VOLUME 3 - ISSUE 7 LEGAL UPDATE
- Serving Notices – Are Witnesses Necessary?
- Security Deposit Transfer Procedures
- Training Your Property Owners
- When a Special is Not So Special…
SERVING NOTICES – ARE WITNESSES NECESSARY?
by Harry Anthony Heist, Attorney at Law
Thousands of Three Day Notices, Seven Day Notices and Notices of Nonrenewal are served each week by landlords. Most are served by posting on the premises or hand delivered to the tenant if the tenant is present. While most tenants comply, there are many times when the landlord files an eviction and the tenant denies receiving the notice. Most likely an agent for the landlord served the notice by himself or herself with no witnesses, so the judge will have to decide who to believe if this is brought up as a defense to the eviction. While witnesses are not necessary, they sometimes can be crucial to your case.
There is absolutely no requirement in Florida law that the landlord must have a witness or witnesses present when serving a notice. This article simply deals with recommendations based on our experiences.
The Dangerous Tenant
Serving notices can be dangerous. Here you have a situation where a landlord is required to knock on a door, only to meet a less than friendly tenant or other occupant of the premises, whether authorized or not. Each year, landlords get assaulted while in the process of serving notices, and recently in Florida a landlord was killed serving a Three Day Notice
The Mailing “back up” Mistake
A landlord sometimes will want to insure that the tenant receives a notice and sends this notice by mail, in addition to posting on the premises or hand delivery. This can be a serious mistake as the law extends the expiration time of a notice if it is mailed. If a Three Day Notice is mailed, the law allows 5 days for the tenant to receive the notice and an additional 5 days for the tenant to pay by mail even if you don’t want the tenant to pay by mail. This can result in a Three Day Notice becoming a Thirteen Day Notice. On top of this, confusion can occur because the Three Day Notice was given one day but another Three Day Notice received a few days later by mail causing a conflict and possibly voiding out the first Three Day Notice. In the case of a Notice of Nonrenewal, the landlord may be under a strict timeframe in which to give the tenant notice. For instance a month to month tenancy needs to be terminated by the landlord giving no less than 15 days notice prior to the beginning of the next monthly rental period. If the notice is mailed on say August 14, adding 5 days for mailing would make the notice short.
The Desperate Tenant
There are no limits to the lies that tenants will come up with if they do not have the rent. The most common one is that they did not receive the Three Day Notice. Judges hear this one all the time, and in most cases, as long as the landlord or someone else testifies that they served the notice, this defense will not be successful. If this defense is raised in court, you better be certain that the person who served the notice is in court with you, and better yet, another witness.
The “I paid the landlord by cash defense”
Occasionally a tenant will raise the defense of payment. They will claim that they paid the landlord when the landlord met them at the door. Sometimes they will allege that they paid the landlord in cash. In most cases this is not a very credible defense, but if the tenant can show that the landlord accepted cash in the past, the defense becomes stronger. Having a witness who can also testify that no payment was made by the tenant could be crucial if this defense is raised.
Alternative delivery methods
Private process servers are available in most counties and are often certified to serve notices by the Circuit Court. The process server will prepare an affidavit of service which will be attached to your Three Day Notice that you file with the Court. Most judges will take this seriously, but still, if a process server is used, we would recommend that the process server comes to the eviction hearing or trial. A word of caution when using process servers: make sure the date on your notice and the expiration date are proper, and that the process server serves the notice immediately. We have seen cases in which the landlord hired a process server, gave the process server the notice. but the Three Day Notice was not served until the next day, requiring the notice to be completely redone, and the landlord had to start over again.
The Sympathetic Judge
Judges are human and in some cases feel sorry for the tenant‘s plight. Some tenants can weave a great story, and some tenants indeed do have legitimate problems. While most judges will follow the law, giving the judge one little excuse to deny the eviction action might be enough for you to walk out of the courtroom with unexpected results. Never underestimate what a tenant will do in Court. Our office handled a cut and dry non-payment of rent case, in which the tenant denied receiving the Three Day Notice. The landlord testified that he gave the notice. The tenant had no other legal defense whatsoever, and the judge decided to dismiss the eviction action, stating he did not feel that the tenant received the notice. If we had a witness to the notice serving, we doubt that the judge would have considered both the landlord and the witness to be liars, and we feel that we would have prevailed in the eviction action.
If at all possible bring a witness with you when you are serving notices. If you feel that you have a dishonest or dangerous tenant on your hands, or possibly you have accepted rent in cash in the past, it is the safer approach and can mean the difference in whether you win or lose the eviction action.
