VOLUME 3 - ISSUE 8 LEGAL UPDATE
- The Stack of Bills and Small Claims Court
- Pre-Property Management Acceptance Investigations
- Evictions and the Rented Garage
- “Special” Lease Terms
THE STACK OF BILLS AND SMALL CLAIMS COURT
by Harry Anthony Heist, Attorney at Law
The tenant moved out, and you or your maintenance staff begins the fun process of repairing all the damage, painting, replacing carpet, replacing kicked in doors, repairing door frames and filling holes where your resident decided to practice the sport of boxing. The kitchen is an absolute wreck, requiring a deep clean taking hours, and the refrigerator shelves are either broken or missing. The bathroom has deep mold where every bit of caulking ever existed, and the floor is severely stained due to standing water or whatever else. I need not go on, you get the picture.
Should you sue the tenant? Will you be sued?
Tenants who leave the rental premises in deplorable conditions usually are judgment proof. It would be absolutely ridiculous to spend any serious time or money trying to go after persons like this. Most landlords know this, but many still insist on filing a small claims court case and pursuing a judgment. If a landlord is local and has time on their hands, usually there is not much harm in filing a small claims court case, and there is little expense if no attorneys are involved. Unfortunately, the landlord may have no choice in the matter and be the one who gets sued! There is no doubt that the landlord will retain the entire security deposit in a situation in which damages meet or exceed the security deposit amount, and many times, the tenant will seek to get the security deposit returned to him or her.
The seriousness of a small claims court case
Most landlords have no idea how serious a small claims court case can become. The landlord may file the case on his own, and the tenant hires an attorney who invariably files a counterclaim, meaning the landlord now is suing and getting sued at the same time. The prevailing party may be awarded attorney’s fees. This means that if the tenant wins and has an attorney, the landlord may end up having to pay thousands of dollars in attorney’s fees to the tenant’s attorney. The amount of attorney’s fees the judge may award has absolutely no relationship to the amount of the dispute. You could easily have a $5000.00 attorney’s fee award when the dispute was about a $500.00 security deposit, and the judge felt you overcharged by $50.00.
The proof you will submit in Court
Daytime court television shows probably do the most serious injustice to the court system and lead people to believe that this is indeed how court “works”. While some judges in small claims court do indeed play fast and loose with the evidence of the parties, most judges follow the laws, and this means the rules of evidence are followed. Most landlords will have a stack of bills and receipts which they think they will use to convince the judge that the tenant damaged the property. Sounds reasonable. After all, why would the landlord have spent all this money if the tenant left the place in good clean condition with no damage? It would seem to make sense that the judge will look at the bills and receipts, and this will help you convince the judge that you indeed were harmed by the tenant and should be entitled to keeping the security deposit or getting a judgment against the tenant.
The Bills and Receipts Problem
Ready for the big surprise? Bills and receipts cannot be submitted as evidence in court to PROVE the tenant did the damage. Bills and receipts are what is known as “hearsay” and CANNOT be used to prove the tenant did the damages.
What is “hearsay”?
Most people think hearsay means that when someone tells you something, you cannot use that statement in court. This is partly true. If I tell you that “John stole the car”, you cannot go into court and say that “Harry told me that John stole the car”. Why? Because if I am not in court with you, the defendant will have no way of cross-examining me. This means that what you are saying is “hearsay”, and the judge cannot listen to this, and it will not be used as evidence in court. Now on the other hand, if I were also a witness in court, and you told the judge that Harry told me that “John stole the car”, I can be called up to the witness stand and be cross-examined. The statement will then be admissible into court.
Other examples of “hearsay”
Besides just statements by people that cannot be cross-examined in court because they are not in court, there are other things which are considered hearsay.
1. Affidavits. Many property managers get the repair people and vendors to sign an affidavit, get it notarized, and then they think they can show it to the judge. It does not work; it is hearsay, because the vendor or repair person cannot be cross-examined in court.
2. Witness Statements. Getting 5 statements signed by people who observed the damages would seem like compelling evidence in court, but again, it is hearsay, unless the person or persons who signed the statements are in court.
