VOLUME 6 - ISSUE 1 LEGAL UPDATE

- The Skipping Tenant
- Identity Theft Part 1 Claim
- Eviction Avoidance Techniques
- Refusing Electronic Payments

 

 

 

The Skipping Tenant
by Harry A. Heist, Attorney at Law

 

Tenants are "skipping" at a record rate. Skipping of course is the common name given to the act of simply walking out on a lease. The lease is signed, the tenants move in, live in the unit for a while, and then for whatever reason, decide to pack up and move. Can you stop them? Of course not. Just like you cannot force a person to pay the rent or prevent them from moving in unauthorized occupants or getting those 5 pit bulls, a tenant who is desirous of leaving will do so. It is that simple. Since the tenant has decided to leave and does, you are now faced with the dilemma of an empty unit and rent owed to you. What can you do? Suppose you are managing a unit for another. The property owner who is often out of state is baffled and cannot understand how this can be. Often we hear them say, "But they have a lease!" or, "Why did we even have a lease? It is worth nothing". What do you tell this angry and baffled property owner? How do you handle it when it happens to you? This article will examine some of the harsh realities of the tenant "skip" and how you can deal with the problem. Notice I said, "deal with the problem", not solve the problem. If anyone knows how to solve the problem of the tenant skip, you call me right away! This article will examine the three simple paths you can take when a tenant skips out on you.

Sue the Tenant

When a tenant skips before the end of the lease term, the tenant will owe rent until the unit is re-rented or until the end of the lease, whichever occurs first. This statement assumes that no other document is in place, or the tenant has not signed an early termination addendum which may liquidate the amount owed. What does the tenant owe? You will not know until the unit is re-rented or the lease expiration date.

Now the big question: should you sue the tenant? In most cases we will advise you to do a careful cost/benefit and risk analysis when deciding whether to sue the tenant. Before you can even think about suing, you must know where the tenant is, so he can be served with the lawsuit. In many skips, the tenant disappears and cannot be found. If you cannot find him, you cannot sue him.

a. Cost: Unless you can find an attorney who will file a lawsuit on a contingency basis where you pay nothing unless or until you win, using an attorney to file a lawsuit is often cost prohibitive. Many landlords are under the impression that the tenant will be responsible for their attorney's fees and costs, and this is true in most cases, but just because you "win" in court does not mean you will collect a dime. Most attorneys will not take a case like this on a contingency basis.

b. Benefit: By suing the tenant you may be able to get a judgment against the tenant, allowing you to lien any real property the tenant owns, and also may be used in attempting to garnish wages, another expensive, cumbersome process full of exemptions. Will you collect your money even if you win? Probably not. People who skip do not care much about getting sued, because if they did, they would not have skipped in the first place. They are usually what we call "judgment proof".

c. Risk: The risk involved in filing a lawsuit against a tenant may come as a real surprise. Why would there be risk? The tenant owes you money after all. The risk arises when the tenant claims there was a "legitimate reason" why she skipped out. She may claim you failed to maintain the property, felt unsafe, was told she could leave early, you name it. There are a thousand reasons that a tenant who is being sued can come up with to justify why she broke the lease, and the judge in the case might believe the early departure was justified. If the judge finds for the tenant, YOU will have to pay the tenant's attorney's fees PLUS your attorney's fees, if you hired a lawyer to fight the case.

If the property owner has a lot of time on his hands and wants to file a small claims case without a lawyer, there is probably nothing wrong in giving it a try, UNLESS an attorney pops into the picture and defends the tenant. If you are managing the property and the owner asks you to do it, just say NO. Property management agents should not be acting as the attorney for the owner.

Settle with the Tenant

Once you know how much the tenant owes, if you are able to get in touch with the tenant, writing a demand letter or having your lawyer write a demand letter at minimal cost is not a bad idea. A demand letter may open up some dialogue and result in an offer by the tenant to pay all, something or possibly set up a payment plan. Settlement is not a bad word. It is often the smart thing to do. Your attorney can provide you with the proper form to use when settling with the tenant, as everything should be in writing.

Forget about the whole thing and move on

Your final option is to do nothing. Direct your energies into getting the unit rerented. You can always decide to sue at a later time, and you have up to 5 years to do this.

