VOLUME 5 - ISSUE 3 LEGAL UPDATE

- The Lease Break by the Tenant
- Copying ID - Is it Legal
- Are you Inspecting Enough?
- Foreclosure and Disclosure
- Live-in Caregivers

 

 

The Lease Break by the Tenant
by Harry Anthony Heist, Attorney at Law

 

Your tenants have just informed you that they are breaking the lease agreement and moving out. A job transfer, sickness, home purchase or any other reason may be given. They may call you on the phone and then inform you in writing, sending you their new address where they expect you to send the security deposit. They may simply send you a letter telling you their intentions. Most likely you will not agree with the tenant's desires or plans, but you need to decide whether to ignore the letter or respond.

Do you need to respond?

There is nothing in the law that requires you to respond to the tenants. A letter from tenants indicating their intention to break a lease does not have any effect upon the lease agreement or the tenancy. Legally, it is called an anticipatory breach of contract. Will the tenants be breaching the contract? Yes, and you do not need to respond. However, when you do not respond, the tenants feel they are entitled to break the lease, and they assume your failure to respond indicates acceptance with their intentions. We feel you should respond, but in writing and with specific wording.

The tenants' expectations?

What are the tenants' expectations? As we can see in many lease break letters from tenants, many feel that a job transfer, sickness or home purchase somehow legally allows them to simply pack up and break the lease. During the sales boom, many real estate salespersons told tenants that in the event they purchased a home, the law allowed them to break the lease without penalty. We all know that this just is not the case, but the tenants think otherwise. If the tenants feel they can break the lease without penalty and send the landlord a letter indicating the same, and the landlord in no way responds to the tenants, the tenants may feel that everything is fine and that the landlord is in complete agreement.

How to respond

When tenants have already broken or will break a lease, the landlord must immediately become vigilant and communicate only in writing with the tenants. Remember, the tenants are attempting to get out of a serious contract, and anything can and will happen. The landlord may be caught off guard, the tenants may be desperate, and the parties begin a verbal communication which is subject to interpretation and misunderstanding. The act of tenants breaking a lease is a legally significant and dangerous situation (from the standpoint of the agent's potential liability), and nothing should be done unless it is in writing. Too often we see cases in which deals are made, conditions are set, and conversations ensue in which the landlord and the tenants each end up having a completely different understanding of the situation. This results in conflicting testimony in a later court case. Unfortunately, some people can lie more convincingly than others can tell the truth, so when the tenants go to court and claim the landlord said they could break the lease, no one has anything in writing other than the tenants who have a letter written to the landlord indicating they could break the lease. The judge is put in an unfortunate situation in which he or she must decide who to believe. You may be on the losing end that day.

Common landlord mistakes

Upon learning of a lease break or anticipatory lease break, the landlord may tell the tenants that if a new tenant is obtained, the departing tenants will not have to pay any further rent. This immediately creates an expectation on the part of the tenants that the landlord will mitigate his damages and suddenly get a new tenant. Under current market conditions, we all know that finding a new tenant may be a lot harder than it was two years ago. The landlord may make the mistake of agreeing that the departing tenants will find a replacement tenant. Often this happens, and the person the breaching tenants find does not meet the landlord's criteria and is not accepted, causing the breaching tenants to feel that the landlord does not want to rent the unit out. Another mistake is to make a payment arrangement with the tenants for money owed, but at that time no one really knows what is owed or how long the unit will be vacant. Lastly the landlord may find a new tenant, but at a lower rent amount. Does this mean the lease breaking tenants are now off the hook? All the foregoing mistakes are made by landlords, and often they are part and parcel of the verbal agreements with the tenants.

The proper response

Now that you are convinced that the landlord should never respond unless in writing, you need to know what to say. Simply put, the landlord should tell the tenants that the lease agreement stands, and that the tenants' vacating shall constitute a breach of the lease agreement. Since automatic forfeitures of security deposits, liquidated damages and accelerated rents are not expressly legal, this will not be discussed. The correspondence should be short and simple.

The tenants have left. Can you take possession?

If you do not agree with the tenants' intention to break the lease by vacating and the tenants vacate, how does the landlord know if he can take possession? Often tenants will wait to see if the landlord takes possession. They will have a neighbor watch the property and notify them if the landlord is seen going into the unit. Possibly, the rent will be current, and if so, the landlord cannot take possession unless the tenants have granted possession. If the tenants have indeed vacated and the unit is abandoned, meaning the unit has been vacant for 15 days and the rent is unpaid, the landlord may take possession. If the tenants have told the landlord in writing that they will be vacating on a particular date and in fact do so, the landlord will most likely have possession of the premises, but should be sure by inspecting the unit and running this by their attorney. By sending the tenants a proper response, the landlord can accomplish a number of things to help minimize a bad situation and dispel the uncertainty of whether possession is or is not granted.