3. Estimates. No good. Hearsay, unless the person who wrote up the estimate is in court and based the estimate on personal observation.
4. Bills. This is the classic mistake of the landlord. The stack of bills cannot be admitted into court to prove that the tenant damaged the property, unless the person who did the work is there in court, and a witness which can be cross -examined.
5. Police reports. There are times where properties are so severely damaged that the police are called in to write up a vandalism report. Hearsay again, unless the law enforcement person who wrote up the report is in court with you.
Is there any value to bills, invoices and receipts?
While they cannot be used to prove damages, they can be admitted into court to prove what something cost you, and if you have proof of payment, they can be used to prove that you paid for something like the supplies, the vendor, and the repair person. This certainly limits the usefulness of your bills, invoices and receipts, BUT will help your case in court, if you make it clear to the judge that they are being admitted as business records to prove what you paid.
If you end up in small claims court involuntarily, i.e. you have been sued, call your attorney as soon as possible. Don’t wait until the last minute when the chances of settling the case are seriously jeopardized. If you decide to file a small claims court case on your own, take the time to talk to everyone who worked on the premises to make sure that they will be there with you in court. You can subpoena these people as well and hope they come to court, but you don’t want to have an angry carpet cleaner who had to kill 5 hours waiting in court with you. Examine your evidence carefully, and try to put yourself in the judge’s seat for a moment and ask, will my evidence and testimony completely convince a judge that the property was not damaged when the tenant moved in, and was in a damaged state when the tenant moved out? Then expect the tenant to come up with all kinds of lies and stories to make you look like the bad guy.
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PRE-PROPERTY MANAGEMENT ACCEPTANCE INVESTIGATIONS
by Harry Anthony Heist, Attorney at Law
A property manager is an asset manager. The asset owner turns over the home or condo to the property manager to manage as that manager sees fit. Unlike cash, the asset that the property manager is entrusted with is complex, and to make matters more complicated, sometimes this asset comes complete with a tenant in place. Many property managers, and in particular ones who are newly entering the field of property management, will basically take anything that comes though the door. If that out of state owner calls you to manage his property, the first response is “yes”. We believe the first response should be “possibly after we get a little more information”. Our office deals with tens of thousands of situations each year. We see many instances in which property managers take over management of a property or a group of properties without asking questions first. The result is early litigation or a nightmare throughout the entire process. Our office files evictions for individual homeowners who are “attempting” to manage their own properties. While some owners are successful and knowledgeable, others have no clue whatsoever and make serious mistakes. If a potential client has made serious mistakes, we often will decline the case, as we do not want to have a situation in which we are in fact losing money because of what a client has done in the past. Since we do not traditionally charge hourly for eviction matters, a major problem results in us losing money, due to our flat fee system and taking up time that can be better spent on clients who have taken the time to know the law. Our firm’s philosophy should also be your firm’s philosophy. Taking over a nightmare property from a nightmare owner will end up costing you money in the long run and making property management more difficult than it already is. Now for the big question. How do you know what you are getting into?
The Property Owner Questionnaire
When we are asked by an individual homeowner to file an eviction, we first have that homeowner answer a number of questions, so we can get a feel of what has been going on. You should do the same, and preferably in writing, so you have proof. Out of state owners who have gotten themselves into a mess are notorious for leaving out major pieces of information, as desperation has sunk in. The number of these individual homeowners who are trying unsuccessfully to manage their own properties is rapidly increasing. The following are some questions to ask a potential new owner BEFORE accepting the property for management.
Who is the owner of the property?
The owner may be a partnership, trust corporation individual of any other entity. While you are asking this question, you can also be looking at tax records in the computer, as you want to confirm ownership so a property management agreement can be drawn up correctly.
How long have you owned the property, and when were you last at the property?
This will tell you if the owner is new to the property or has had long term dealings with the property and knows his or her property. An owner who bought the property 10 years ago will have you begin to manage the property, then visit Florida and nearly keel over when it does not look like it did when it was purchased. Who gets blamed? The property manager.