Conclusion : If you are a seasoned property manager or landlord, you probably understand everything you have just read. The problem is your out of state owners who just doesn't understand how Florida law works, and that Florida is what is known as a "debtor" state. If you are managing property for them, you will often get unreasonable demands about collecting the money. In many states, the creditor has significantly greater rights in pursuing the debtor. Florida is known for its lenient laws as they pertain to collecting money from a debtor. There are head of household exemptions, personal property exemptions and although not unique to Florida, bankruptcy protection. Does this mean that it is impossible to collect a debt? Absolutely not. In many cases people will pay. Most cases? Probably not. The best approach is to have your lawyer take a look at your the situation or send your property owner to the lawyer for a quick look, and have the lawyer give the advice necessary for you or the owner to make an informed decision. Exercise care in what lawyer you may send the owner to as some lawyers may not be completely honest and will choose to take a case AND you or your owner's money knowing full well that the chances of collection are slim.

 

(Back to Top)

 

 

Identity Theft Part 1
by Michael Geo. F. Davis, Attorney at Law

 

IDENTITY THEFT PART 1 - PROTECTING YOUR RESIDENT PAPER INFORMATION

Identity theft occurs when someone uses another individual's personal identifying information, such as name, Social Security number, or credit card number, without that individual's permission, to commit fraud or other crimes.

Public awareness on this issue is high. When you ask your applicants to complete the rental application, you should be prepared to answer some basic questions:

1. Why do you need this information? Is the answer that you need it to run the credit and criminal background checks and to contact prior landlords the whole answer? Do you use the information for anything else? Statistical analysis of your resident profile? Marketing? Do you need all the information? Many applications ask for more information than is truly needed. Review your application.

2. Who will use this information? You give this information to your background service. Do you or your staff run any background checks (sexual predator website) or contact the prior landlord? Do you do follow-up criminal checks periodically during the lease? At time of renewal?

3. How will you protect this information? Be careful here. The temptation is to overpromise with broad, reassuring statements like, "We keep everything under lock and key with tight security." Yet in reality you give all your staff access to the tenant files. People may legally rely on your statements. When those statements are false, they may be entitled to compensation for their damages.

4. Is there an alternative to giving you this information? Some people are trying to hide their disqualifying past. Others are concerned about the widespread abuse of private information.

Personal information is everywhere in your office. The obvious places are the file cabinets, the computers, and the mail. However, what about the less obvious places like the pad with the name, apartment and credit card number of the tenant who called because he has to extend his vacation to deal with a family emergency? The half completed application in the trash can?

Dispose of all trash properly. Your leasing office trash is a gold mine for identity thieves. Paperwork bagged and placed in the dumpster doesn't protect against dumpster diving. There's no excuse for not having a paper shredder. The shredder is worthless without a shredding policy. The policy is worthless without enforcement.

Protect your paper files. Are they kept in a secure filing cabinet? Who has keys? Access to keys? A secure cabinet is not much protection for the files left on your desk overnight or for the week because you're busy or have given keys to staff for follow-up who keep them in their unlocked desk drawers.

Protect your mail. Does it sit in an "Outgoing" box accessible to anyone coming into the leasing office? Is the incoming mail left on an unoccupied desk until you can get to it?

Protect you tenant payments. How secure is your drop box? How hard is it to reach the payments inside? We get calls from landlords who have drop box break-ins. If the landlord permitted payments through a drop box, then the loss is on the landlord. Why do you think bank night payment drops are so secure? In a drop box break-in situation it is impossible to disprove the claims of the many tenants who allege deposit of cash payments into the drop box. Your drop box should have a prominent notice stating that its use is at the risk of the payer.

Protecting the tenant's payments includes protecting the information on any payments that you are returning. For instance, the tenant makes a partial payment of rent by check in the drop box. You don't permit partial payments. How do you return the check? Never post it on his door, even if it is in an envelope. Void the check and return it to him in a letter to protect the privacy of his bank information. Post a copy of the letter in an envelope on his door, so he will know immediately that his payment was refused.

Insist that an information release accompany any rental verification request. Best practice is to confirm with the tenant before answering any such requests.