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SECURITY DEPOSIT TRANSFER PROCEDURES
by Harry Anthony Heist, Attorney at Law
There will invariably come a time when a property manager’s services are terminated by the owner, and the owner will either want to manage the property himself or will want to hire another property manager. Additionally, a property could sell, and a new property owner will wish to terminate the services of the property manager. In every case, either the new property manager or the owner will demand that you transfer the security deposit out of your escrow account and into their account. Florida law specifically deals with how this is accomplished and must be followed. Failure to follow the law could result in a lawsuit or a FREC complaint. The term licensed property manager in this article refers to those persons holding a real estate sales or broker's license.
1. The licensed property manager is fired, and another licensed property is taking over management.
In this situation, no permission is needed from the tenant to transfer the funds from your escrow account to the escrow account of another licensed property manager. The new property manager must notify the tenant where and how the money is being held. Property managers who are fired are often angry, as they feel that the firing was wrongful and money is owed to them by the owner. Money may indeed be owed and the filing may have been unfair or wrong, but NEVER hold back the transfer of money to the new property management company as an attempt to try to recover owed commissions. This type of an attempt at self help recovery of commission money by touching the tenant’s money is illegal and wrong.
2. The licensed property manager is fired, and the property owner decides to self-manage
If the owner is self-managing, the property manager must get permission from the tenant to transfer the funds. The logic behind this is probably that since the owner is not licensed, there may be a greater risk of the owner not preserving the tenant’s money. We recommend that you use the form below and try your best to have the tenant sign off. If the tenant fails to sign off, further steps need to be taken, and the property manager should not transfer the money.
3. The property sells to a new owner, and the property manager is fired.
Oddly enough, the tenant does not have to give permission for the property manager to transfer the funds to a new owner if the property is sold. This makes the reasoning in situation #2 seem faulty, but it is the case. Since a typical owner of rental property will not know how to follow the law, we recommend that you give the new owner a copy of Florida Statutes Section 83.49 and keep a record in your file that you gave the new owner the information.
Transferring the money out of state
Often owners will be out of state and will want you to send the money to them through the mail. Security deposits must be kept in a Florida banking institution. We urge you never to send the escrow funds out of Florida, even if the tenant gives you written permission. If they get pushy, send them a copy of the law and document every conversation and correspondence. Fortunately many banks operate in multiple states, so it has become easier for owners to have a Florida bank account which has branches in their state.
Florida Law excerpt of Section 83.49
(7) Upon the sale or transfer of title of the rental property from one owner to another, or upon a change in the designated rental agent, any and all security deposits or advance rents being held for the benefit of the tenants shall be transferred to the new owner or agent, together with any earned interest and with an accurate accounting showing the amounts to be credited to each tenant account. Upon the transfer of such funds and records as stated herein, and upon transmittal of a written receipt therefore, the transferor shall be free from the obligation imposed in subsection (1) to hold such moneys on behalf of the tenant. However, nothing herein shall excuse the landlord or agent for a violation of the provisions of this section while in possession of such deposits.
RECOMMENDED PERMISSION LETTER
SECURITY DEPOSIT TRANSFER AGREEMENT
(TO BE USED WHEN TRANSFERRING A SECURITY DEPOSIT TO THE PROPERTY OWNER(s). FORM IS NOT NECESSARY WHEN TRANSFERRING DEPOSIT TO A LICENSED REAL ESTATE BROKERAGE)
Tenant(s) hereby acknowledge and agree that the Security Deposit and or Last Month’s Rent totaling $______________ shall be transferred from the current account of: _____________________ (name of current deposit holder) to the account of:_________________________ (name of new deposit holder).
New Florida Bank Information if known at time of transfer :
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TRAINING YOUR PROPERTY OWNERS
by Harry Anthony Heist, Attorney at Law
Most property managers work primarily for out of state owners. The owners have entrusted the property to the property manager and expect that it will be managed properly. As an agent for the owner, the property manager is given the authority to act as the owner to the fullest extent that the property management agreement allows. The tenant deals with the property manager from beginning to end, and ideally the owner has no contact or any dealings with the tenant. Unfortunately tenants and owners come into contact with each other often, resulting in problems and complications. A property manager’s goal should be to keep this contact from occurring.
The owner visits the property
Many out of state owners have not viewed their property for some time. It is only logical that when the owners do come to Florida, they decide to do a drive-by of the property or take a closer look and walk around. Besides the usual surprise by the owner that the property does not look like it did 10 years ago, the owners often run into the tenant and they begin to chat. A number of problems arise out of these “chats”.
The tenant finds the owner’s phone number and calls
An angry tenant will go to great lengths to find the property owner, if he or she feels that there is a problem that the property manager is not attending to. This will result in the phone call to the tenant where the owner hears only the tenant’s side of the situation. A gullible owner may believe everything that is heard and then have a conflict with the property manager.
