VOLUME 7 - ISSUE 8 LEGAL UPDATE

- A MID YEAR REVIEW
- THE NEW CONDO/HOA LAWS AND THE PROPERTY MANAGER PART 2
- RETALIATORY NONRENEWALS

 

 

Retaliatory Nonrenewals
By Michael Geo. F. Davis, Attorney at Law

 

 

Owners may find themselves having rented to the proverbial "resident who is more trouble than he is worth." During the term of the lease, the resident doesn't commit any lease noncompliances that are serious enough to justify a lease termination. He may chronically pay late, but always before the three days on the Three-Day Notice to Pay Rent runs. Aside from late payments, he may have a series of other lease noncompliances: unauthorized occupancy, pet rule breaches, noise disturbances, parking violations, etc. He may never commit the same offense twice, or his acts, while annoying and requiring an inordinate amount of management time, are never grievous enough to justify lease termination. He may have chronic complaints about his neighbors, and after investigation the owner finds them unwarranted. He has or may be in the process of making insurance claims against the owner for personal injuries or for damage to his personal property. He expects the perfect rental, and to that end deluges the owner with a series of repair requests. Some of the repair requests are valid, but many, too many, concern cosmetic issues that are frivolous or border on frivolous.

It is important not to succumb to frustration with this resident. The law and the lease must be followed: his noncompliances noticed, his complaints investigated, his claims processed and his repair requests answered. It may be difficult, but the valid must be sorted from the frivolous, the relevant from the insignificant, and the valid and relevant handled as required by Florida law and the lease. Most important of all, everything should be logged, recorded and documented in the resident's file.

All too often these residents are more familiar with the Landlord/Tenant Act than the owner. These residents have been down this path before. They may copy attorneys on complaints, repair requests and correspondence, or cite fair housing violations or claim retaliatory conduct. The owner can bet that these residents are documenting their files.

The owner, who has had enough, now prepares to non-renew the troublesome resident. Before serving the non-renewal notice, the owner is advised to contact his attorney to discuss the potential for a retaliatory conduct defense by the resident to the non-renewal.

Retaliatory conduct statute

Florida has a statute addressing retaliatory conduct by the owner. FS 83.64 Retaliatory conduct. (1) It is unlawful for a landlord to discriminatorily increase a tenant's rent or decrease services to a tenant, or to bring or threaten to bring an action for possession or other civil action, primarily because the landlord is retaliating against the tenant. In order for the tenant to raise the defense of retaliatory conduct, the tenant must have acted in good faith. Examples of conduct for which the landlord may not retaliate include, but are not limited to, situations where: (a) The tenant has complained to a governmental agency charged with responsibility for enforcement of a building, housing, or health code of a suspected violation applicable to the premises; (b) The tenant has organized, encouraged, or participated in a tenants' organization; (c) The tenant has complained to the landlord pursuant to s. 83.56(1); or (d) The tenant is a servicemember who has terminated a rental agreement pursuant to s. 83.682. (2) Evidence of retaliatory conduct may be raised by the tenant as a defense in any action brought against him or her for possession. (3) In any event, this section does not apply if the landlord proves that the eviction is for good cause. Examples of good cause include, but are not limited to, good faith actions for nonpayment of rent, violation of the rental agreement or of reasonable rules, or violation of the terms of this chapter. (4) "Discrimination" under this section means that a tenant is being treated differently as to the rent charged, the services rendered, or the action being taken by the landlord, which shall be a prerequisite to a finding of retaliatory conduct.

Retaliating

FS 83.64 is much broader than it appears on first reading. The statute forbids retaliating against the resident. What is "retaliating"? The statute indicates it is to discriminatorily 1) increase the resident's rent, 2) decrease services to the resident, or 3) bring or 4) threaten to bring an action for possession or other civil action primarily because of a retaliatory motive.

The statute doesn't explicitly forbid a non-renewal. It might be argued that every non-renewal carries with it the implicit threat of an action for possession. That tenuous argument aside, if the resident won't vacate, the owner's method to enforce the non-renewal is by actually bringing an action for possession, and the statute now clearly can be invoked by the resident as a defense to the action for possession.

The statute enumerates four examples of protected activity by the resident: complaint(s) of code violations, resident organization, resident delivery of a 7-Day Notice to the owner under F.S. 83.56(1) or servicemember termination. Note that these are only examples and are non-inclusive examples. Thus, courts are free to hold that the statute applies to the exercise by the resident of any rights granted under the Landlord/Tenant Act or the exercise of any rights granted the resident under the lease. As a matter of fact, the statute's language doesn't limit its application to only the Landlord/Tenant Act or the lease. Other states with retaliatory conduct statutes have found an eviction action to be retaliatory when it was in response to the resident taking any action that the resident was legally entitled to take. Whether or not a Florida court will apply the statute so broadly remains to be seen.

