VOLUME 2 - ISSUE 11 LEGAL UPDATE
- Post Three-Day Notice Communications
- Small Claims Strategies - Settlement
- Document Destruction Compliance
POST THREE-DAY NOTICE COMMUNICATIONS
by Harry Anthony Heist, Attorney at Law
A common practice among landlords is to serve the Three-Day Notice, and if no payment has been made, serve the tenant with an additional notice or letter to induce payment. This notice or letter is usually entitled “Final Warning”, “Eviction Notice”, “24 Hour Notice” or some kind of variation on this theme. The purpose obviously is to give the tenant a final chance at paying the rent to avoid the necessity of an eviction filing by the property manager. Does it work? Yes, often the “post” Three-Day Notice letter or notice is highly effective, especially when a tenant has received one before and has paid after the expiration of the Three-Day Notice. The problem is that the notice can cause serious problems with the procedure and prerequisites of filing an eviction action.
The Sacred Three-Day Notice
The Three-Day Notice is a condition precedent and jurisdictionally required notice which must be given in a non-payment of rent situation in order for the landlord to proceed to filing an eviction action. It is a very specific notice, clearly spelled out in Florida Statutes, must be of a certain form, with specific rent items only allowed, and it must be prepared and served properly in order for it to be a valid Three-Day Notice. If there are any defects in the Three-Day Notice, it is quite possible that the eviction action will be dismissed, resulting in a further loss of rent by the landlord, delays and potential liability for paying the tenant’s attorneys fees.
The effect the “Post” Three-Day Notice communication has on the Three-Day Notice
If a landlord gives the tenant any type of “post” Three-Day Notice letter or notice regarding the payment of rent or a last chance to pay, some case law has shown that the original Three-Day Notice is nullified or made void by the later notice or letter. While this doesn’t seem to make practical sense, the reasoning lies in the fact that Florida Statutes alone provides for and requires a specific notice prior to an eviction action. Any notices given after the Three-Day Notice can confuse the tenant, and since not Florida Statute provided, will be made up by the landlord and could create confusion on the part of the tenant.
Should we discontinue using the “post” Three-Day Notice letter or notice?
Our recommendation is that you cease using any notice after the service of the Three-Day Notice. As more and more cases are being contested at a higher rate, with more sophisticated and knowledgeable tenants and attorneys, it is not advisable to do anything that can jeopardize the eviction action. If you have been using the “post” Three-Day Notice letter or notice in the past, a problem is created for future cases, as the tenant who has received such a notice or letter before will be expecting this notice before you file an eviction. This detrimental reliance by the tenant on your “post” Three-Day Notice letter or notice can actually now provide the tenant with a defense when you did not use the notice or letter!
If you have been using a “post” Three-Day Notice letter or notice in the past, we recommend that you immediately cease this practice. It will be important though to notify the tenants of this change in policy or procedure. You may want to use language such as the following:
In the past, our company has been sending out a “Last Chance Letter”, “24 hour Notice”, (insert name of your notice) after the expiration of the Three-Day Notice giving the residents a final chance to pay rent to avoid eviction.
From this point on, we will only be serving a Three-Day Notice as required by law. Any rent tendered after the expiration of the Three-Day Notice may be refused by us, and eviction proceedings may be commenced. This letter shall serve as notification that in the event you do not pay according to the stated due date on your lease, you may be subject to receiving a Statutory Three-Day Notice giving you three business days to pay the rent. No further notice or letter will be given.
Can we continue using the “Notice” or “Letter”?
Many landlords will opt to continue using a “post” Three-Day Notice letter or notice, as it is without a doubt very effective in getting the tenant to pay the rent. It is quite possible that the risks in giving the letter or notice are outweighed by the benefit of reducing evictions and receiving the rent. Each landlord must decide the route to take. All we can say is, “You have been warned.”
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SMALL CLAIMS STRATEGIES - SETTLEMENT
by Harry Anthony Heist, Attorney at Law
A Small Claims Court case is simply a lawsuit by one party against another party where the sum sought after is up to $5000.00. Florida law has created a system within the County Court system where smaller cases such as these are handled in a unique and often expeditious manner. There are many ways of proceeding if one finds himself or herself as a defendant in a Small Claims Court case. You may be able to file a Motion to Dismiss if there are defects in the Plaintiff’s case, an Answer may be appropriate, possibly a Counterclaim will be necessary, or the case can be amicably settled. This article will only deal with settling the most common Small Claims Court case whose subject matter is a Security Deposit Dispute, and assumes the Small Claims Court case is NOT filed by an attorney, but rather is pro-se, meaning that the Plaintiff filed the case on his or her own without an attorney signing the paperwork.
