lower deposit. On its face, it appears that discrimination had indeed occurred, but the facts showed that the first tester stated that they had a pet, and the landlord upped the security deposit accordingly due to the pet. The second tester did not mention the possibility of a pet and thus was quoted a lower security deposit. If you are not currently using a proper pet addendum, you can download one by going to the following link. DOWLOADABLE FORMS AND NOTICES
For further information regarding the above topics or any other topics contained in this site, feel free to call 1 800 253 8428 or email us atInfo@Evict.com
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