Given that the statute's purpose is to protect the resident, an owner should be prepared for a court finding that the statute applies to the resident's exercise of the any rights granted by the Florida Landlord/Tenant Act or contained in the lease, such as the right to demand repairs. An eviction based on the non-renewal of the resident for exercising his rights, such as requesting repairs, can be met with the defense of retaliatory conduct.

Owner defenses

Under the statute the owner has several defenses available: his action isn't discriminatory, his action isn't primarily retaliatory, his action is for good cause, and the resident is not acting in good faith.

Not discriminatory

The owner's action isn't discriminatory. "Discrimination" is defined in the statute as treating the resident differently as to rent charged, services rendered or action taken by the owner. Since the statute requires a finding of discrimination by the owner as a "prerequisite" to finding retaliatory conduct, no discrimination in the treatment of the resident means no retaliation. If everyone in the building is being non-renewed for the building's rehab, then there would appear to be no discrimination towards anyone in the building.

Not primarily retaliatory

The owner's action isn't primarily retaliatory. This is a proof issue of the owner's subjective intent. The burden of proof rests on the owner. When there are several reasons for the non-renewal, the owner will have to prove that his primary reason wasn't retaliation. It may be hard to convince a court of an owner's subjective intent without any documentation to support the owner's position. The owner's testimony is likely not going to be enough. If the resident has been a problem resident, the owner should have a file with Seven-Day Notices of Noncompliance or Three-Day Notices to Pay Rent. If the repair requests have been frivolous and unwarranted, the file should contain reports by the owner after investigation or by responding vendors so indicating. This is when the owner's documentation can be crucial.

For good cause

The owner's action is for good cause. The statute specifically sets forth good cause as the owner's absolute defense to the application of the retaliatory conduct statute. The statute lists three examples of good cause: good faith action for nonpayment of rent, violation of the rental agreement or of reasonable rules, or violation of the Landlord/Tenant Act. These are only examples and are non-inclusive examples. Owners are free to raise any other reasons as good cause. Note that the examples are preceded by the requirement that the owner's action is in "good faith." The fact that the statute expressly states that the good faith rent nonpayment eviction (Three-Day Notice to Pay Rent) and the good faith eviction for violation of the rental agreement or of reasonable rules (Seven-Day Notice of Noncompliance) are exempted from the statute's application may be the best reason why owners don't often face a viable retaliatory conduct defense by residents. Judges recognize it as a stalling tactic or an invalid defense, if the owner has properly prepared his case. Judges may be more likely to consider it in the non-renewal case of the troublesome resident.

No good faith

The resident's isn't acting in good faith. The statute requires that in order to raise the defense of retaliatory conduct, the resident must have acted in good faith. Once again this is an examination of subjective intent. This time it is the resident's intent. The owner has the burden of proving the resident's bad faith. Again, without any documentation it will be difficult to prove the resident's intent. Timing may be an indication of the resident's bad faith. The owner may successfully raise a bad faith claim, in the case of a resident, who didn't object to the non-renewal notice when it was served, but first raises the retaliatory conduct defense when the eviction is filed.

The Landlord/Tenant Act has a separate statute (FS 83.44) that imposes the obligation of good faith on the performance or enforcement of every rental agreement and on the every duty under the Residential Tenancies Part of the Landlord/Tenant Act. The drafters of the retaliatory conduct statute (FS 83.64) saw fit to include the duty of good faith twice again in the retaliatory conduct statute "“ applying it to both the owner and the resident. This will not be lost on a court in evaluating the evidence presented by the owner and the resident.

Fair housing

Retaliatory conduct claims are often accompanied with a fair housing claim of discrimination. Many times the evidence will be the same to contest the fair housing discrimination claim and the retaliatory conduct claim. The fair housing aspect of such cases is not treated in this article.

As indicated at the beginning of this article, there are instances in which the owner should be prepared for a retaliatory conduct defense to a non-renewal notice. The best preparation is a candid discussion of all the facts with his attorney before the owner takes any action.