The Security Deposit Dispute—The most common Small Claims Court subject matter
The vast majority of Small Claims Court cases involve a dispute over a security deposit. The Plaintiff, a former tenant, will claim that you failed to return the security deposit, failed to send out notice in the required time period or unfairly charged the security deposit for things that were not the Plaintiff’s responsibility. Most of the time the Plaintiff is suing for no more than the security deposit amount plus the costs of filing the lawsuit. While you may firmly believe that the amount you charged the Plaintiff is absolutely correct, this type of case is one of the best kinds to settle rather than fight.
Why should we settle?
The Small Claims Court case regarding a security deposit dispute is much harder for the landlord to fight than one may think. The same judge that seems very tough on tenants in eviction court often seems to bend over backwards to believe the Plaintiff’s story of the evil, greedy landlord who charged the Plaintiff for damages he did not do to the unit that the Plaintiff left cleaner than it was when the Plaintiff moved in. While the ex-tenant Plaintiff is bringing the case against your company and should have the burden of proof, the judge will demand that you prove that the unit was not damaged when the tenant moved in, the tenant did the damage while living there, it was over and above ordinary wear and tear, and you can prove the costs of the repairs or replacements. You may need a detailed move-in and move-out inspection form, photos, videotapes, maintenance persons, vendors and just about anybody you can possibly think of that had contact with the unit in court with you to prove that the amount you charged the Plaintiff was correct. You may have a stack of bills for carpet cleaning, pest control and painting, but the judge will not look at these if you try to use them to prove the Plaintiff damaged the unit, as these bills will be considered hearsay. You will need to bring the painter, pest control person and carpet cleaner into court to testify, and often they do not want to come to court or, when they do come to court, make poor witnesses. In almost every single case we examine, the landlord has severe weaknesses in the case.
The Mechanics of the Small Claims Court Case
The Plaintiff files the Small Claims Court case in County Court and has the case served upon you, the defendant, by Registered mail, private process server approved by the court, or most commonly, by a Sheriff’s deputy. When the case is filed, a date is specified on the paperwork for a Pretrial or Mediation date. If the case is not settled before the Pretrial date, you must attend this Pretrial, or you will have a judgment automatically entered against you or your company. At the Pretrial, a mediator is appointed to the case, and there is an opportunity to sit down in a private room with all the parties present to discuss the possibility of settling the case. If the case is not settled, the parties go back to the courtroom where they wait for a trial date from the judge. The parties must then attend the actual trial, where the case will be fully tried with all witnesses present. At the end of the trial, the judge will make his or her ruling and may award costs at that time.
How long does the process take?
The Pretrial process usually takes from 1 hour to 3 hours depending on how many cases are assigned to the court that day. The time is usually spent waiting in the courtroom to be called by the clerk. Once called and a mediator is assigned, the actual Mediation session usually takes between 30 minutes and one hour. If the case is not settled in Mediation, the parties will be sent back into the courtroom, where the wait can be from 5 minutes to one hour to get a date from the court for the trial. The trial is usually scheduled to be held within 60 days from the Pretrial date. On the trial day, the parties can potentially wait up to 2 hours for the trial to begin, and a typical small claims trial takes anywhere from 30 minutes to 2 hours on average. Unlike what you may observe on “The People’s Court” or “Judge Judy”, all the rules of civil procedure apply in the Small Claims Court trial, and it is actually taken very seriously by the judge. You need to have all your witnesses and evidence in court. If you are unprepared or disorganized, expect to be intimidated and berated by the judge. Frequently the judge is already annoyed that the case was not settled, and most judges really do not seem to enjoy small claims court trials.
Settling prior to the Pretrial, the cost-benefit analysis and “principle”
Settling the Small Claims Court case prior to Pretrial/Mediation is the preferred way to go. At this point you will have little to no time into the case and will have avoided countless hours of aggravation. You need to make a simple cost benefit analysis of the situation and avoid wanting to go to court for “the principle of the matter”. Fighting over “principle” is just not wise. First, your expenses will be increased and secondly, you have no idea whatsoever if you will win in court, as Small Claims Court is so full of surprises. If you and the Plaintiff can come up with an agreeable amount, the agreement is put into writing, the money is exchanged, and the Plaintiff files a Voluntary Dismissal with the court. Does it make sense to take 3 staff members out of the office for 5 hours? Are you sure you are going to win in court? Will you need to get your attorney heavily involved? Will you need to subpoena parties? Will your vendors that you subpoenaed be aggravated with you? Will they show up in court? You need to take a deep breath and ask all these questions before you chart out your course of action. Assuming you are agreeing to give the Plaintiff some money to settle the case, it is imperative that you do not just send the Plaintiff the money. You must do this in conjunction with a proper Voluntary Dismissal and release. You don’t want to settle with the Plaintiff and then have his or her co-tenant sue you over the same dispute. Smart settlement is a smart thing to do. Principle does not pay.