Do you own other properties in Florida?
Owners sometimes will dump the problem property on a property manager while continuing to self-manage the other properties that he or she owns. This is a warning sign. It is like when a property manager files the non-payment of rent evictions without an attorney, but then asks us to handle the completely messed up case. Sorry. Time to get another attorney.
Do you have a current tenant in the property, and how is it going?
You will want to get a feel of “why” they are coming to you. These questions are important, as the problems becomes evident almost immediately when you begin managing the property
1. Has the tenant complained of repairs?
2. Are there pending repairs?
3. Have you ever let the tenant do work in exchange for a rent rebate?
4. Has the tenant ever expressed interest in purchasing the property?
5. Is the tenant now in arrears?
6. Have you ever accepted cash from the tenant?
7. Who was accepting rent and posting notices in the past?
8. Are you happy with the tenant?
9. Does the tenant feel you owe anything to him at this time?
10. Is there a current written lease?
11. Do you want to keep the current tenant?
12. Do you know the names of all your tenants?
Is the unit a legal rental unit?
We don’t recommend our clients getting involved with illegal units where code enforcement can come in, start fining the owner, and the tenant has a valid lease in an illegal apartment, creating a breach of contract and eviction problem.
Are the mortgage payments, taxes and condo/ homeowners fees up to date and paid?
An owner who is delinquent sometimes gets so desperate they look to you to do all the work, find them a tenant, then fire you. You need to know the financial situation of the owner as it relates to the property. We have seen property managers take over homes and put tenants in, only to find out that the owner has been in foreclosure for months.
What were you hoping to get for monthly rent?
WOW! This is a big problem lately. Thousands of investors have purchased properties at prices where the taxes, mortgage and insurance don’t even come close to the potential rent you can get on the property. If the owner is unreasonable or does not want to accept the harsh realities, you do not want to represent this owner.
Are there any code violations on the property?
Absentee owners often have failed to maintain the premises, and there could indeed be active violations on the premises.
What was the problem with the prior property management company?
If the property was being managed by another company and now the owner wants to come over to you, it is important that you investigate exactly why the owner is switching. This may tell you if the owner has unreasonable expectations.
Is this owner engaged in “Management Flipping”
If you are just another property management company in a long chain of management company hiring and firings, this shows that the real problem is not the management company, but the property owner. Don’t fool yourself into thinking that you are going to make this owner happy because you do things a “different way” or you are “better”. While you may be “different or better”, the owner is the same! When we see a client who is obviously attorney flipping, we refuse representation.
In addition to the questions and issues discussed in this article, we are sure that there are many more questions that you already ask and have implemented in your policies. We would love to hear from you to see what other “screening” questions you ask before accepting the property for management. If you wish, we will amend this article and put your name next to some of the questions or procedures that you recommend! Simply email your info to me at firstname.lastname@example.org and let us know if you want the recognition!
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EVICTIONS AND THE RENTED GARAGE
by Harry Anthony Heist, Attorney at Law
Many multi-family unit tenants, and in some cases, tenants of condo units, either have a garage included in the tenancy, or can choose to have a garage at a cost in addition to their apartment. The way the lease agreement and garage addendum is worded can have major consequences in the event of an eviction action. Failure to use the proper wording can result in the unpleasant situation in which the tenant is evicted from the apartment, but the property manager is left trying to deal with a garage full of the tenant’s possessions. In a single family home, we do not have these issues, as the garage is usually attached or directly near the premises. In a multi-family setting, the garage is more often detached and may or may not be part of the “premises” .
The typical lease
The typical lease will state the monthly rent and then add a section for garage rent or have a check-off section stating that the garage is included. The garage is never mentioned again in the lease, and there is no garage addendum used. Sounds simple enough, and usually there are no problems
The Sales Tax Issue
Most property managers do not realize that if a garage is rented separately from the residential unit, sales tax must be collected on the garage rental. It is crucial to include the garage within the rental for this purpose to potentially avoid any problems with the DOR and sales tax. We recommend that you have a price stated for units with garages and a price for units without garages. Making a separation of the garage from the rental unit can trigger a sales tax issue. If you ever rent out garages to non-residents, you absolutely MUST collect sales taxes.