 

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A Mid-Year Review
by Brian P. Wolk, Attorney at Law

 

Property managers are not unlike other professionals in regard to resisting change. Property managers all too often refuse to act in their own self-interest by making proper changes to their leases or policies and procedures. Why you ask? There are many reasons. Some property managers may be locked into the belief that their way is the only correct way. Some managers may also be frightened of the unknown and feel a loss of control due to veering from their usual way of doing business. Sadly, other property managers will not change their bad habits, because they have not experienced problems as a result of their poor decision making. In that case, they believe that making modifications to the way that they conduct business is pointless and a needless interruption of their work environment. This type of backward thinking plays right into the hands of the growing number of consumer law attorneys in Florida who are more than happy to represent your current or past residents in an attempt to nail you with a class action lawsuit, or force you into an expensive, contested eviction or security deposit dispute. Do you think that your Regional Manager will be any less irate when you tell her that your are sorry that the judge awarded ten thousand dollars to the resident and denied your eviction request, but that this is the first time that ever happened? We think not! Because of the difficult economic climate, many management companies lack resources at the home office level to review your leases and policies and procedures, so it is vital that you value and implement the course of action that your attorney recommends to you. The balance of this article will set forth a number of simple steps that you can take to remedy your past property management mistakes.

NO MORE PET ADDENDUMS UNLESS THE RESIDENT HAS A PET.

Vic and Michael have arrived at your office to sign their lease. They have told you they have no pets. Both residents execute the lease and all addendums, including a pet addendum. On the pet addendum, no animals are listed, since Vic and Mike told you they had none, and the pet fee is listed as $0.00. Two weeks later, Suzi, your leasing agent, witnesses Vic and Michael each walking a Cocker Spaniel. You quickly contact your attorney and request a Seven-Day Notice to Cure for the unauthorized pets. You are in disbelief when your attorney tells you that you may have already authorized these pets. Had your lease simply stated that no pets will be allowed on the premises without the written consent of the landlord, then everything would have been fine. How easy is that? Instead, you chose to complicate matters and potentially lost power over Vic and Michael, because you had them sign a pet addendum. In the typical situation when the resident claims that they have no pets at move-in, the property manager does not list any pets on the pet addendum, but nonetheless will have the resident sign the pet addendum. The problem with that approach is that the pet addendum will then go into detail about the conduct of the pet and any related fees. Therefore, you are in effect telling the resident that if you do obtain a pet you need to follow the rules established in the addendum. Thus the addendum may be viewed by a judge as an invitation to later obtain a pet. Worse yet, because there is a zero pet fee amount on the addendum, you will likely have no recourse to charge the residents for the pets.

FAIR HOUSING DOCUMENTATION

Your resident has been nothing but trouble since move-in. He plays his music loud, which is causing an unreasonable disturbance on the premises, and you have repeatedly told him to stop. However, you have not issued any formal notices, such as a Seven Day Notice to Cure. You reach your boiling point and fire off a Notice of Non-renewal, as you believe that under Florida law you do not need a reason to non-renew a tenant. The resident happens to be a member of a protected class. The resident refuses to leave upon the expiration of the lease term, and you send his file to your eviction attorney without mentioning that you have no back up to support your non-renewal. The resident hires an attorney and contests the eviction, alleging that you are discriminating based on the resident's religion. While it is true that the Florida law does not require that the property manager of a conventional property provide a reason for non-renewing a resident, it is still illegal under Florida and federal law to discriminate against a resident based upon religion. In this case, had the property manager served the resident with a number of simple Seven-Day Notices to Cure regarding the noise disturbances, there would have been evidence establishing that the manager had a proper non-discriminatory motive for the non-renewal. As any property manager who has been the subject of a fair housing complaint by HUD or any other governmental agency can attest, this process is long and very time consuming. Your files should tell the investigator exactly why the residents were non-renewed, and the Seven Day Notices should be your storyteller!

