VOLUME 9 - ISSUE 3 LEGAL UPDATE

- Move-Out Inspection Procedures
- On Premises Accidents and Incidents
- Collections and the Property Manager

 

 

Move-Out Inspection Procedures
by Harry Heist, Attorney at Law

 

The move-out inspection of the unit will determine what damages, if any, for which the resident is charged from the security deposit, and if the amount exceeds such security deposit, will determine what excess amount will be sent to collections. The property manager has a very important duty to accurately and fairly assess the condition of the unit, compare it with the move-in inspection documentation, and properly charge the resident for damages that exceed ordinary wear and tear. Sloppiness and failure to take this matter seriously could and often does result in expensive litigation on the county court level, and in higher courts later if the resident's credit has been damaged as a result of the charges that possibly cannot be substantiated years later by the property. The move-out inspection should never be undertaken with the resident present, no matter how much the resident so demands, unless the applicable lease so requires; this is the golden rule. You should also not charge the resident unless that charge can be substantiated later in a court of law. The move-out inspection must be performed by an experienced staff member who not only understands the difference between ordinary wear and tear and damage, but also fully understands how to prorate items, such as the painting and the carpeting in the unit. The success of the move-out inspection is directly related to the quality of the move-in inspection. The security deposit belongs to the resident, and extreme care must be taken when making a claim upon this money.

WHEN MOVE-OUT INSPECTION IS PERFORMED

1. The Immediate Cursory Inspection - As soon as you are made aware that the resident has vacated the premises, the unit should be entered by staff and an overall cursory inspection should take place. This inspection is done to confirm that that all residents have indeed vacated the premises, to secure the unit, remove spoiling food or garbage, look for leaks, close windows and check on climate control. It is not necessary to perform the full move-out inspection at this particular time. Occasionally, a resident will claim that damages occurred AFTER the resident vacated the premises, due to a third party or parties entering the unit. It is quite possible, although not common, that this type of damage occurs. Units are sometimes vandalized after a resident vacates. If the move-out inspection was not performed for quite a bit of time after the resident vacated, these claims can be made. This is why the immediate cursory inspection is so important. Get in the unit right away, look around, take your photos and document what you observe.

2. The Full Move-Out Inspection - Since you have 30 days from the date the resident vacates within which to make a claim upon the security deposit, and 15 days from the date the resident vacates to return the full security deposit if there is no money owed or damages to the premises, the full detailed move-out inspection should be conducted within the first 10 days from the move-out date. Of course, if you are desirous of turning the unit fast and preparing it for the next resident right away, the full inspection can be performed immediately. If not, the 10-day window is fine. There are certain advantages to not performing the full inspection immediately. Some damages do not appear right away.

Odor: A unit that is air conditioned with air freshener sprayed in the air can be hiding significant pet or smoking odor, which does not become apparent until the unit is closed up and the air conditioner is turned off. Urine, smoke and food odor can be significantly masked. Your cursory inspection may not detect what will become quite evident a week later after further investigation and inspection.

 

Fleas: Fleas may not appear immediately after a resident vacates. Most cats and dogs, even if kept indoors, have fleas, but sometimes at barely noticeable levels. If the resident's pet does not have a significant flea problem, it may go unnoticed by the resident. The fleas will lay their eggs which fall into the carpeting. Upon hatching, the new fleas will head straight to the cat or dog to reside, thus going unnoticed by the resident. The cycle of the fleas is interrupted when the dog or cat is removed from the premises. Within a week or so of the pet removal, the flea eggs in the carpeting will hatch and if there is not an animal present, the first meal will be your maintenance tech working in the unit, or worse, the new residents who just moved in. It is imperative that you speak with pest control regarding inspection and treatment, even if you were not made aware by the departing resident of any flea problem and you did not detect fleas in your cursory inspection. Often a resident is able to hide an unauthorized pet, usually a cat, from you for a significant amount of time. Do not assume that just because the resident's file does not indicate any pets, that the resident was not harboring a cat or dog in the premises.

