VOLUME 6 - ISSUE 7 LEGAL UPDATE

- Failing To Tell Your Attorney All The Facts
- No More Notices After Non-Renewal
- Foreclosure Quick Q & A
- The Mechanics of the Tenant Release

 

 

 

Failing To Tell Your Attorney All The Facts
By Michael Geo. F. Davis, Attorney at Law

 

An unnecessary, self-inflicted injury is a client’s failure to disclose to his attorney all the facts. It is human nature that a person doesn’t want to disclose his mistakes or case weaknesses. Maybe they’ll magically disappear, won’t be discovered or won’t make any difference. They don’t disappear. The tenant knows about them, and they do make a difference when the tenant springs them on the landlord’s lawyer in court.

Your attorney’s general advice to you is based upon the facts. Without knowledge of all the facts, his advice may at best be worthless and at worst harmful. It’s never a good idea for the client to prejudge what he thinks the attorney needs. Your attorney is in the best position to judge which facts and documents are important and which are not.

7-Day Termination Notice

Our office rigorously examines a client’s request for a Seven Day Notice of Noncompliance Without Opportunity to Cure (a 7-Day Termination Notice). We require the client to provide proof of the noncompliance: police reports, witnesses’ names, addresses, and possibly statements, etc. Often we find that a client has omitted key facts. The reasons range from innocent omissions to intentional concealment to aid in obtaining the 7-Day Termination Notice. Your attorney works to protect you, not the tenant. Requiring a vigorous screening of a 7-Day Termination Notice protects you. Slipping something past your attorney harms you by exposing you to a potentially invalid 7-Day termination case.

When negative facts are later discovered, at a minimum you may be withdrawing the 7-Day termination notice. This will embolden the already difficult-to-deal-with tenant. At worst it may result in a legal action against you by the tenant.

3-Day Notice

Even a straightforward 3-Day Notice nonpayment eviction can go awry when you fail to tell your attorney all the facts. Were there other notices regarding payment sent with or after the 3-Day Notice was served? Did you enter into any other agreements as to payment of the balance? What about other correspondence regarding payment or nonpayment? Are there any emails or letters from the tenant regarding rent withholding, maintenance complaints, retaliatory claims, or code enforcement notices? Is there any reason to think a Fair Housing claim may be made by the tenant? Has the tenant claimed protected class status?

Before the hearing:

It is probable that the undisclosed fact or document will be supplied to the judge by the tenant. The result can be an outright dismissal by the judge, an unnecessary delay while your attorney responds to the tenant’s claim, or an unnecessary hearing, perhaps with no money deposited into the court registry. A tenant’s “answer” may mislead the judge with untrue or unsupported claims that have slivers of truth from the undisclosed facts or documents. The point is that your attorney usually can deal with these issues, if disclosed, before filing the eviction, either by advising against filing or by explaining them in the complaint or a separate filing.

At the hearing:

The stakes are higher when the non-disclosures are revealed at a hearing. You attorney’s ability to win your case can be seriously hampered. Documents needed to counter the unexpected development have not been obtained. Case law to support your position has not been researched. Cross examination of the defendant’s witnesses has not been prepared. Witnesses needed by the landlord are not in court prepared to testify. The benefit of the eviction procedure providing for quicker hearings with less discovery becomes a disadvantage when confronted by surprise documents and testimony.

Consequences:

If the defendant has an attorney, an adverse court decision will likely result in a substantial defendant’s attorney fee award paid by the landlord. This is in addition to any damages recoverable by the defendants. If the landlord’s undisclosed actions have been statutorily prohibited practices, for instance locking the tenant out or improperly disposing of his property, there are statutory damages tripling the monthly rent amount. Often the tenant will file a counterclaim for defamation, harm to credit standing, or impairment of future ability to obtain housing caused by the filing of the eviction. A lost eviction case can lead to a fair housing complaint. Clients, who have not experienced the financial exposure or legal complications resulting from an unfavorable outcome, have difficulty understanding the seriousness of filing even the simple 3-Day Notice nonpayment eviction. Non-disclosure by the client to his attorney can result in the attorney seeking to withdraw from the case or demanding additional attorney fees.