Settling the Small Claims Court case at the Pretrial Mediation
Surprisingly, most Small Claims Court cases are settled at the Pretrial Mediation. The court has fully trained volunteer mediators from all walks of life whose mission it is to have you settle the case and walk out of the courthouse relatively satisfied. In the mediation, each party has a chance to present their side of the story in front of the impartial mediator. The mediator also will conduct a caucus at times, whereby one party leaves the room and the other party can privately speak with the mediator. When you go to mediation, you want to be very prepared, as sometimes, a good mediator will encourage a party to settle if they feel the other party has a very good case. Once the parties come to an agreement, the mediator writes everything up on a settlement form, and the case is over. Assuming it is a security deposit dispute and you are agreeing to return some funds to the tenant, this will all be written out, and you must comply with the Settlement agreement or you will have a judgment entered against you. Since we know that most cases are settled at Mediation, try to settle the case BEFORE mediation to avoid wasting time.
Suppose Mediation is unsuccessful?
If Mediation is unsuccessful, a trial date will be set by the court. It is important to bring your calendar with you to Mediation, as once the trial date is set, the only way it can be changed is with agreement by the parties or the court granting a Motion for Continuance. After a trial date is set, there is plenty of time to decide whether proceeding with the trial is prudent or settlement is the better way to go. A case can be settled at any time prior to the actual trial date. Sometime after the parties have some time to reflect on the mediation, settlement becomes easier. The time before trial can be used to continue to attempt settlement through the use of offers and counteroffers. Always get the Plaintiff’s phone number and current address so the lines of communication can be kept open.
Your attorney’s role in a Small Claims Court case
It is a good idea to always notify your attorney the moment you are served with a Small Claims Court case so your attorney can quickly review the paperwork and give you some advice. Most honest attorneys will tell you the truth about your case, disclose how much it will probably cost to fight the case and advise that you try to settle the case. In most cases, if your attorney advises that you settle the case, they can provide you with advice and with forms to help make this happen. You may want your attorney to attempt to settle the case. This is often an excellent route to take, as long as it will not take your attorney too many hours to accomplish this task. Give your attorney a figure that you will settle on, agree on attorney’s fees, and let your attorney run with it. A pro-se plaintiff will be surprised that you have an attorney involved in the case and will be more likely to want to settle. Here you attorney acts in a quasi-mediator fashion to get the parties to settle. The truth is, most attorneys have no desire to fight small claims court cases regarding dispute security deposits, because in most cases, they know that in the end, their client will not be happy having to pay their attorney’s fees and possibly losing the case in whole or part. Your attorney will advise you if you can go it alone, or if the attorney should file a Notice of Appearance and take over the case.
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DOCUMENT DESTRUCTION COMPLIANCE
by Harry Anthony Heist, Attorney at Law
Identity theft is one of the fastest growing crimes in the United States today, affecting approximately 10 million people each year. Criminals are engaging in everything from sophisticated computer hacking to dumpster diving to obtain private information on individuals, which can be later used to obtain credit, or access for emptying out bank accounts. A typical landlord will be in possession of documents which would be highly valuable to an identity thief. The primary documents which have the most information useful to an identity thief are the Application for Residency and the Consumer Report. The application will have the name, date of birth, Social Security number and bank account information of the applicant, all of which can be used by a thief. The Consumer Report will contain a list of all the applicants’ credit cards and other valuable information. In response to the rapid increase in identity theft fraud, the Federal Government through the Federal Trade Commission (FTC) has enacted new laws which directly affect the landlord.
The Disposal Rule
Effective June 1, 2005, if you are a business that uses a consumer report, more commonly known as a Credit Report, you must dispose of this information in a specific fashion. Since most landlords ask for an Application and subsequently receive a Credit Report, it is apparent that the Disposal Rules apply to the landlord. The Disposal Rule requires disposal practices which are “reasonable and appropriate” to prevent the unauthorized access to or use of information in a “consumer report”. You will note that the law says “consumer report” and not “Application”. Many Federal rules when initially introduced are vague and confusing. As time goes by, the courts and the FTC “interpret” the rule. Obviously the purpose of the rule is to prevent identity theft; thus we strongly recommend that you apply the rule to the application as well as the Credit Report, as this is consistent with the intent and legislative history of the rule.
How long and where should we keep documents?
The statute of limitation regarding disputes arising out of a contract such as a lease is 5 years. We recommend that you do not dispose of any files for a minimum of 5.5 years from the time the tenant vacates the premises. While this may seem a bit extreme and cumbersome, if you are sued and do not have your file, anything can and will happen in court, and it will not be pleasant. Some people intentionally wait until the Statute of Limitations is almost up, as they know that most people will not have kept the records for this length of time. Your documents need to be kept in a safe place in your office and subsequently in storage. Most landlords do not keep these files locked up or have a written plan in place as to file security or destruction. This needs to change.