CONDUCTING THE MOVE-OUT INSPECTION

WHO SHOULD BE PRESENT: The move out-inspection, be it the cursory inspection or the full inspection, should NEVER be conducted with the resident present UNLESS your lease requires this. Look at the lease agreement as soon as possible, and if this is required, speak with your regional manager about getting your lease revised. Some lease drafters are under the impression that it is the law or actually beneficial to have the resident present at the move-out inspection, but this is incorrect. If the resident is present, the manager or maintenance tech performing the inspection will be more apt to do the inspection quickly and not as thoroughly as necessary. A move-out inspection is a serious matter and sometimes takes a significant amount of time to perform correctly. The intimidation factor and time pressure is high when a resident is following you or the maintenance tech around the unit while you attempt to inspect. Damages are often overlooked if the resident is present. Most likely you will need to examine the move-in inspection form or resident file to properly perform the move-out inspection. The carpet stain may be due to a leak that occurred in the unit that is not reflected on the move-in inspection form. A common problem occurs when the resident, accompanying the manager during the move-out inspection, asks the manager or maintenance tech if the security deposit will be fully refunded. Not seeing any readily apparent damages or trying to avoid a conflict, the resident is answered in the affirmative. The resident then departs under the distinct impression that the security deposit will be refunded. Upon a later, more detailed but relaxed inspection, a flea infestation, urine damage to the carpet, water damage to the countertop and an oven cleaning requiring two hours of deep cleaning are discovered. Now your resident receives a Notice of Intention to Impose Claim on Security Deposit. The resident feels that you lied about the deposit refund and hires an attorney to files a small claims court action against your property. You then have to explain to the judge why the resident was told that the security deposit would be refunded when it was not. NOTE: If your lease requires that the resident be present with you during the move-out inspection, comply with the lease requirement, but be extremely careful not to expressly indicate or imply to the resident that a deposit refund will or will not be forthcoming.

FORMS TO BE USED- Your detailed move-out inspection should be performed using your move-in inspection form, photos and any file notes as a reference, as a guide to avoid charging the resident for pre-existing damages, damages not attributable to the resident, and to avoid missing possible damages for which the resident should be held responsible. Your move-out inspection form may be incorporated in your move-in inspection form, but we strongly recommend using a separate move-in inspection form and move-out inspection form, as this is serious business, and a "combination" form often does not have enough space to properly explain the conditions that you may discover, and the subsequent description is not complete. A move-in inspection form most likely does not have a spot for flea infestation, urine or smoke odor, so you are forced to create a new section if you are using the same form for the move-out inspection. Carefully examine your forms, try to avoid using the combination form, and create a separate move-out inspection form with everything you can possibly think of that could be damaged or chargeable to the resident. Sit down with your maintenance tech, and look at the form or forms together. Using the same insufficient or incomplete form because it is the one provided by your company is no excuse for not conducting a proper, thorough and accurate move-out inspection.

DOCUMENTATION - Your digital camera is probably the most important tool of the move-out inspection. Ideally, the unit was photographed during the move-in inspection, but unfortunately this is not done in many cases. A detailed move-out inspection form by your maintenance tech will be extremely helpful in the event of a court action or to prevent a court action, if and only if the maintenance tech is still working for your company. Written documents such as a move-in inspection form often cannot be admitted into evidence in court under evidence rules governing hearsay. If you are the new manager, management company, or you have a new maintenance tech, the written document previously completed may be useless, unless you are able to get the document into evidence under a business records exception. A resident has 5 years within which to file a lawsuit on a written lease contract. Although most residents will often dispute within the first one or two months of receiving a Notice of Intention to Impose Claim on Security Deposit, some wait a significantly greater amount of time. Possibly a lawsuit is not filed until years later, when a resident finally discovers that his credit has been damaged.

Photos are crucial to avoiding and winning disputes and lawsuits. A rule of thumb should be that the resident will never be charged for anything that you cannot prove by looking at a photo. There are exceptions of course. A photo will not show odors, and flea infestations are difficult to visually prove, but this is no excuse for not using your camera as the ultimate tool of the move-out inspection. Many residents have different standards of cleanliness. A filthy oven and stove that requires hours of cleaning was perfectly acceptable and normal to the resident for some time, or it would not be this way. When you make the charge against the resident, it will often be met with fierce resistance. A clear photo showing a clean oven and stove put next to a filthy oven and stove has a great impact in mediation, in court or to prevent a court action from being filed.