Ask your attorney:

I’m not implying that a client has to send his attorney the tenant’s entire file. Someone with even a little experience in property management knows when a document or other fact should be disclosed. A good rule of thumb is that if you question whether it should be disclosed, it should be. Talk to your attorney. Allow your attorney to decide what is or is not relevant to your case.

 

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No More Notices After Non-Renewal
by Michael Geo. F. Davis, Attorney at Law

 

Once the landlord has sent the tenant a Notice of Non-Renewal, that tenant’s file should be tagged for special identification The landlord will want to avoid taking any action which would jeopardize his right to retake possession of the rental unit or to double rent in the case of a hold-over tenant.

The following discussion has to be placed in the context of modern communications: distribution list emails, mass mailings, computer-generated statements. A landlord is often sending documents without verifying the specific recipients.

The superseding agreement:

If the tenant is unwilling or unable to move, he will be looking for any opportunity to extend his tenancy. Many tenants will use an inappropriately sent letter or notice as evidence to bolster their position that there was an oral agreement. This correspondence superseded the Non-Renewal Notice and permitted him to renew his lease or to remain month-to-month. Even a complete fabrication can be convincing to a judge if there are documents of the landlord that seem to support the fabrication. In fairness to the tenants who operate in good faith, inconsistent documents of the landlord can create enough confusion that the tenant assumes he can stay.

Renewal notice sent in error: If the landlord has sent the tenant emails, letters or notices implying, suggesting or offering renewal, then the landlord must immediately notify the tenant of the error. I do mean “immediately”. I suggest that an email (with a delivery and read receipt if available in the email system) be sent to the tenant. A follow-up letter or even the printed email should be immediately posted on the tenant’s door and mailed to the tenant via certified mail. The renewal information was sent in error and is withdrawn. The landlord wants to notify the tenant before the tenant can seize the information as a renewal offer and accept it.

The focus is not the legal arguments with regard to contract formation. The important point is to avoid providing the tenant with an opportunity to make these arguments in court.

Helpful reminders:

After the landlord has served the Non-Renewal Notice, the landlord gives the tenant additional non-renewal reminders or warnings at the landlord’s own risk. While these reminders are sent under the pretext of helping the tenant, they are usually sent for the benefit of the landlord. Any contradictions or deviations from the original Non-Renewal Notice can result in voiding the original Non-Renewal Notice. The most common mistake is a contradictory vacating date or an incorrect calculation of the time remaining until the vacating date.

7-Day Notices after the Non-renewal Notice:

Our firm generally advises against serving 7-Day Cure and 7-Day Termination Notices after a Non-Renewal Notice.

While the landlord may still serve a 7-Day Notice of Noncompliance with Opportunity to Cure (a 7-Day Cure Notice), one has to question both the effectiveness of the notice and the wisdom of antagonizing a tenant that has been non-renewed. Additionally, serving such a notice, when there are less than seven days until the vacating date, creates the confusion that we are trying to avoid. (Similarly, serving a 3-day notice that expires outside the vacating date is a bad idea). Serving a 7-Day Notice of Noncompliance Without Opportunity to Cure (a 7-Day Termination Notice) actually can worsen the landlord’s ability to remove the tenant. What would have been a straightforward holdover eviction becomes a complicated 7-Day termination eviction with all the attendant burden of proof problems that the landlord must bear.

That being said, there are times when the health and safety of the staff or other residents requires a 7-Day Cure or 7-Day Termination Notice. This is a matter for the landlord to discuss with his attorney.