 

(Back to Top)

 

 

Eviction Avoidance Techniques
by Harry A. Heist, Attorney at Law

 

Over almost 20 years now, we have been able to observe the habits and traits of property managers. Some of these habits and traits are good, and some are just plain bad. One interesting aspect has stood out above the rest and is readily apparent in our firm, since we file so many evictions for so many property managers. Some property managers seem to be able to decrease the number of evictions they have when they begin managing a particular property or portfolio of properties. How do they do it? This article will examine some of the habits or procedures of property managers who seem to have found the trick to reducing evictions. Reducing evictions is crucial to the bottom line. Not only are you avoiding the costs of an eviction, the headaches, the uncertainty and all that goes with evicting, you are also minimizing damage to the property. Tenants who are evicted generally do not clean the unit upon move out, and worse yet, many maliciously damage or destroy the premises and take off with the appliances, resulting in thousands of dollars in expenses.

Communication is the Key

Many tenants are already preparing to move from the premises, so when you file the eviction, it is actually a waste of money. Often the tenant vacates immediately upon getting served with eviction papers. Is this because they got the papers? Often the answer is no; they were planning on moving anyway, but you did not know it. The result is that you wasted the money. Some tenants need to be reminded to pay the rent. Funny how the tenant all of a sudden pays right after you spoke with them. Some tenants are simply late payers and pay on their own schedule. You file an eviction, and they come running into your office, but are now unable to get caught up because of the attorney's fees and costs you incurred

1. Notice serving: A Three Day Notice or any other notice for that matter, unless the statute or your lease requires otherwise, should never be served by posting (taping) on the door unless the tenant is not home. You are allowed by law to post a Three Day Notice "in the absence of the tenant". Common practice by many property managers is to "tiptoe, tape and take off". The manager puts the tape on the notice ahead of time, creeps up to the door and lightly places the notice on the door, then gets out of there before the tenants' unauthorized dog begins to bark. Why? Because the property manager does not want to confront the tenant. The result is that the tenant will look at the notice, throw it in the trash and maybe pay the rent. No communication has occurred, except for the property manager serving the notice, and even that service was legally improper because the manager failed to knock on the door. Knock on that door! If you feel uncomfortable doing it, have someone come with you, or delegate it to someone else.

2. Face to face communication : Speaking with the tenant face to face is the best way to communicate and see what the tenant's intentions are. When serving the Three Day Notice or at any time thereafter, the manager should knock and try to engage the tenant in conversation. The manager may find out information from the tenant at that time which could avoid an eviction: a. The tenant may pay the rent. This is the best and desired result.
b. The tenant may tell you they are going to pay tomorrow or give you a fixed date which may be soon after the expiration of the Three Day Notice. This will then affect your decision whether to hold off a couple days or go straight to eviction after the expiration of the Three Day Notice.
c. The tenant may indicate he is moving. You look in, see a bunch of boxes and over the weekend the tenant moves out. By making the decision to hold off, you have averted an eviction and saved some time and money.

3. Past Due Amount Workout Agreement: Upon being able to make the face to face communication happen, the tenant may indicate that they do not have all the rent due but can pay you at a future date. Not wanting to lose the tenant, you may decide to agree to the payment on a fixed date or date and in a particular fashion. It is a payment plan. By using the Past Due Amount Workout Agreement, this memorializes the agreement and prevents a situation in which the tenant claims you gave a verbal extension.

4. The Agreement to Vacate :: The tenant may ask for a few more days and the property manager, hoping the tenant will live by his word agrees. If the property manager agrees, the tenant can sign an Agreement to Vacate giving a fixed vacating date. We have found that most tenants who sign an Agreement to vacate will indeed do as they say. Another eviction not filed!

5. Phone or email communications: The next best thing to face to face communication is to speak to the tenant on the phone or email them. Generally regular mail is not the preferred method, as mail can take up to 5 days, and each day without rent is lost money. The problem is that many managers fail to have the up to date information necessary to contact the tenant and find out his or her intentions. We highly recommend you read this article as soon as possible Importance of Updated Contact Information

6. The 24 Hour Notice: Many property managers give a final "24 hour Notice" to the tenant after the Three day Notice has expired. This notice tells that that they have one last chance to pay the rent before their file is sent to the attorney for eviction. Payment demand notices that are given to the tenant after the Three Day Notice can compromise the eviction, but that said, use your own judgment as to whether or not you are going to do this. While some judges have ruled that such a notice invalidates the prior Three Day Notice, it can be very effective! We cannot tell you to do this, but we know it is done all the time. If you do decide to send a final notice or 24 hour notice, if a dollar amount is referenced on the reminder notice, it should not conflict with the amount cited on the prior Three Day Notice.