Your photos should be clear and plentiful. If possible, set your digital camera to show the date the photos are taken, but be certain that the date is correct. Often cameras are set up improperly and can cause your photos to be challenged. Once the photos are taken and reviewed, they should be saved properly on your computer and backed up, be it an on-site or off-site backup. The days of Polaroid photos are gone, but even though you can take far more photos than before at no extra cost, if they are not saved or indexed properly, they will be destroyed, inaccessible or useless to you. If you really feel it necessary or are alerted to a potential problem resident ahead of time, take the initiative to have the photos printed out. Your local Walgreens or CVS will do this for approximately 15 cents a photo, and it could be worth thousand of dollars to you later on.

Move-out inspection form - This must be clear and detailed. Not having enough space to fill out a section is no excuse whatsoever for lack of detail. Use a separate sheet of paper, and do everything it takes to clearly explain the damages you discover. Write down who performed the move-out inspection and names of any witnesses to the unit's condition. This is crucial in cases when you are charging for odor or fleas. Although it may not be admissible in court, have one of your witnesses write up a short narrative of what was observed. In the event of court at a later time, your witness can review the written statement to help recall the situation, and you may be able to admit the statement into court if the witness is available. Never rely upon your memory. That unit that has been smoked in heavily for 2 years and requires a significant amount of odor remediation, painting and carpeting will become a distant memory a year from now, no matter how bad it was.

DESTROYING YOUR EVIDENCE- Some maintenance techs are extremely efficient, so much so that upon entering the unit, they immediately begin hauling the trash and furniture out and shortly thereafter dive into the painting and removal of significantly damaged carpeting and a countertop which goes straight to the dumpster. No photos are taken, or if they are, they are often inadequate. It is crucial to instruct your maintenance tech to never begin the trash removal or repair process until they are certain that documentation of the damage has been obtained. Sit down with your maintenance techs to explain your procedures, examine your current procedures, and make sure that your maintenance techs attend the legal classes geared for maintenance techs provided by the local apartment associations.

WHAT CAN BE CHARGED TO RESIDENT? - You are allowed to charge the resident for damages that exceed ordinary wear and tear and missing items. If charging for damages or missing items, some items must be prorated, as you cannot charge a resident the full replacement of something when its normal life expectancy has come close to the end. The fact that the 5 year old carpet that your last resident destroyed in 6 months of residency does not relieve you of the necessity of prorating the damage to the carpet, and possibly not being able to charge the resident at all. What is ordinary wear and tear? We are not quite sure. A ground floor unit with two children in residence will most likely experience faster carpet wear or damage than the third floor unit with the businessman who is never home.

PRORATIONS - The two most common types of items to be prorated are carpeting and painting. There is no law that requires a unit to have replacement carpet or repainting when a resident moves out. You and your maintenance tech need to consult with your carpeting professional and your paint supplier to determine the proper lifespan of each item. Many of the companies that are members of the local apartment association will keep track of all carpeting for you and give you proration guides. When a unit is repainted, it is important to note in the file of the outgoing or incoming resident that fact that the unit or some rooms thereof have been repainted. This is crucial to prorating. We recommend that the maintenance staff keeps detailed records of each apartment, dates that each room was painted and what paint was in fact used. The same applies for carpet.

BROKEN OR MISSING ITEMS - Some items in an apartment commonly break: towel racks, toilet paper holders, toilet seats, cabinet doors, drawers, interior refrigerator shelves or holders, electrical faceplates and blinds, to name a few of the most common items. In order to charge a resident for the repair or replacement, you will need to prove that the items were not broken or missing when the resident moved in and were broken or missing when the resident moved out. If broken, the item must have been broken due to the fault or negligence of the resident, other occupants or guests of the resident. Proving it was the fault or negligence of the resident is often difficult, and your maintenance tech will tell you of many items that routinely break in a unit. Charging the resident for an item that routinely breaks is asking for a dispute and an unsympathetic judge, should the matter reach the litigation stage.