Notices after the vacate date: Serving a 3-Day Notice, a 7-Day Cure Notice or a 7-Day Termination Notice to a holdover tenant after the vacating date may be fatal to the non-renewal. A landlord would only have the right to serve these notices if the tenancy was continuing. This means that the landlord waived the non-renewal demand. Sending the tenant a billing statement or account balance notice charging rent beyond the vacating date or other monthly services (pest control, valet waste) gives rise to the same argument that the tenancy is continuing. Accounting notices may be more easily explained and excused than the statutory notices. A court can easily reason that a landlord should be more careful about the statutory notices.

Consult the attorney:

As a final thought, it is always advisable for the landlord to consult his attorney as soon as he discovers that he has mistakenly sent a notice, letter, or other communication to the tenant that may jeopardize his Non-Renewal Notice.

 

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Foreclosure Quick Q & A
by Harry A. Heist, Attorney at Law

 

The following are some of the most common questions we deal with on a day to day basis regarding foreclosures in the single family home setting and some short answers. The answer to a particular question you may have depends on the factual circumstances, so do not rely upon this information as a final answer, but a starting point in your journey through the foreclosure maze. Very few laws directly address the unexpected situations which have arisen, due to the large number of foreclosures currently being filed, but we expect to see some state legislation passed in 2010 which will give us better direction.

Q. My tenant just got a copy of a “lis pendens” in the mail. Does this mean the property is in foreclosure?

A. No. A “lis pendens” is a document which must be filed before a foreclosure action is filed. A foreclosure may or may not be filed, but probably will be soon.

Q. My tenant received a letter on their door from a bank stating that they have to move out in 10 days. Is this legal? Must they move?

A. This is not legal, and the tenant does not have to move. Only the Sheriff’s Department can make the tenant move out upon order of the Court, and at a minimum, the foreclosure would have to be finalized, with a Writ of Possession at some later time being issued and executed. Under a new federal law, the bank or third party purchaser will acquire the property subject to the existing tenancy.

Q. My owner told me that he is not really in foreclosure but trying to make a loan modification. Is this true?

A. That one is too funny. If the owner received foreclosure paperwork, the owner is in foreclosure. While they may end up modifying the loan and getting out of foreclosure, the truth is that they are IN FORECLOSURE. Some owners do not like to admit the truth.

Q. Does my tenant have to respond to the court within 20 days like the foreclosure summons states?

A. The tenant does not need to respond but can if they wish. Do not give them any advice.

Q. What should my tenants put in their response to the court?

A. That is up to the tenant, You should give them no advice at all. Their response will not make much difference in the foreclosure action other than to delay it a bit more.

Q. Do my tenants still have to pay rent?

A. Yes. Nothing has changed. The rent obligation to the owner continues.

Q. My tenant is claiming that they are not going to pay the rent but instead put it into “escrow”. What are they talking about?

A. There is no recognized mechanism for putting the rent into “escrow” prior to litigation. The tenant may decide to hire an attorney who may place the rent his or her “Trust Account”, but this would probably not be a good thing for the tenant to do and has no basis in law.

Q. Does the bank have a right to the rent money?

A. Yes, but the banks needs to exercise the Assignment of Rent clause in the lease and notify you, most likely through court documents. The bank usually does not do this in the residential setting.

Q. What should I tell the tenant when they say they are refusing to pay rent?

A. Tell them that if they do not pay rent they will be served a Three Day Notice and be evicted if they fail to comply.

Q. Can I file an eviction if they fail to pay?

A. Yes. If the owner instructs you to file, you should proceed as normal. Make sure you tell your attorney that the owner is in foreclosure.

Q. My owner is broke and does not have the money for the eviction. Should I advance the money to pay for the eviction?

A. Do so at your own risk. We highly recommend against this.

Q. I feel sorry for the tenant and have so many vacant homes. Can I find the tenant another home to move into?

A. Absolutely NOT, UNLESS you get permission from the owner in writing. Make sure all parties agree on any money you are holding so there is no misunderstanding.