DEATH OF THE RESIDENT

When I inform a property manager that her lease does not have proper wording to deal with their deceased resident, and her best course of action to obtain possession is to open up an estate in probate court and then evict the estate, the manager is dumbfounded. Then, when she is told that that if the lease had included one more sentence, the whole process of evicting the estate could have been avoided, the property manager's reaction is usually not one of happiness. Our article on this subject is a must read. Read "Tenant Death and the Obsolete Lease" If your lease contains the following language, and the last remaining resident has died, you may take back possession of the unit after 60 days if the rent is unpaid and dispose of all personal items left inside if you have not received written notification that an estate has been opened in probate court or notified of the name and address of a personal representative. The following is the required lease language: BY SIGNING THIS RENTAL AGREEMENT, THE TENANT AGREES THAT UPON SURRENDER, ABANDONMENT, OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING TENANT, AS PROVIDED BY CHAPTER 83, FLORIDA STATUTES, THE LANDLORD SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE TENANT'S PERSONAL PROPERTY. If the property manager's lease does not contain the above wording and the property manager takes back possession of the unit after 60 days from the date of death and disposes of the personal items, then those who stood to inherit from the former tenant could surface later and bring a civil action for the full value of the personal property disposed of; the agent and the owner could be liable for a substantial amount of money. Without the required lease provision, the property manager could still take back possession of the rental unit, but there would be no safe way to dispose of the remaining personal property, short of opening up an estate in probate court and then putting the personal property to the line when an eviction against the estate was finalized. This process would be time consuming and expensive; you could avoid that mess with one sentence!

NOTICE DEFECTS

Freda, the property manager, has two court hearings tomorrow. The first case involves a security deposit dispute. The resident who skipped out on her lease would like the full return of her security deposit, claiming she never received the security deposit claim letter. Freda believed that under the statute, she was not required to send one out, because the resident vacated prior to the end of the term without providing a forwarding address. The resident has now produced an alleged copy of a letter that was supposedly hand delivered to Freda 14 days prior to the tenant's vacating date, putting her on notice that the resident was vacating early. You get the point. Even if this is not true, how does Freda prove that? Therefore, we advise all of our clients to send out the SODA in all circumstances, even when the resident vacates early and the property manager has not received prior written notice from the resident. The second case that is set for hearing also involves a security deposit dispute. Freda's lease requires residents to give 30 days' notice prior to the end of the term if they are not going to renew or face a one month liquidated damages charge. One particular resident vacated at the end of the term with no notice, and Freda deducted one month's rent from the security deposit. Under Section 83.575, Freda must provide written notice to the resident within 15 days before the start of the notification period contained in the lease. The written notice shall list all fees, penalties, and other charges applicable to the resident, and must specify the resident's obligations under the notification provision contained in the lease, and the date the rental agreement is terminated. So in this case, Freda better have sent out the reminder letter somewhere between the 31st and 45th day if she hopes to win this case in court. Proper wording for the notice can be found in our article "Requiring Notice Before Lease End"

 

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The New CONDO/HOA Laws and the Property Manager
Part 2

by Harry A. Heist, Attorney at Law

 

In last month's issue we discussed the new and amended laws in Florida Statutes Chapter 718, 719 and 720 giving the condominium and homeowner associations, hereinafter Association(s), the power to demand rent directly from the tenant in the event the owner is delinquent in the payment of the fees or assessments due to the Association. Since the new law went into effect, a large number of tenants have been served with notices or received letters from an Association, the management companies for the Association, or attorney representing the Association or management company making the rent demand.

Many property managers have taken our recommended proactive approach, contacted the Association, its management company and attorney, and are continuing the management of the property, remitting the sums to the Association from the rent paid with the consent of the owner and the Association. Some property managers are now actively checking with the owner and the Association to see if there are any delinquencies, so they can get a jump on the problem before the tenant is served with notice. Upon receiving demand notices from the Association, its management company or attorney, many tenants are simply packing up and leaving, feeling that their right to reside in the unit is at risk. These tenants are sometimes correct to an extent, as the unit owner is also often under foreclosure, and the demand letter is the last straw. The goal is to keep the tenant in the unit, collect the rent money, remit it to the Association, and be able to subtract the management fee from the rent received so the property manager does not lose the account. One important factor to remember is that usually the repair account is replenished by the rents received. If all the rent minus the property manager's commission is going to the Association, the property manager needs to be aware that there may be no funds for repairs. If necessary, this can be addressed in the agreement signed between the owner, property manager and Association, as most unit owners, if they are not paying the Association, will neither have money nor the desire to pay for repairs, thus putting the property manager in an uncomfortable and complicated position.

Current actions being taken by Associations

Completely unrelated to the new law which grants further powers to the Associations, actions already have been and continue to be taken by Associations in terms of ceasing certain amenities or services that have traditionally been provided. We wrote an article on this a while back called Condo/HOA Service Amenity Removals which should be read again, so the property manager fully understands that Associations can make decisions, with the vote of their board of directors, to stop including certain amenities for everyone on the property, not just the delinquent owners and their tenants. These decisions are taken by Associations simply due to the lack of funds being collected from the delinquent unit owners and end up affecting everyone. Items such as cable TV, satellite TV, included water, trash removal, lawn cutting, alarm monitoring, manned access gates, included sewer fees, internet and almost any other amenity offered can and have been taken away from the owner. No longer are some of these items included in the monthly, quarterly, or yearly dues or assessments paid (or not paid) by the unit owner. Hopefully you have modified your leases to prepare for this, as your tenants will expect these services if they are included when they move in, and they will be entitled to these services throughout their tenancy, unless they specifically agree in their lease that these services or amenities may be taken away and become the tenants' responsibility. Our article includes the recommended wording to be placed in your lease agreement, which we recommend doing as soon as possible.