CHARGE LISTS- One method to minimize disputes is the use of a charge list which is made part of the lease agreement and agreed to by the resident, which details the cost of repair, cleaning or replacement of certain items. The fact that you are using a charge list is not a 100% solution though. You still must prove that the resident is liable for the charges, and you must have proof that the repair, cleaning or replacement was indeed necessary. This you will accomplish by using your detailed move-out inspection form, notes and photos. Some charges found on the typical charge lists today are excessive and punitive in nature. This needs to be changed. The charge should correspond to your cost and the time involved in the repair, cleaning or replacement. Charging a resident $20 for replacement of a rusted stove drip pan when it might cost less than $2 and requires one minute to replace may be considered excessive, even though the resident has agreed to the charge when entering into the lease agreement. Just because a resident agrees to something in a lease agreement or addendum does not mean the lease provision cannot later be challenged.

EMOTIONS AND THE MOVE-OUT INSPECTION - It is easier to charge a resident you dislike for damages than that nice long term resident that you just adored and hated to see go. The problem is that the resident who you dislike may also dislike you, and is more apt to dispute a claim upon a security deposit. That person may be expecting you to make charges against the deposit, and is just waiting for the moment to receive the Notice of Intention to Impose Claim on the Security Deposit in the mail. If you allow yourself or your maintenance tech to get angry or emotionally involved in the move-out process, you are destined to increase the odds of a dispute and potentially expensive litigation. Look at each unit in an impersonal manner, and always follow the golden rule. Many managers are famous for documenting the extremely damaged or trashed unit with an excellent number photos and even a video. Ironically the resident who significantly and maybe intentionally damages a unit rarely disputes the claims made upon the security deposit. You will probably never hear from that person again. It is your nice, friendly resident who has resided in the unit for four years without any problems at all that may be far more apt to dispute a claim you make upon the security deposit. Never let your guard down when documenting damages, and treat everyone the same.

Best Practices

1. NEVER conduct the move-out inspection with the resident present, unless your lease or local ordinance requires this.
2. Use a detailed move out inspection form.
3. Conduct the move-out inspection with the move in inspection form as a reference.
4. Take photos of all damages for which you are going to charge.
5. Preserve your documentation.

 

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On Premises Accidents And Incidents
by Harry Heist, Attorney at Law

 

Each company usually has its own procedures and forms for documenting any accidents or incidents that occur on the premises. In some instances law enforcement is called, and they may or may not prepare a report. The police report is not admissible in court unless the law enforcement officer who wrote the report is in fact in court with you. Always follow company procedure when dealing with accidents, injuries and incidents on the premises, but supplement company policy by making sure that you are being as detailed as possible and getting a resident incident report filled out.

PROPERTY GENERATED INCIDENT REPORT - The property generated incident report is the most common report used by the property manager. It should clearly explain what happened or was observed, action taken, injuries to persons, damage to property and witnesses of the incident with contact information. The statute of limitations for personal injury claims or damage to property are long, so the more information that is gleaned at this time the better, as a legal action could be filed years later. Some people actually wait a long time to file a lawsuit in hopes that you no longer have any records. Care should be taken to preserve the incident report in hard copy format for later use, and if it refers to a particular resident, place it in the resident's file or your designated safe place for incident reports. If using software which allows incidents to be inputted on the computer or online, do not fail to do so immediately. Never underestimate how a small incident can balloon into something big and unexpected. The key is to try to prevent this from happening.

RESIDENT GENERATED INCIDENT REPORT - The incident report generated by management or staff is extremely important in most situations and is common practice. Often it is relied upon too heavily as the primary and sole documentation of an incident. Sometimes though, the incident report generated by the resident or an occupant will prove even more valuable to you. Unfortunately, this is not common practice, but it should be. If possible, we would like to see a resident generated incident report for every possible occurrence, but we know that this is not always feasible. In certain situations it needs to be an imperative. When a resident reports an incident to you, your first thought should be to get this information in writing from the resident. The main reason for the resident generated incident report is to get the information from the resident at the time or near the time of the occurrence. Whether the resident is telling the truth or not is not relevant. What is relevant is that you are to some extent locking in the resident's story before the resident may decide to alter the story, go to an attorney, or exaggerate the story later for some gain. The story of the most honest of residents could change once the resident consults with an attorney. At the moment of the occurrence, no attorneys are usually in the picture, and the dishonesty or greed factor has not been elevated or exacerbated.

