VOLUME 6 - ISSUE 9 LEGAL UPDATE

- The Better Business Bureau Complaint
- The Dangers of Rental Assistance Forms
- Screening your Owner

 

 

 

The Better Business Bureau Complaint
By Michael Geo. F. Davis, Attorney at Law

 

The Better Business Bureau is a non-profit organization. It is composed of local businesses that voluntarily join and pay dues for membership. Its members commit to a code of ethics in dealing with the public. One of the services it offers is to assist in the resolution of issues between businesses and consumers.

The BBB complaint

The consumer initiates the process by filing a "complaint" with the BBB. The complaint can be against any business, whether a BBB member or not. The BBB will not handle complaints involving employment practices or discrimination. The BBB indicates that these complaints are better made to and handled by the government agencies created to deal with these issues.

The BBB complaint process begins with the consumer filing a complaint, either in person or online. Anonymous complaints are not taken. Based upon the business's zip code, the complaint is assigned to the local BBB. The complaint questionnaire asks the consumer to describe his/her complaint and the settlement sought. The BBB assigns a case number to the complaint, and within two business days the complaint is forwarded to the company. The company is asked to respond, normally within ten days. If a response is not received, the BBB issues a second request. If the BBB does not receive a response within thirty days, it closes the complaint as unresolved without a response.

A response isn't required

There is no legal requirement that any business, whether a BBB member or not, respond to a BBB complaint. BBB member businesses are expected to respond to complaints. A member business's failure to respond may affect its continued membership in the BBB. Any response by non-member businesses is completely voluntary.

The legal Complaint

The landlord should not be confused by the BBB's use of the term "complaint". Landlords are familiar with a legal "Complaint". This is the legal document that is filed with a court to start a lawsuit. A legal Complaint should always be reviewed by the landlord's attorney, as it requires some response. On the other hand, a BBB complaint does not start any legal process. It does not necessarily have to be reviewed by a lawyer. It does not require a response.

Benefits of responding

If responding, the landlord should make a reasoned, professional response correcting any tenant misrepresentations, indicating the efforts made to address the tenant's concerns, and citing the results obtained. In the response, the landlord should refrain from any hostile attacks on the tenant, inflammatory accusations or belittling language. Responding to a BBB complaint, even in instances of tenant misrepresentation, demonstrates that the landlord is acting professionally and in good faith. Also, at a later date in a different setting (court) the tenant may try to argue that the unanswered complaint indicated the landlord was unwilling to address the tenant's issues or that the complaint was accurate.

The BBB does keep track of the number of complaints filed against a business and the number of complaints resolved. Because this information is available to the public, responding to complaints may be good public relations.

Since it is the tenant's version of the facts, the BBB complaint is usually one-sided. However, it does give the landlord notice that the tenant considers the issues important enough that the tenant has taken the time and made the effort to file the BBB complaint. It's quite possible that the complaint is the landlord's first notice that the tenant has these issues. Thus, the complaint may actually help a landlord address and resolve a tenant's problems. Resolving a tenant's issues at this stage may avoid further complications. The tenant's next step may be to involve a governmental agency or issue a rent withholding letter to the landlord.

Problems with responding

While some tenants' BBB complaints may be filed in good faith, some are just another chapter in many tenants' continuing harassment of the landlord. The complaint may be a complete misrepresentation of a situation which the landlord has already fully and fairly addressed. It may be a request for relief that the landlord is not required to give and has determined not to provide. It may be a waste of time to respond.

Although the BBB complaint and the landlord's response are not legal documents, the landlord should give thought to the wording of his response. The complaint and the response are subject to being introduced as evidence should the matter eventually become the subject of litigation. The landlord should not disclose any information that may later be used against him. The landlord should be careful with regard to making any admissions of responsibility, liability or negligence. If in doubt about what he is disclosing, the landlord should not respond.

Require a privacy waiver

The tenant's filing of the complaint can be considered his consent for the landlord to disclose information necessary to answer the complaint. Unwarranted disclosure of the tenant's personal information unassociated with the complaint would be a privacy violation. The prudent landlord should respond that privacy concerns prevent any response without a privacy waiver by the tenant and enclose a waiver for the tenant's signature.

If the landlord has any doubts about responding or the wording of the response, he should consult with his attorney.