 

(Back to Top)

 

 

Refusing Electronic Payments
by Michael Geo. F. Davis, Attorney at Law

 

Acceptance of Payment. The landlord's acceptance of payment from the tenant waives the pursuit of any other lease noncompliance known to the landlord at the time of acceptance. The landlord's acceptance of tenant payment after a failure to pay waives that payment noncompliance as a basis for terminating the lease. If a 3-Day Notice has been delivered, the acceptance voids the Notice and requires the service of a new 3-Day Notice. The landlord's acceptance of tenant payment after learning of a noncompliance other than nonpayment (such as illegal parking or the assault on another tenant) waives that noncompliance, no matter how serious the noncompliance. If a 7-Day Termination Notice has been delivered, the payment acceptance voids the Notice.

The Gray Area. The basis of waiving the noncompliance is "acceptance" of the tenant payment. Within the two clear boundaries of an accepted payment and a refused payment is the gray area. In this gray area are electronic payments: the on-line payment by credit or debit card, the electronic check, and the automatic charge to a credit card or debit to an account.

The obvious answer is to avoid the gray area altogether. Terminate the ability to pay on-line. Establish procedures and checklists to insure that electronic payment authorization is withdrawn or blocked. That being said, mistakes will happen. The size and complexity of landlord organizations, the shifting of staff and plain human error are among the factors contributing to mistakes.

Judicial Discretion. In any legal gray area judicial discretion is paramount. In the exercise of its discretion a court will consider the intent of the parties, their business sophistication and any mitigating factors. The more sophisticated the landlord, the less the court will be inclined to understand mistakes from failure to follow established policy, lack of adequate staff training, and disorganization. The presence of mitigating factors can be important. A tenant following his established practice of paying on-line has a better chance of claiming acceptance than a tenant that used the electronic payment to circumvent an in-person refusal.

Speed and Documentation. The most important factor evidencing the landlord's intent to refuse an electronic payment is the speed with which it is returned. The moment a landlord discovers the payment, it should be credited back. The landlord should document the file with the date and time of payment, when and how it came to the landlord's attention, and when and how it was returned. Written, dated and initialed notes are more persuasive in court then a hazy recollection.

A cautionary note to landlords: while notice of an electronic payment may be nearly instantaneous the payment itself doesn't clear instantaneously. The dilemma is that waiting for the funds to clear may be construed as acceptance, while issuing an immediate credit may result in an overpayment if the electronic payment is rejected and doesn't clear.

The 3-Day Notice. Given the uncertainty of the judicial response, I advise some common sense guidelines can be followed. If it's a 3-Day Notice, the landlord should accept the payment even if it's a prohibited partial payment, including the $25 on-line payment designed solely to buy three more days. The landlord should accept that the tenant took advantage of the mistake, serve a new 3-Day Notice and notify the tenant that electronic payment privileges are withdrawn. Note that if the lease has delivery method and timing requirements for the notice regarding withdrawal of electronic payment privileges, these must be followed.

The 7-Day Termination Notice. If it's a reoccurring noncompliance, such as loud music late at night, the landlord should accept the payment and wait for the next noncompliance. If the landlord has sent a 7-Day Termination Notice, he should send a letter noting the payment, withdrawing the Notice in view of the payment and stating that electronic payment privileges will be withdrawn in the case of any future termination for noncompliance. If the current noncompliance is of such a serious nature that the landlord does not wish to waive it, then the landlord must accept the risk of an adverse litigation result. This includes paying the tenant's attorney's fees, which can be substantial, and facing a fair housing complaint arising from the unsuccessful litigation.

Eviction Proceedings. If eviction has been filed, the above analysis can only be competently made by the eviction attorney. The attorney should be consulted immediately upon discovering the electronic payment. The attorney is in the best position to draw upon his experience in the particular county before the particular judge.

The Law Offices of Heist, Weisse & Davis, P.A. has filed tens of thousands of evictions throughout Florida and can help the landlord assess the risks in payment situations both before and after filing eviction.

 

(Back to Top)

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


|     Home Page     |     Firm Profile     |     Attorney Profiles     |     General Services     |     Apartment Communities     |     Residential Managers     |     Apartment Communities     |     Residential Managers     |     Homeowners/Investors     |     Eviction Q & A     |     Legal Articles     |     Training/Events     |     Contact Us     |