 

Sample Response Letter to the Lease breaking Tenant

Dear Tenant,

We are in receipt of your letter (or phone call) in which you have indicated that you are vacating the premises on (month, day, year). Please note that under the terms of the lease agreement that you signed, your lease and rent obligations continue until the end of the lease term. We will expect you to continue paying the rent and all charges due under the terms of the lease until the earlier of the date we may be able to re-rent the unit, if we decide to do so, or the end of the lease agreement. If we are only able to rent the premises at a lower rental rate than the amount for which you are currently responsible, you will also be liable for that deficiency. Please inform us in writing when you have vacated the premises, and return all keys, garage door openers or any other property belonging to us at that time, so we can avoid filing a possible eviction action. Please note that by vacating prior to the end of your lease agreement, you are in breach of the lease agreement, and we shall exercise all our rights under the lease and Florida law.

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Are you Inspecting Enough
by Harry Anthony Heist, Attorney at Law

 

Your tenant moves out, and you discover massive damage that has been going on for months. Your A/C blower motor burns out because the filter never has been cleaned. You find serious pet related damage to the carpeting, walls and doors. There is a severe mold problem in the bathroom caused by the tenant. Could this damage have been avoided? If you are managing a single family home, can a property owner hold your company liable?

Common practice

Most property managers and landlords inspect the rental premises once a year. While the pest control professional may be in the unit more often than that, typically a condition inspection is only done once a year. In many situations, as long as the tenant is paying the rent, no complaints are coming from the unit and everything appears fine on the outside, no inspections are ever done.

The law and Inspections

Florida law places no obligations on a landlord to make any inspections of a unit. While the law places many obligations of maintaining the premises on the landlord, most of maintenance will be at the request of the tenant in response to a problem. Nothing in FS 475, which governs real estate licensees, places any requirements upon a property manager to inspect or otherwise preserve or protect the managed property.

What can happen inside a unit?

The short answer is "just about anything". You can have unauthorized occupants, unauthorized pets, unsanitary conditions, damage to the walls, damage to carpets, pest infestation, severe mold issues, water intrusion problems, plumbing problems, indoor drug cultivation, clogged air filters, severe smoke related damage or just about anything that can happen, which could result in the need for an expensive repair or replacement. A common item that is usually ignored by the tenant is the A/C filter, which eventually gets clogged up to the point where the blower motor is strained and eventually fails. Could any of the aforementioned problems been avoided? Possibly not completely, but most likely they could have been minimized by an inspection that was done earlier rather than later, or done more often than not.

Apartments

An apartment manager should be diligent about inspections. Units should be thoroughly inspected once every three months. Any problem should be dealt with immediately. If there are maintenance issues, they should be handled even if the tenant has not put in a work order. If a problem is caused by the tenant, the manager should serve the tenant with the appropriate notice, that notice usually being the Seven Day Notice of Noncompliance with Opportunity to Cure. Inspections are crucial to catching a problem early and taking action. In the event of unauthorized occupants or pets, a tenant often claims that the occupants or pets were there for a long time, that you had knowledge of this, and therefore that the pets or occupants are now allowed, since you have waived your rights to do anything about it. This is actually a compelling defense which can catch a manager off guard if the premises are not reinspected after the notice of noncompliance is given.

Managing Homes

This single family/duplex/triplex home manager has an even greater reason to inspect often. Besides having more items to inspect in most cases, the owner of the property can and sometimes does attempt to hold the property manager liable for the damage caused by the tenant. If the manager has not inspected often enough, a good argument can be made that the manager failed in her duty to protect the premises. The argument is as follows: the owner's attorney proves to the judge that had the manager inspected sooner, the damage could have been avoided or minimized. Since this did not occur, the manager should be held liable for the resulting damage. Many judges are apt to accept this reasoning. This scenario may also result in the manager getting reported to FREC, who due to its lack of experience in property management related issues, may feel the manager was negligent in his or her duties.

Inspections after Seven Day Notices

As we all know, just because a Seven Day Notice of Noncompliance with Opportunity to Cure has been served on the tenant, this does not mean the tenant will cure. You must perform an inspection after the notice expires to see if the desired results have been achieved. Many property managers serve notices, assume the noncompliance has been rectified, and then continue to accept rent from the tenant, who unbeknownst to the landlord is still in noncompliance and possibly will try to claim that he is now allowed to continue in the noncompliance because you kept taking rent for months after citing the noncompliance.

Inspections and Fair Housing

All tenants need to be treated similarly when it comes to inspections. What about situations in which there seems to be ongoing problems? A tenant may have children who have caused damages to the premises or are tearing up the yard. Will excessive inspections be looked upon as discriminatory or harassing?