 

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The Dangers of Rental Assistance Forms
by David R. Weisse, Attorney at Law

 

Many tenants who are struggling to pay rent understandably attempt to obtain rent assistance, whether the assistance be from a church, charity, city, county or state program. It is also understandable that the landlord would want to help the tenant obtain rent assistance, which theoretically should help both the tenant and the landlord. However, when the tenant brings you a form for you to fill out in the pursuit of this assistance, you need to be aware of potential risks. These forms often require the landlord's agent to provide the landlord's federal tax identification number (TIN), and also require a signature by the landlord's agent. Moreover, many of these forms attach conditions to receipt of the rent assistance. If you sign this type of form, what have you just done? What happens if you agree to wait upon charitable assistance, even if there are no forms to sign?

When no forms have to be signed, the main question becomes whether the landlord has agreed to wait on payment, and if so, for how long? For example, if the tenant indicates he can obtain rent assistance from his church, and you have already given a 3-day notice, do you subsequently agree to wait on this assistance? Often, we see situations in which a payment from a charity rolls in during an eviction action, an amount that was intended to pay some or all of the rent amount demanded on the 3-day notice. If the tenant provides proof of this attempted charitable payment to the Court, the eviction could be derailed, even if the attempted payment is returned to the donor(!) The Judge's decision may be based upon whether there was some agreement, either express or implied, to wait on payment. If the landlord in fact accepts a charitable contribution for some or all of the amount demanded on the 3-day notice, the majority of judges will rule that the landlord has technically waived the right to complete the eviction, just as if partial or full payment was made directly by the tenant.

If rent assistance forms are signed, it is even harder for the landlord to claim that there was no agreement to wait on payment. Moreover, rent assistance forms often come with a variety of conditions, and particularly when a city or county gives assistance, the typical form will require the landlord to forebear its right to pursue an eviction for the time period which will be covered by the rent assistance, even if the payment is not full payment. Some forms can be interpreted to signify that the amount given for assistance will be considered full settlement of the tenant's outstanding rent obligations. Some forms require the landlord not to file eviction 30 days from the point assistance is received. Often when these forms are used, it is not clear when the landlord has waited long enough for assistance funds that never materialize, and it is not unusual for the form to indicate that payment will be made in 6-8 weeks. After obtaining the landlord's signature, the tenant will sometimes delay or completely fail to submit the form to the organization offering assistance.

We have seen cases in which rent assistance procured under an assistance form rolls in many weeks after the 3-day notice was delivered, and that assistance payment covers some or all of the amount demanded on the 3-day notice. In this scenario, the tenant will frequently file with the Court documentation showing the landlord's signature on rent assistance paperwork, and the eviction can be jeopardized. The landlord may claim that the forms were signed to help the tenant eventually obtain money to deposit into the Court Registry, but that will probably be a losing argument.

One final point: if a landlord decides to sign rent assistance forms, consistent standards must be applied concerning when the forms are used. Inconsistent use of rent assistance forms will invite a fair housing complaint. The landlord may be opening the door to a flood of rent assistance applications which ultimately prove to be less than desirable.

 

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Screening your Owner
by Harry A. Heist, Attorney at Law

 

The typical property manager's goal is to maintain his or her current accounts and get more accounts. New accounts are acquired by many means. They could come from referrals or marketing. The property owner who is in need of a property manager contacts you, and then you put your process into motion to decide whether to accept or reject the account for management. Each company has some sort of criteria, and every property manager has at one time or another rejected new business, as the owner or the property does not meet their criteria. Probably the biggest mistake property managers make is to accept an account for management without doing their due diligence. This means checking out who the property owner really is, why he or she needs you to manage, and what you are going to be managing. The temptation is great to accept an account. After all, it is new business and more money so it may appear. The reality is that in some cases you find out after the fact that you just acquired a nightmare owner, a nightmare property and now need to get out fast to avoid potential litigation. What happened here? Whose fault is this mess you are now in? It is the property manager's fault for not investigating the property owner more carefully to see whether this owner is someone for whom you really want to work.

the "Manager Jumper"

We all know that there are property managers of differing quality out there. Some are excellent, and some are extremely bad. There is no special license or training required to manage property, and some "property managers" are not managers at all, but just trying not to lose the relationship with an owner who may be thinking of selling, and decide to assist in the rentals and everything that goes along with this. Some are untrained and cause the owners serious problems and liability. and the owners are put in a position in which the owner legitimately has cause to fire them and hires you. Now, you are the new manager, and the owner is looking to you to fix all the problems and reverse the damage that the prior manager caused. But wait. Are you the second or third manager in a short period of time that this owner had? There comes a point where the problem is not with the manager but with the owner, who for some reason does not wish to retain a manager for any length of time. This is the "jumper" who uses a manager to rent and/or manage the home, then decides to switch to another manager without a legitimate reason for the switch. If you spot a "jumper", you need to either say no to that owner and decline the account, or really do some investigation as to why the prior manager or managers were terminated.