Actions that can be taken against tenants and owners

Florida Statute Chapter 718 gives great powers to Associations that will impact your tenant. Of course, you would have nothing to worry about if your owner is not delinquent, so every effort should be made to make sure your owner is paid up with the Association and continues to make the payments either directly or through you.

The unit owner and the tenant are absolutely required to comply with the declaration of condominium, the rules and regulations and the bylaws. Even if they are not referred to or mentioned in the lease agreement, they are "deemed to be" by the law. A tenant will not successfully be able to say that he or she was not told of a particular rule or regulation in order to be free to violate such rule or regulation. We highly recommend that you provide the tenant with a synopsis of the rules and regulations, and that you continually keep up on any changes that can and do occur throughout the year.

Failure of the tenant to comply with the declaration, rules, regulations and bylaws can result in injunctive relief to the Association and/or an action for damages by the Association. Attorneys who represent Associations are not inexpensive, and this could result in further judgments or liens against the unit owner. The property manager never wants to be placed in a position in which the property management company could be held liable for the actions of the tenant, so working with the Association and quick action is crucial in the event of any noncompliance.

Suspensions of Tenant's Rights

If the unit owner is delinquent for more then 90 days in paying any monetary obligation to the Association, the Association has the right to take action, and this action could affect the tenant. The Association is fully allowed by law to limit, restrict or prohibit the tenant from using common elements, common facilities and any of the Association property until the time the unit owner has fully paid the delinquent monetary obligation. These common elements include, but are not limited to, the pool, hot tubs, tennis courts, clubhouse, barbeque area, and shuffleboard courts. Any common element or amenity with a few exceptions can be made off limits to the tenant and guests of the tenant. If the tenant or guests are seen using them, the owner and the tenant could be subject to fines of up to $100 per violation, up to a current cap of $1000. This is a steep price to pay for a visit to the now off-limits pool by the tenant.

What are the limits on the Association?

While the Association's powers are broad, they are not limitless. The Association cannot prevent the tenant from accessing the unit in any way, change the vehicle or pedestrian gate card or access gate code codes to restrict access, cut off or restrict any utility service, take away parking spaces, or prevent the elevator from being used by changing the elevator key card or code. Will Associations overstep their limitations? They already are, and you must notify your attorney right away, so the attorney for the management company or Association can be contacted. This often solves the problem quickly.

Can the Association suddenly impose these restrictions?

Although some Associations will violate the law, a process must be undertaken by the Association prior to restricting the tenant's right to the common elements and amenities. 14 days' notice must be given to the tenant or unit owner, and the tenant or the unit owner has an opportunity to be heard before a committee of at least three members appointed by the board in the event of a homeowner's association, or in the case of a condominium association, "a committee of other unit owners". In either case, these committee members cannot be officers, directors or employees of the Association, or related to any officers, director or employees. In order for a suspension, restriction or a fine to be valid, the committee must agree by majority vote in the event of a homeowner's association, or in the event of a condominium association, they simply "must agree". The Association must provide written notice of any fine, restriction or suspension of the rights to use the common facilities to the tenant or unit owner by either hand delivery to the unit, which may or may not include posting on the door, or sent by mail to the tenant or unit owner. As you can see, if an Association decides to restrict or suspend your tenant's ability to use a common element, facility or amenity, a process must be undertaken first, and many Associations will attempt to illegally bypass this process.

Where do we go from here?

Each property manager in your office needs to fully understand the laws governing the relationship the Association has with the property owner. Extreme caution should be taken when an agent decides to handle a rental in an Association, as there is increased liability to the management company due to dealing with a potentially or currently delinquent unit owner, or a tenant who is not complying with the declaration, bylaws, rule and regulations of the Association. Managing a unit governed by an Association is not for the faint of heart or inexperienced property manager, and we urge you to always get legal advice when an issue arises. Delinquencies are at their highest rate ever, and any property manager dealing with Associations will eventually have to face these situations

 

 

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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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