Files should always be kept in a locked room or locked filing cabinets with access limited to persons designated in writing as having permission. These should only be employees that are bonded. Most landlords do not consider the value the paper files have to an identity thief and are not in any compliance whatsoever. If records are sent to storage, there needs to be a specific procedure in place to prove chain of custody and detailing exactly who has access to files and when they accessed the files.
Most people find it difficult to throw out old computers. They pile up in the back room and eventually get thrown out or donated years after they will not run current programs. Most landlords do not have password protection in place on their computers, making them vulnerable to an identity thief. Finally, most landlords who are careful about backing up their computer data do not have a specific procedure for storing these backups. Landlords need to immediately evaluate the safety of the data and create a written procedure which needs to be followed. If information from the tenant’s application and consumer report will not be stored on or transmitted through a computer, the danger is significantly lessened.
How should documents, hard drives and backups be destroyed?
Paper documents should be shredded or pulverized. There are different levels of paper document destruction available, and we recommend that the documents are pulverized to avoid any problems later. Many landlords purchase store bought shredders and pulverizers, but if operating on any kind of a large scale, document destruction companies will need to be utilized to carry out the larger document destruction tasks. Many local garbage disposal companies are jumping into the business of document destruction, and it is prudent to check this in addition to the smaller private companies. As chain of custody is crucial, most of the document destruction companies provide an on-site service that can be observed by the landlord to avoid someone taking the documents to another location and using them for illegal means. Hard drives and backups can be physically destroyed by a landlord or destroyed by the document destruction companies who deal with this as well as paper documents. The key is to have a plan in place, and this should be part of your written procedures for document safekeeping and disposal.
Does everything have to be disposed of properly?
Fortunately only certain information has to be disposed of according to the FTC rules. An examination of your tenant files will probably show that only a few sheets contain information which could be successfully used by an identity thief. Most likely only the application and the consumer report will contain the sensitive information, therefore your procedure may limit the disposal to the destruction of only those documents.
FEDERAL TRADE COMMISSION INFORMATION
Disposing of Consumer Report Information?
New Rule Tells How
In an effort to protect the privacy of consumer information and reduce the risk of fraud and identity theft, a new federal rule is requiring businesses to take appropriate measures to dispose of sensitive information derived from consumer reports.
Any business or individual who uses a consumer report for a business purpose is subject to the requirements of the Disposal Rule. The Rule requires the proper disposal of information in consumer reports and records to protect against “unauthorized access to or use of the information.” The Federal Trade Commission, the nation’s consumer protection agency, enforces the Disposal Rule.
According to the FTC, the standard for the proper disposal of information derived from a consumer report is flexible, and allows the organizations and individuals covered by the Rule to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology.
Although the Disposal Rule applies to consumer reports and the information derived from consumer reports, the FTC encourages those who dispose of any records containing a consumer’s personal or financial information to take similar protective measures.
Who must comply?
The Disposal Rule applies to people and both large and small organizations that use consumer reports. Among those who must comply with the Rule are:
Consumer reporting companies
Attorneys or private investigators
Individuals who obtain a credit report on prospective nannies, contractors, or tenants Entities that maintain information in consumer reports as part of their role as service providers to other organizations covered by the Rule
What information does the Disposal Rule cover?
The Disposal Rule applies to consumer reports or information derived from consumer reports. The Fair Credit Reporting Act defines the term consumer report to include information obtained from a consumer reporting company that is used – or expected to be used – in establishing a consumer’s eligibility for credit, employment, or insurance, among other purposes. Credit reports and credit scores are consumer reports. So are reports businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history, or medical history.
What is ‘proper’ disposal ?
The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report. For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:
burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule. Due diligence could include:
reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
obtaining information about the disposal company from several references;
requiring that the disposal company be certified by a recognized trade association;
reviewing and evaluating the disposal company’s information security policies or procedures.
The FTC says that financial institutions that are subject to both the Disposal Rule and the Gramm-Leach-Bliley (GLB) Safeguards Rule should incorporate practices dealing with the proper disposal of consumer information into the information security program that the Safeguards Rule requires ( ftc.gov/privacy/privacyinitiatives/safeguards.html ).
The Fair and Accurate Credit Transactions Act, which was enacted in 2003, directed the FTC, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Securities and Exchange Commission to adopt comparable and consistent rules regarding the disposal of sensitive consumer report information. The FTC’s Disposal Rule became effective June 1, 2005. It was published in the Federal Register on November 24, 2004 [69 Fed. Reg. 68,690], and is available at http://www.ftc.gov/os/2004/11/041118disposalfrn.pdf
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit FTC.GOV or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Your Opportunity to Comment The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.
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