1. Accusations of Theft - If the resident accuses you, a vendor, staff member or another resident of entering a unit and stealing something, you need to sit the resident down and have them fill out an incident report. While you may not believe a word the resident is saying, avoid comments or a defensive response at all costs, and just get the resident to fill out the incident report. A common response to an outrageous allegation is to defend yourself, blame another party or claim that it is not your responsibility. This only angers the resident, who may or may not be telling the truth. The alleged $300 stolen off the counter often becomes $300 plus jewelry and an expensive computer when the resident is sent out of your office angry and decides to go to an attorney. By getting the resident to fill out an incident report, you have a higher chance of the resident either telling the truth or not exaggerating the lie or scam that he may be perpetuating upon your company. Once in writing by the resident, it becomes more difficult for the resident's story to change or become exaggerated later when the resident is told in no uncertain terms that you do not plan on paying the resident for the alleged loss. Never tell a resident to call the police in this type of instance. When a resident does not go to the police, that can be later used against the resident, as most residents who are truly victimized by crime would involve the police without being told. Do not scold a resident at this time for not getting renter's insurance, or indicate that you will or will not be compensating for the loss in any way.

2. Property Damage- Damage to a resident's property does indeed occur. It may be through no fault of the apartment community, such as in a case when the upstairs neighbor floods the resident's bathroom; it could be due to a broken pipe or failed water heater, something your company may or may not be liable for. It could be damage caused by an outside vendor, such as the landscaper. Most leases have clauses which attempt to remove liability for personal property damage from your company, but these attempts to remove liability are not always successful, no matter what the lease may provide or what your regional manager may say. A common misconception among property managers is that the landlord is not responsible for any damage to a resident's personal property. This is far from the truth. Florida law gives the resident an implied warranty of habitability, which could mean that a resident is not to have water from a pipe or water heater that belongs to your company damage the resident's personal property. If a resident comes to you complaining about a leak or flood which caused damage to personal property, the first impulse is to tell the resident that she "should have gotten renter's insurance". We know that this is not the proper response. The response should be, "Let's fill out an incident report". Provide the resident with the incident report, and have it filled out in the resident's own words, detailing what was damaged and the cost for the repair, cleaning or replacement. Your company may have absolutely no intention whatsoever to compensate the resident, but now you have the incident report and the amount of supposed damage documented by the resident, and as in the case of a theft allegation, makes it more difficult for the resident to later change the story and inflate the amount of damages. Your company may decide to compensate the resident based on good will or the recommendation of an attorney. Now you have a much greater chance of solving the problem or settling without it escalating into a huge damage claim.

3. Personal Injury Claims- If possible, have the resident or occupants who may be important witnesses fill out an incident report. You may have a situation in which a resident ignored the sign on your clubhouse door about coming in from the pool with wet feet. The resident comes in, slips and falls. After a trip to the doctor's office, the resident wants to be reimbursed for medical bills. Always follow your company procedures, and supplement them with having the resident fill out an incident report, even if you feel the company will not reimburse the resident, or the injury was the fault of the resident. Notify your regional manager immediately if there is any allegation of personal injury, as your company's insurance policy may deny coverage if there is a significant delay in reporting.

4. Claims against Third Parties - Your resident may have a gripe with a vendor, the landscaper, other resident, occupant or other third party who did or said something to the resident. Of course, if another resident is involved, you may be serving that resident with a Seven Day Notice of Noncompliance, but sometimes it is not appropriate or does not rise to that level. Hand the resident the incident report, have the resident fill it out in your presence, take action if appropriate, or place it in the resident's file if it is not something that requires attention. If the resident requests contact information regarding a vendor, provide that information and investigate the matter with your vendor.

Best Practices - a. Use a property generated incident report for all injuries, damages and incidents
b. Avoid a defensive attitude with residents
c. Have the resident fill out the resident incident report whenever possible
d. Practice safekeeping of all incident reports

 

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Collections and the Property Manager
by Brian P. Wolk, Attorney at Law

 

The successful property manager should have a solid understanding of the collections process. Not complying with federal and state collection laws can and will subject the landlord to substantial penalties, as there is no shortage of consumer rights attorneys who are will sue landlords if given the chance. These laws must be followed carefully, as any mistake, even if unintentional, can have serious negative consequences. In addition, seasoned property managers also do not have unrealistic expectations about the prospects of actually collecting monies owed by former residents. Those managers are well aware of the lengthy steps needed to obtain a money judgment, and understand that collecting on a money judgment in many cases never happens.