If the inspection is justified, it will not be considered excessive or discriminatory or harassing. Fair housing laws do not absolve tenants of the responsibility to maintain the landlord's property.

To avoid the risk of having an inspection become fodder for a fair housing claim, develop a policy and follow it. If you must deviate from your inspection schedule, document the reasons for doing so. For example, if your policy is to inspect every three months, but you want to do an inspection in some intervening month because pest control reported a problem, fine. Do the "extra" inspection, and make notes to your file why you are doing it.

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Copying ID-Is it Legal?
by Harry Anthony Heist, Attorney at Law

 

Many landlords are reluctant to copy the tenant's identification due to a fear that this will trigger a Fair Housing violation. By not having a copy of the identification, the landlord is at a distinct disadvantage when this identification is needed later in the tenancy or for collection purposes. Should the identification be copied? Is it legal? Let's look at the risks and benefits of copying the ID and get some advice from our nation's Fair Housing Experts.

The Application Process

Most landlords have been advised that copying an applicant's identification and keeping it with the file can open you up to a Fair Housing complaint. The theory behind this is the fact that you can gather up numerous applications, sit down and review them, look at the photos of the applicant and decide to discriminate against the applicant based on race, religion, color, nationality or anything else you may be able to determine by viewing the image of the applicant. Possibly, the applications are gathered and sent to a third party in your company who makes the ultimate decision as to accepting or rejecting the applicant. This person can easily sort through the applications and make decision based on what they see on the applications. In the event of a Fair Housing complaint, the investigator may and probably will want to see all your applicants' files, and in the event there appears to be a pattern of discrimination against someone based upon a protected class that can be determined by the ID copies, you will have a lot of explaining to do. Is it illegal to make copies of the ID at the time of application? Nadeen Green, a nationally respected Fair Housing expert and Senior Counsel with For Rent Media Solutions says this :"If you feel a need to have a copy of the applicant's photo prior to them being approved, (1) know the risk, (2) be consistent within the policy, and (3) be sure you can absolutely justify the decision making procedures and process as to why one person got an apartment and another did not. Otherwise there could easily be the illusion that decisions were based on factors about the people, with those factors being identified through the photos." Let's look at what she is saying.

1. Know the risk. The risk is that you will be accused of discrimination, as you can often easily identify a person of a protected class by the photo on the ID. Will not having a copy of the photo ID keep you safe? Of course not, but having a copy certainly elevates this risk. 2. Consistency in your policy. If you are taking a copy of photo ID for the purposes of identification of the applicant, you must do this with all your applicants. Never pick and choose or make exceptions unless these exceptions are not based upon any discriminatory purpose. If you have a policy to copy photo ID, you will need to have a written policy for when a person does not have a photo ID. Note the emphasis on "written" when it comes to all your policies.

3. Justifying your application approval/rejection decision. All landlords need to have a written Resident Selection Criteria and/or other written policy which must be followed for the application acceptance or rejection. Careful file notes should be kept with the full reasons for which a tenant was denied.

Copying the ID at lease signing

While some landlords may be hesitant to copy ID during the application process, it is crucial that ID is copied at the lease signing. This gives the landlord another chance to look at the ID, compare it with the information provided, and have a firm way to identify the tenant at a future date. A copied ID often is useful in a tenant lock-out, pursuing a bad check, dealing with identity theft or in an unauthorized tenant matter. Both Doug Chasick of Call Souce and Fair Housing Trainer Nan Cavarretta agree that copying ID at lease signing is both legal and recommended, but feel that copying during the application process is risky.

Your decision?

When dealing with any potential fair housing issue, caution is key. If you have a good Resident Selection Criteria and detailed policy and procedures AND you follow them, documenting everything along the way, you will probably be safe copying the ID at application time. Short of that, we recommend you hold out until the lease signing. Finally, when it comes to copying the ID, no matter when you do it, as Doug Chasick of CallSource will tell you, "most copy machines at leasing offices don't make good copies of photographs anyway!" NOTE: SEE OUR ARTICLE ON THE PROHIBITION ON COPYING MILITARY ID.

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Foreclosure and Disclosure
by Cathy L. Lucrezi, Attorney at Law

 

Foreclosures seem more prevalent in Florida than oranges and "˜gators. There is a 97% increase in them in the last twelve months. So many of the investors who thought they could make some money as landlords are now letting the properties slip into foreclosure. As the property manager, you too can get mired in the mess. One dilemma may be deciding whether you must tell the tenant what is going on.

No foreclosure yet"¦

If the owner tells you that the property is about to go into foreclosure, or he says he is thinking of "letting the bank have it", there is no disclosure that needs to be made. After all, the information is speculative. You do not have to tell the tenant that the landlord is having financial difficulties.