The Eviction Problem
As mentioned before, usually the garage is not listed as part of the premises but treated separately. This separate treatment can cause a major problem in an eviction action. Typically, the eviction is served on the rental premises and lists the rental premises as the premises that the tenant is leasing. Have you ever seen a garage listed on the 3-Day Notice or eviction action? It is assumed by many property managers and thankfully many tenants that in the event they get evicted, they need to remove everything from the garage as well, and most do. This assumption though may be false. A property manager could be faced with evicting the tenant but not being able to get the tenant to take items out of the garage. In fact, we have seen cases in which a tenant moved his or her belongings into the garage, actually sleeps there at night, and the traditional eviction action cannot get the tenant or his property removed from the garage.
The Lease Tie In
In the beginning of the lease agreement, we recommend that the lease clearly describes the premises as follows “125 Main Circle Unit 306 and Garage Number 16” We do not recommend separating out the price of the garage from the price of the apartment or condo. Simply add these together to have one amount.
SAMPLE LEASE ADDENDUM FOR GARAGE, CARPORT AND/OR STORAGE UNIT
1. ADDENDUM: This is an addendum to the Lease Contract for Apartment No_____ in the ________________________Apartments ___________, Florida and is made between Resident(s) (hereafter referred to as “Resident(s)”) and Owner and/or Owner’s agent (hereinafter referred to as “Owner”).
2. PREMISES: The Premises as defined herein, shall be an enclosed garage, a carport and/or a storage unit (hereinafter referred to as the “Premises”).
3. USE: Only those persons whose names appear on this addendum may use the Premises. The Premises may be used solely for private residential storage, and under no circumstances shall any business activity be conducted from or in the Premises. No person shall be permitted to sleep in the Premises at any time or remain in the Premises with the door closed.
4. PETS: No pets or animals may be kept in the Premises.
5. DEFAULT AND REMEDIES: If Resident(s) default in complying with this addendum or the law, Owner has the right to retake possession as provided by Florida law and institute eviction proceedings. If, Resident(s) or invitee(s) engage in criminal activity on the premises, such action will be a default for which this addendum and the apartment tenancy may be immediately terminated. In addition to any of the foregoing, Owner has all other rights and remedies provided by law.
6. RIGHT TO ENTER AND TERMINATE: Resident(s) consent to Owner entering the Premises at any time and for any purpose without notice. Owner reserves the right to terminate this Addendum at any time and for any reason whatsoever, and Resident(s) agree to immediately remove all items from the Premises or face eviction proceedings from the Premises and the apartment unit.
7. REPAIR AND MAINTENANCE:Resident(s) acknowledge that they have inspected the Premises and are fully satisfied and accept it in "as is" condition. Resident(s) agrees to be fully responsible for any damage cause to the interior of the Premises, including but not limited to the walls, ceiling, floor and the door(s).
8. ALTERATIONS: Resident(s) may not make any alterations or additions to the Premises or affix anything to the floor, ceilings or walls.
9 CONTENTS: Nothing may be used or kept in or about the Premises which would in any way affect the terms and conditions of Owner’s fire and extended coverage insurance policy, constitute a violation of the law, or otherwise be a hazard in Owner’s sole judgment. NO FLAMMABLE OR COMBUSTIBLE LIQUIDS OR GASES, BATTERIES, FIREWORKS, EXPLOSIVES OR ANY OTHER ITEM OR SUBSTANCE, WHICH OWNER DEEMS DANGEROUS OR UNACCEPTABLE, MAY BE KEPT IN THE PREMISES. NO ELECTRICITY MAY BE HOOKED UP TO THE PREMISES, AND NO PLANTS MAY BE GROWN IN THE PREMISES.
10. PEST CONTROL: Owner will in no way whatsoever be providing any pest control for the Premises and shall not be liable for any damages caused by pests to the Premises.