The tenant is expecting to purchase the property
Occasionally the tenant will express an interest in purchasing the property and discusses this with the owner. A simple discussion can lead to an understanding or expectation by the tenant that he will indeed be able to purchase the property. The tenant then starts treating the property as if it is his own and then begins making repairs, repainting or engaging in actions more appropriate for the owner of a property rather than a tenant. When the tenant later tries to actually purchase the property, the owner, finding out that the property is worth far more than he originally thought, decides to get top dollar, and the tenant is in no way able to qualify for the purchase. This creates bitterness on the part of the tenant who now refuses to allow showings of the property or cooperate with any potential buyers or sales agents.
The tenant is told of a replacement or repair
While chatting with the owner, the tenant shows the owner some part of the premises that may be in need of a repair or replacement. Things are said by the owner like, “We will get new carpet for you if you renew for another year”. The owner then changes his mind and decides not to get new carpet for the tenant. Result? The owner is now in breach of an oral agreement, and the tenant is angry deciding to withhold rent, due to the breach with the property manager stuck in the middle of the mess.
The tenant offers to do work in exchange for rent
If the tenant happens to be a painter, landscaper or other tradesman, the tenant will invariably want to use his experience and equipment to work on the premises. The owner will think this is a win-win situation and agrees to provide materials and/or reduce the rent. This is a huge mistake, as most property managers already know. Mixing a tenancy with work by the tenant is a recipe for a rent withholding and/or complicated eviction action. Frequently, the tenant will not do the work as promised, will do too much work over what was agreed to, do shoddy work, or get injured on the premises in the process. A tenant should NEVER be allowed to do work on the premises.
The tenant is told to pay the rent directly to the owner
Every property manager has or will experience the situation in which the owner deals directly with the tenant and decides to cut out the property manager, breaching the property management agreement. This could be out of simple greed, or a feeling that the property manager is not doing a proper job based on what the owner hears from the tenant. The tenant is told to pay the rent directly to the owner, bypassing the property manager.
Deals on rent are made
A property manager is much less apt to act based upon feeling sorry for the tenant. Most property managers have heard every sob story in the book. The owner may grant the tenant an extension or make some kind of a deal with the tenant. Most likely this deal is not done in writing and now will interfere with a possible eviction action.
The Court Testimony Problem
If the tenant has had direct contact with an owner, be it in person or by phone, or other correspondence, and an eviction or other court action becomes necessary, the owner may be required to come to court and testify. This could result in a costly last minute plane flight for the owner or multiple visits to Florida in the event of protracted litigation. If the tenant alleges that an agreement has been made with the owner, and the owner did indeed have some contact with the tenant, the only way to counter the tenant’s allegations will be to have the owner testify. While it may be possible to get permission form the court for the owner to testify by phone, the owner is put at a distinct disadvantage.
Your Property Management Agreement
Keeping the owner away from his or her tenant is a touchy situation. You do not want to make the owner get the impression that you are hiding something or trying to keep the owner away from the tenant for some sinister purpose. On the contrary, you are trying to protect the owner from complications that invariably occur. We recommend that you specifically advise the owner of the reasons why owner-tenant contact is not advisable. Additionally, the property management agreement can create a clause such as the following:
CONTACT WITH THE TENANTS: Owner agrees to have no contact with the Tenants whatsoever by phone, fax, email, mail, in person or through any other means and shall immediately direct any and all attempted contacts to the Property Manager. Owner understands and agrees that any contact with the Tenants may result in the Owner being forced to attend court on short notice in the event of any litigation,including but not limited to eviction actions or security deposit lawsuits.
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WHEN A SPECIAL IS NOT SO SPECIAL….
by Cathy L. Lucrezi, Attorney at Law
The Competitive Edge
In any competition it’s good to have an edge – something that makes you stand out from the rest of the landlords. Often, that edge takes the shape of a special move-in deal or a concession. Be sure that it does not take the shape of a fair housing violation.
Targeted Move-in Specials
Move-in specials can violate the fair housing laws if they are targeted to limited groups. Such targeting indicates a preference for one group over another. Thus, what you think is a “deal” for one group can act as a discouragement to another.
Specials for Seniors
A move-in special that offers the first month free to senior citizens has the effect of discouraging families with children. That violates the federal and state Fair Housing Act’s prohibitions against familial status discrimination.
If you have a move-in special for newly married couples, you are discouraging single people (which violates fair housing ordinances in several localities). For this same reason, you should charge each applicant the same application fee. There should be no “2-for-1” or reduced application fee for married couples.
Innocent Looking Specials
The situation may not seem logical. For instance, a move-in special aimed at families with school-age children would seem benign. After all, it certainly does not exclude families with children. However, since it shows a preference for a protected group, it could be considered a violation of the law.
Review your specials to make sure they are fairly available to all groups. Get legal advice immediately. Give attorney Cathy Lucrezi a call at 1 800 253 8428. If you think the special might discourage someone from applying, your special won’t be so special in the long run.
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