The Slumlord Owner

Before accepting an account, you will go to the property and make some kind of assessment of the property condition. Often you only are able to see the outside of the property and not get a true picture of the inside condition or maintenance needs. You accept the account, only to find out that maintenance requests are not being taken care of. The owner blames this on the prior property manager, and you might tend to believe the owner. Let's think about this though for a moment. Don't most property managers who are given sufficient funds to make repairs actually make those repairs? Of course they do. The real problem here is that the property owner either failed to make the repairs himself if he is self-managing, or has failed to or refused to give any funds to the past property manager to make these repairs. Do you think that when you begin managing, the owner will open his wallet and shower you with money to make repairs? Of course not. You will be stuck managing a home where the tenants are complaining about legitimate repair needs, and you will have no money for repairs. This will just cause you further headaches and liability to you and your company.

The Financially Distressed Owner

You were probably waiting for this one. Many property owners are simply broke or real close. They purchased a home, or in some cases, multiple homes, that they could not afford, and between taxes, insurance, fees, repairs, mortgage payments and vacancy, the property is not only not making a dime for the owner, but is a huge financial drain. The owner is hanging on right now and is looking to possibly sell in the future, BUT things are not looking good. Should you manage for an owner in such a financial condition? An owner in bad shape is someone to seriously consider declining.

The REALLY financially distressed owner

So many of our clients accept new accounts, only to find out that the owner has not paid the mortgage for months, condo dues or assessments, taxes, insurance or any other amounts which may pertain to the property. The wise property manager will investigate the owner carefully, not being afraid to ask all pertinent questions, and asking for proof that everything is completely up to date and paid. If you place a tenant in a property, and the tenant finds out that the property is actually in foreclosure or the owner has been in default for a significant period of time, this tenant can try to hold you liable, saying you knew or should have known of the financial condition of the owner as it pertains to the property that you rented the tenant.

The Angry Owner

What recent purchaser of rental property is not either angry at himself, angry at the world, angry at the salesperson who misrepresented the rental rate for the home, or angry at the tenant who has not paid rent in 2 months. I call this the "angry owner syndrome". This owner is not going to get any better once you start managing the property, unless you can pull some real tricks out of your hat, fill the vacancy and get a rent amount with which the owner will be happy. You must clearly understand the owner's expectations and make sure that they are not so unreasonable that you will simply be another in a string of fired property managers.

The Owner with the Non-Paying Tenant

If tenants paid their rent, properties never needed repairs, and everyone on earth was honest and did exactly what they said they would do, property managers and lawyers would be completely unnecessary. Some owners will come to you with a property where the tenant has not paid the rent in months, and they expect you to evict the tenant. You hire an attorney, the eviction is filed, and it turns out to be a nightmare, because the owner failed to fill you in on little tidbits of information, such as the fact that she gave the tenant a special payment plan or allowed the tenant to do work on the property in lieu of rent, or that major repairs were not being done, and the tenant is rightfully withholding rent. Since you did not know about this, the eviction blows up, the attorney is demanding more money, and the tenant decides to file a counterclaim against the owner and tries to pull you into the lawsuit. If an owner wants you to manage a home, and there is a current tenant in the property that has not paid rent, we recommend that the beginning date of your management agreement is the date that the tenant is fully evicted from the property and the tenant has been completely removed from the premises. Your attorney can help you write up contingency wording for the management agreement so you are not actually the manager of the premises until the tenant is OUT.

The Owner who wants to modify your management agreement

The most successful managers we work for refuse to allow modifications of their management agreement or leases. Will they lose a few potential tenants or accounts along the way? Absolutely, but they will have avoided major problems otherwise encountered f they had allowed owners to modify the contracts. Modification requests spell trouble and are some of the best indicators of problems in the future. If a modification request is completely reasonable, and you run it by your attorney for approval, you certainly don't want to kill a deal and can make a modification. Unreasonable requests should be flatly refused no matter how much you need the business.

Is there more?

This article only touched on some of the many issues involved in making a wise and educated decision to manage or decline an account. There are so many more. We urge you to create a checklist by which you can go through questions one by one to decide if the account is one that you want. The best thing you can do sometimes is to just say no to an account. Our office uses a checklist and questionnaire to determine if we will work for a homeowner, and so should you.

 

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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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