Q. Can the tenant win the eviction if the owner is in foreclosure?

A. The tenant can bring up the owner’s foreclosure as a defense, but most judges will evict the tenant anyway if the tenant fails to place the rent into the court registry. The owner does have a greater risk the eviction will be contested, and a judge may feel that the tenant can stay.

Q. The owner does not want to pay for an eviction and has told me not to file one. What should I do?

A. Get this in writing from the owner so that later, the owner does not try to say that you should have filed an eviction and did not do so.

Q. The tenants just up and skipped on me. What do I do with the security deposit?

A. Process it as normal, deducting the rent that is owed and any damages and send your Notice of Intention to Impose Claim on Security Deposit out by certified mail.

Q. Can I let the tenant out of the lease?

A. If the owner instructs you in writing to let the tenant out of the lease, you certainly may, BUT it is crucial that you use a proper form, a Mutual General Release Agreement (which we can provide), to settle all monetary and other issues, and have each party release the other in that form.

Q. Does the tenant receive back their security deposit/last month’s rent or any other sums we are holding if we let them out of the lease?

A. This must all be decided between you, the owner and the tenant and memorialized in writing on the Mutual General Release Agreement.

Q. If the owner is agreeing that we return the escrow money we are holding to the tenant, when can the tenant get the money?

A. At any time the money can be disbursed to the tenant, but we would not recommend doing so unless the tenant has given you the keys, turned over possession to you, the property was inspected for damages, and the tenant signed a Confirmation of Vacating Premises.

Q. We don’t want to work for the owner anymore as he has no money for repairs, and this is causing us a major headache. Can we fire the owner?

A. Most property management agreements state you can terminate the management agreement within 30 days, and the good agreement states that you can terminate immediately. Look at your agreement and call your attorney.

Q. What do we do with the tenant’s security deposit and other escrowed funds if we terminate management?

A. You need to hold it in your escrow account until the tenant agrees it can be put in the owners’ Florida account. Most tenants will not agree to this.

Q. The owner told me that the property is being sold in a short sale. What does this mean?

A. A short sale is nothing more than a sale where the payoff the bank takes is less money than what is actually owed. It is simply a sale just like any other sale as far as the tenant is concerned.

Q. Is the lease still in force after a short sale?

A. Yes. It is just like any other sale and the lease survives unless there is a termination on sale or contract clause in the lease agreement.

 

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The Mechanics of the Tenant Release
by Harry A. Heist, Attorney at Law

 

There will inevitably come a time when the tenant wishes to be released from the lease, or you desire that the tenant vacates the premises, and all the parties are in agreement. This is an ideal situation in property management, as there is no need or desire for litigation, and everyone goes their separate ways. The tenant may be the one who wants to be released for a myriad of reasons, such as a job transfer, sickness, inability to afford the rent, house purchase, problem with the neighbors or anything else. While these may not be legal reasons to break a lease, in certain situations it behooves the landlord to agree and release the tenant. In other cases, the landlord wants the tenant to vacate. Possibly there are problems with the tenant, behavior issues, the apartment community will be going under a complete rehab project, or maybe the landlord of a single family home needs the tenant to vacate due to a foreclosure or a sale of the home. Whatever the reason, a release of the tenant can and should be accomplished through the use of a written agreement. Never is anything done verbally. Whenever a tenant is being released, the landlord needs to make sure that the landlord is being released as well, and that every single base is covered.

Unnecessary Surprises

Surprises are only fun if they are surprise parties, and even then, maybe not! In property management surprises usually end up with one or more angry parties and the potential for litigation. Added to that, the law states that any ambiguity in a document can be construed against the landlord, so already the landlord has one strike against them. The tenants could think that they are going to receive the security deposit back upon vacating, as this is what the owner said, but after they vacate, the landlord finds major damage and keeps the deposit. Now we have a problem. The landlord may have told the tenants that they will receive a particular sum if they vacate and then pays the tenants. The tenants get the money and do not vacate. These are the typical scenarios that occur when everything is not put in writing in the proper document.