Foreclosure is filed"¦

If a foreclosure has already been filed at the courthouse, there is no legal obligation to report it to the tenant. The tenant will soon enough be served with a copy of the complaint and a summons. However, you can cushion the surprise by calling the tenant and letting him know. You can remind the tenant that the filing of the foreclosure does not end the landlord's or the tenant's obligations to the lease.

Foreclosure is filed AND the lease is not yet signed"¦

A disclosure should be made to a new tenant that a foreclosure is pending. Because the new tenant is moving in after the foreclosure was filed, he may never be served with a copy of the complaint and a summons. He may not know about the foreclosure until the day a writ of possession is posted on the door.

For this situation, disclosure is essential. A sentence like this can be included in the lease: "Tenant acknowledges and understands the rental premises are part of a foreclosure lawsuit against the owner." That may result in the tenant choosing to walk away, but anything less could be considered a type of misrepresentation.

Remember, disaster is not a certainty.

The filing of a foreclosure suit does not mean the tenant has to vacate. A lot can happen between the day the foreclosure lawsuit is filed and the day a tenant must vacate. The owner could sell his property, in which case the lease would continue undisturbed. The owner could refinance and resolve the indebtedness on the mortgage. Even in the worst case scenario in which the tenant loses possession, a period of three to four months will likely pass after the foreclosure is filed.

 

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Live-In Caregivers
by Cathy L. Lucrezi, Attorney at Law

 

It is easy to imagine many scenarios in which a handicapped individual may require the assistance of another person. For individuals with severe mobility impairments, a caregiver may assist with moving the tenant in and out of a wheel chair. For individuals with dementia, a caregiver may be responsible for keeping the tenant safe. A caregiver may be responsible for housekeeping, paying bills, administering medication, and/or a thousand other tasks.

A tenant's request for a live-in caregiver should be handled just as any other request for a reasonable accommodation. The tenant must demonstrate she is handicapped and needs the caregiver. If it is reasonable to grant the request, the landlord is obligated to "bend the rules" and let the caregiver move in.

Who is a caregiver?

A caregiver is a person who performs some type of service to a handicapped tenant so that the tenant is better able to use and enjoy the rental premises. The caregiver does not have to be certified or licensed. She could be the tenant's relative, or she could be someone from a nursing agency. The caregiver is whoever the tenant says he is.

When is a caregiver needed?

As with any other request for an accommodation, the landlord can require the tenant to produce verification of the need for the caregiver. If the tenant's health care provider (this person does not have to be a physician) says the caregiver is needed by the handicapped tenant, then the caregiver is needed. Period. The landlord should not second guess the health professional's opinion.

What should the lease say?

The live-in caregiver is not a tenant and should not be listed as a tenant on the lease. The caregiver is not responsible for rent or any other charges that may become due under the lease. Only the tenant is responsible for that.

The caregiver should also not be listed as an occupant. The caregiver has no status as a tenant and no entitlement to protections of the landlord tenant statute. His presence in the household is based solely on the tenant's need for his services.

The live-in caregiver is in a category by himself. The lease should include a provision, or there should be an addendum, that indicates the name of the caregiver and acknowledges that the tenant remains responsible for performance of the lease and the conduct of the caregiver. The lease should make the tenant responsible for notifying the landlord of any changes in who serves as caregiver.

Can the caregiver be "checked out"?

Because the caregiver is not a tenant, the caregiver's income is irrelevant. There is no need for the caregiver to complete an application or for a landlord to run a credit check.

However, it is perfectly legitimate for a landlord to run a criminal background check. The landlord can request the minimum amount of data necessary to run the check. If that means the caregiver must sign an authorization, then it is the tenant's responsibility to obtain it. If the criminal background check reveals a conviction that wouldn't pass muster under a typical application, then it is reasonable for the landlord to refuse to allow that particular caregiver to move in.

 

Sample lease provision

(name of caregiver) shall reside in the premises as Tenant's caregiver. It is understood that the caregiver is neither a tenant entitled to the protections or entitlements of the lease, nor of the statutes related to landlord tenant matters. If Tenant changes caregivers, Tenant shall notify Landlord of the name of the new caregiver prior to the new caregiver taking occupancy. Landlord may conduct a criminal background check of the caregiver and may condition consent to the caregiver upon the results of the criminal background check. Tenant is responsible for any lease violations that occur through the acts or omissions of the caregiver. Tenant shall provide a copy of this lease to the caregiver.

 

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Law Offices of Heist, Weisse & Wolk, P.A.
Phone: 1-800-253-8428 Fax: 1-800-367-9038

Serving Florida's Property Managers with main office in Fort Myers Beach. Available by appointment in Orlando and Clearwater


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