Florida Consumer Collections Practices Act

Many landlords are familiar with or have at least heard of federal laws governing collections, such as the Fair Debt Collection Practices Act. All too often though, landlords are completely unfamiliar with the Florida Consumer Practices Act.

The purpose of the Act

The Florida Consumer Collections Practices Act is a detailed statute enacted by the Florida Legislature to limit a number of abuses in connection with the collection of debts by a collection agency or any business that frequently engages in the collection of debts. Another purpose of the Act was to protect an individual's right to privacy.

the Act and the Original Creditor

The Florida Consumer Collection Practices Act governs not only debt collectors but also original creditors. The landlord and management company would typically be considered the original creditor, unless the account is acquired during an ongoing tenancy. This Act will also apply against successor owners or management companies.

Penalties

The Act imposes administrative, civil and even criminal penalties on an entity or person that is in violation of its provisions. For example, a collection agency that fails to register properly with the office of Financial Regulation of the Financial Services Commission could face criminal charges.

Civil Penalties

The most common type of penalty imposed by the Act is civil liability. A person who violates the Act is liable for actual damages, court costs and attorney's fees incurred by the plaintiff. The judge has discretion to award punitive damages. A plaintiff may recover statutory damages of up to $1,000.00 for every violation of the Act.

Practices Prohibited by the Florida Consumer Collections Practices Act

The Act lists 19 different types of prohibited practices. Probably the most common violation occurs with respect to willfully engaging in conduct that can reasonably be expected to harass the debtor or any member of the debtor's family. This language is somewhat vague. The more frequent the conduct, the more likely courts will determine a violation has occurred. Courts will also examine the contact to determine if there is evidence that the purpose of the communication was to insult or injure. If such a finding is made, the more likely it is that a court will deem the communication to be a violation of the Act. On the other hand, when the debt collector merely makes phone calls to inform and remind the debtor of the debt and to determine the reasons for nonpayment, courts will most likely allow such communications.

Full list of prohibited practices under the Act

Florida Statute 559.72 Prohibited practices generally."”In collecting consumer debts, no person shall: "ƒ(1) Simulate in any manner a law enforcement officer or a representative of any governmental agency. "ƒ(2) Use or threaten force or violence. "ƒ(3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor's reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6). "ƒ(4) Communicate or threaten to communicate with a debtor's employer before obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection. However, this does not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained. "ƒ(5) Disclose to a person other than the debtor or her or his family information affecting the debtor's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false. "ƒ(6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made before such dispute has been asserted and written notice is received from the debtor that any part of the debt is disputed, and if such dispute is reasonable, the person who made the original disclosure must reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days. "ƒ(7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family. "ƒ(8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family. "ƒ(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist. "ƒ(10) Use a communication that simulates in any manner legal or judicial process or that gives the appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law, when it is not. "ƒ(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare. "ƒ(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney. "ƒ(13) Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor. "ƒ(14) Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts. "ƒ(15) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents if requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt. "ƒ(16) Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to "Deadbeat, Jane Doe" or "Deadbeat, John Doe." "ƒ(17) Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor's time zone without the prior consent of the debtor. "ƒ(a) The person may presume that the time a telephone call is received conforms to the local time zone assigned to the area code of the number called, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(b) If, such as with toll-free numbers, an area code is not assigned to a specific geographic area, the person may presume that the time a telephone call is received conforms to the local time zone of the debtor's last known place of residence, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within 30 days to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication. "ƒ(19) Cause a debtor to be charged for communications by concealing the true purpose of the communication, including collect telephone calls and telegram fees.