Vacating Date

The Release agreement needs to clearly state if the tenant has indeed vacated or the date the tenant will vacate. If the date that the tenant will vacate changes after the Release is signed, this needs to be done in writing with an addendum to the Release signed by all parties. Verbal extensions are what get the landlord in trouble every time.

Personal Property

If the tenant has any of the landlord’s personal property such as gate cards, clickers, keys etc, this should all be returned when possession of the premises is granted on the vacating date. When the landlord realizes that keys have not been returned or a $50 clicker or garage door opener has not been returned and then charges the tenant, sparks fly, and the tenant then claims that these items were indeed returned, and a dispute results. Neglecting to make sure everything has been returned immediately causes problems.

Damages to the Premises

Unless otherwise agreed to, the landlord never wants to give up his right to charge the tenants for damages that the tenant caused which exceed ordinary wear and tear. If the release does not address this, the landlord could end up having to return the entire deposit, even after he discovers that the tenant has caused severe damage to the unit. Damages are never fully assessed until the tenant has vacated with all personal items having been removed; the landlord should not give up his right to these types of charges. Although we do not recommend walkthroughs with the tenant at the move out, we don’t want the landlord retaining his right to make a claim on the deposit a deal killer for the landlord, so good judgment under the particular circumstances needs to be exercised. A tenant may not want to sign a release if there is any doubt on the return of the security deposit.

Does the landlord have to send the Notice of Intention to Impose claim on Security Deposit?

While the Release may state that the tenant receives the full security deposit back minus any damages at move out, or agrees to forfeit the deposit if this is part of the deal, the question remains whether the landlord must follow FS 83.49, which provides that the landlord must send out a Notice of Intention to Impose Claim on Security Deposit. We recommend that the landlord comply with FS 83.49 and send the Notice of Intention to Impose Claim out, if the any of the security deposit is being kept by the landlord. We are not sure if the Release can override the law or if the tenant can waive FS 83.49, and there is no reason for you become the test case in court.

Attorney’s Fees and Costs

The Release should have a statement that all parties are bearing their own attorney’s fees and costs. It is possibly that an attorney was in the picture at some time, and if the landlord or tenant ended up getting an unexpected bill and then tried to recoup this from the other party, someone is going to be angry.

The Release language

In the body of a typical release lies the legalese where each party agrees to release the other, their agents, employees, manages, owners, assigns etc, etc from all manner of suits or claims in the past, present and future. This is important wording. The goal in the Release is to end it all and have no chance of future litigation or disputes. If the terms and conditions of the Release are followed, it is OVER. That is the PURPOSE of a Release.

Who signs the Release and who is released?

ALL tenants should sign of course, and the landlord or the landlord’s agent. Your goal is to accomplish a release of ALL parties involved in the transaction, and this includes a third party manager, the owners, employees and anyone else involved. You do not want a situation in which the tenant releases the landlord, and the tenant then decides to sue the third party manager or an employee who was somehow involved.

Who keeps the original Release?

Just like the landlord keeps the original lease and all the originals in the file, the landlord should keep the original Release and give the tenant a copy. We are not in favor of duplicate originals being executed, as one or both parties could alter the document, and you will end up in court.

Transfer of Money

In many Release agreements there is some transfer of money. The landlord may be paying the tenant extra just to leave, or is returning a last month’s rent or security deposit immediately. The tenant may be paying the landlord a particular sum as part of the deal. The timing of the money transfer must be clearly spelled out and the form of payment listed, whether it be cash, money order, check or certified check. The tenant should never receive a dime unless he is completely out of the premises and has granted you clear possession, which should be confirmed by an inspection.

Questions still? Good. You should never go it alone, even when the deal appears simple. We have seen deals go bad very fast, and it is always advisable to have your attorney take a look at the agreement. You attorney is trained to see what isn’t in the document.

 

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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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