11. LIABILITY: Owner will not be liable for any damage, loss, or injury to persons or property occurring within or about the Premises, whether caused by Owner, someone else, weather, fire, wind, rain, flood or any other acts of god. Resident(s) are responsible for obtaining Resident(s)' own casualty and liability insurance, and, agree to save and hold Owner harmless and indemnify Owner from any liability. OWNER STRONGLY RECOMMENDS THAT RESIDENT(S) SECURE INSURANCE TO PROTECT YOUR PROPERTY. Resident(s) agree to save and hold Owner harmless and indemnify Owner from any liability resulting from injuries arising from the use of the Premises.
12. SECURITY: Owner does not provide and has no duty to provide security services for Resident(s)' protection or the protection of Resident(s)' property in the Premises. Resident(s) must look solely to the public police for such protection. The Premises has a lock, which Owner does not warrant in any way. In the event any locks are broken, Resident(s) shall be responsible for the cost of replacement of the locks.Resident(s) may not change the lock(s) on the Premises.
13. POLICIES: In addition to the policies herewith and the attached rules and regulations or any other attachments, the receipt of which is hereby acknowledged, Resident(s) agree to observe and be bound by any other reasonable policies or rule changes which may be later implemented by Owner.
14. GARAGE SALES: Resident(s) agree that no “garage sales” shall be permitted in or around the Premises, parking areas or common areas, and nothing shall be sold out of or around the Premises, parking areas or common areas without express written permission of the Owner.
15. ABANDONED PROPERTY: Resident(s) agrees that should they vacate leaving any items in the Premises or should Resident(s) fail to vacate the Premises after notice or eviction, Owner is expressly given permission to dispose of the items in any way, holding the Owner harmless, and Resident(s) agree to be liable for any expenses arising out the disposal with regard to any items left in premises after Resident(s) vacate the Premises. Resident(s) expressly agree to waive all rights and procedures regarding the disposition of abandoned property provided in Florida Statutes. BY SIGNING THIS ADDENDUM, RESIDENT(S) AGREE THAT UPON SURRENDER OR ABANDONMENT, AS DEFINED BY FLORIDA STATUTES, THAT OWNER SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE RESIDENT(S)’ PERSONAL PROPERTY.
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SPECIAL LEASE TERMS
by Cathy L. Lucrezi, Attorney at Law
SPECIAL” LEASE TERMS
Sometimes, landlords want to add special lease clauses or use a special addendum if a tenant has a handicap. The landlord may want to be protected from liability if the handicapped person falls or if the grab-bars break. Sometimes, the landlord wants the tenant to acknowledge in writing that the landlord will not pay for any modifications to the unit. Or, the landlord wants to include language in the lease that cautions the wheelchair user about the dangers of going to the pool unattended.
Should you add language to your lease to cover these situations? No.
The Fair Housing Act protects individuals with handicaps. The law says you cannot discriminate in the “terms and conditions” of the tenancy based on a person’s handicap.
That means you cannot impose conditions on a handicapped person’s tenancy if you are not also imposing the conditions on all other tenants as well. You cannot single them out for special or additional responsibilities. You cannot require them to sign an addendum that you would not also require of a non-handicapped tenant.
Clauses that attempt to limit the landlord’s liability are unenforceable in Florida, regardless of whether they involve handicapped individuals. However, by imposing such a clause on a handicapped person, the landlord would also run afoul of the fair housing laws.
Refusing to Pay for Modifications
A lease clause that provides the owner will not pay for any modifications to the unit may be correctly stating the law, but it should still be avoided. It is hostile language that would discourage a handicapped person from requesting permission to make a reasonable modification. Also, because it is something the landlord would be using only for his handicapped tenants, it discriminates.
Warning of dangers
If the lease includes cautions about what the landlord perceives as special dangers to the handicapped person, such patronizing lease clauses are not only useless, but are also in violation of fair housing law. You can be assured the wheelchair user already understands the risks of using the pool alone.
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