Interplay between security deposit disputes and disputed debts

When a resident vacates, the landlord is required to send the resident the Notice of Intention to Impose Claim on the Security Deposit. The required notice is the largest cause of disputes between the resident and property manager. If the resident disagrees with the amount that the landlord is claiming is owed, including but not limited to amounts claimed against the security deposit, and so notifies the landlord in writing, then for purposes of the Act, the debt is disputed by the resident. Although not a recommended practice, it is perfectly legal for a property manager to respond in writing to the resident and explain in more detail why the charges were incurred. It is even legal for a property manager to threaten to send a resident's disputed debt to collections. The trap for the property manager is to threaten to send the account to collections without notifying the resident that the debt will be reported as a disputed debt, when the resident has previously given written notice of a reasonable dispute. Many property managers make this mistake. Also, when sending a resident to collections, the collection agency should be informed that the debt is disputed. A smart approach would be to send the collection agency a certified letter and place a copy in the resident's file.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law which regulates the collection practices of collection agencies and collection attorneys and any other individuals or entities that are considered debt collectors. Unlike The Florida Collection Practices Act, The Fair Debt Collection Practices Act does not regulate the collection activities of the original creditor, assuming the original creditor uses its own name when collecting the debt.

Purpose of the Fair Debt Collection Practices Act

The United States Congress intended to curb deceptive and abusive activities by debt collectors. The original version of the law was intended to protect consumers, not business entities. The Federal Trade Commission has the power to administratively enforce the Act. Congress actually wrote into the Act that abusive debt collection practices contribute to personal bankruptcies, marital instability and loss of jobs.

Penalties

A violation of the Fair Debt Collection Practices Act may result in a penalty of $1000.00 per violation, and there can also be liability for the reasonable attorney's fees of the plaintiff, an amount which often is substantial.

Required warning

The Fair Debt Collection Practices Act requires the debt collector to inform the debtor that it is attempting to collect a debt and that any information gathered can be used in furtherance of collection. The warning must be given when the debtor is first contacted. All future correspondence must state that the communication is from a debt collector.

Requirement of a validation notice

After a collection agency initially contacts the debtor, the debtor must receive within five days of the initial communication, a detailed written notice. The Act spells out all the required information that must be contained in the validation letter. Essentially, the validation letter advises the debtor of the nature and amount of the debt, the identity of the original creditor, which would be the landlord, along with the right to dispute and request documentation supporting the debt.

Prohibited conduct under the Act

The following are some but not all of the prohibitions under the Act: false representation that the communication is from an attorney, false representation that the consumer committed a crime, false representation as to the amount or legal status of the debt, threatening to deposit a post dated check, and communicating by post card.

In-House Collections

Often it is tempting for the property manager to take on the role of the collector. More often than not, this activity will turn out to be counterproductive. The apartment manager may want to avoid paying a fee to the collections agency. In reality, the collections process is very time consuming. Moreover, costs are incurred, and the apartment manager likely will not have the most advanced skip tracing software. What makes in-house collecting even more dangerous is that that the property manager, although an original creditor, still must comply with the Florida Collections Practices Act. One mistake by the property manager can lead to expensive litigation.

Collection Agencies

There are many collection agencies that will attempt to collect debts owed from former residents to apartment communities. It is important that the property manager select an agency with a good reputation. One benefit of using a collection agency is that the property manager will not incur costs and time tracking down the former resident. A good collection agency will have sophisticated software and skip tracing programs that will locate the former resident. The reputable collection agency will then vigorously pursue the collection of the debt and will make sure to comply with federal and state collection laws.

Reporting to collection agencies

The property manager must be very careful in reporting to collection agencies as to what amount the resident owes. In addition, the property manager should retain the proper back up, as the former resident could sue years later. Also, collection agencies will report the information provided to them by the property manager to consumer reporting agencies. If that information is erroneous, then the landlord could be subject to a lawsuit by the former resident. In addition, the landlord could be sued by the collection agency, if it is held liable for attempting to collect the inaccurate debt. It is recommended to wait until the resident has had a chance to dispute the debt before sending the account to collections. Usually this means waiting at least 15 days after the resident received the Notice of Intention to Impose Claim on the Security Deposit. If not, then it is much easier for the manager to mistakenly not alert the collections company that the debt is a disputed debt. Also, one common error that property managers make is that they accelerate the rent owed under the lease when they should only be reporting the rent owed as it comes due.

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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