VOLUME 10 - ISSUE 4 LEGAL UPDATE

- The New Law and the Multi Family Home Manager
- The New Law and the Single Family Home Manager
- Understanding the New Power of Attorney Law
- Vendor Contracts and the Property Manager
- Single Family Home Legal Q and A
- The Fair Housing Lady

 

 

The New Law and the Multi Family Home Manager
by Harry Heist, Attorney at Law

 

On June 7, 2013, Governor Rick Scott signed into law House Bill 77, the most extensive change in over 20 years to the Residential Landlord-Tenant Act found in Florida Statutes, Section 83 Part II. The changes, additions and subtractions help to clarify some of the greyer areas of law that have developed over the years, and give guidance to property managers, attorneys and judges. The landlord-tenant relationship is affected by the lease agreement, statutory law and decisions by judges creating case law when the statute or lease is unclear. In the residential setting, most cases are decided in county court. If a judge rules in a way that may not be in accordance with the law, other judges often will follow suit. This creates situations where in one county or circuit the judges rule one way, and in another county or circuit, the judges rule an opposing way. Often judges in the same county or circuit will rule in opposing ways. Inconsistencies create a problem of uncertainty for property managers, and since under Florida law, the prevailing party in a Landlord-Tenant action is entitled to an award of attorney’s fees, the stakes can get extremely high for all parties involved. The Landlord-Tenant Act in Florida is extremely fair, and for the most part clear and concise, but nothing is perfect. The changes to the law clarify a number of areas of the law which will be examined here. Just because the law has changed, we must warn property managers that not all judges will follow the law, especially in the beginning, and some still will interpret the law in a way that you and your attorney may disagree with. When this occurs, there is an option of filing an appeal to a higher court, but due to the expense and time involved, this is not usually done. This article will explain the new law as it pertains to the multi-family manager. The new law goes into effect on July 1, 2013, and the new security deposit disclosure wording must be placed in all leases beginning on January 1, 2014.

ATTORNEY’S FEES

Prior Law – The Landlord-Tenant Act provides that the prevailing party in a case seeking to enforce the provisions of a rental agreement or the Landlord-Tenant Act is entitled to an award of attorney’s fees. In some cases, residents would be injured on a property, a slip and fall for example, and the attorney for the injured party would seek attorney’s fees. Personal injury law does not provide that the injured person receives attorney’s fees, but this grey area was being exploited by some personal injury attorneys to ask for and receive attorney’s fees.

New Law- The new language clarifies that attorney’s fees will NOT be awarded in an action in which a person was injured on a rental property, AND a lease cannot be modified to allow management to attempt to force residents to waive away their rights to attorney’s fees in non-personal injury cases.

SECURITY DEPOSITS AND ADVANCE RENT

Prior Law – It was unclear in prior law whether management had to notify the resident if a bank’s name had changed, was sold, or one bank merged with another. That bank would be the one holding the deposits.

New Law – Management is now clearly not required to notify the resident of a bank change, merger or bank sale.

Prior Law – Management was required to provide the resident with a section of Florida Statutes 83.49(3), explaining timing and procedures that governed management and residents if management were to make a claim upon the deposit, return the deposit, or if the resident disputed claims made against the deposit.

New Law- A brand new disclosure is now required in the lease for all leases beginning January 1, 2014. Until that time, you can continue to use the old law wording, or you can update your lease right now. The new disclosure clarifies that you do not have to notify the resident if you are using the advance rent when it becomes due, clarifies that management has 30 days from the time of resident “move out” to send the Notice of Intention to Impose the Claim on Security Deposit, and encourages management and residents to try to informally settle disputes, and if not, either party can sue as before. Basically the procedures regarding security deposits have not changed, just the new disclosure is required. If a resident disputes, the new law still does not clarify if management is permitted to retain the “disputed” amount, or if the disputed amount can be disbursed or put into your company’s operating account.

Prior Law – If management failed to send out the Notice of Intention to Impose Claim on Security Deposit in time or properly, it was unclear if management had to refund the entire amount of the deposit or could “set it off” against the amount the resident may have owed and return the rest to the resident.

New Law – It is clear now that if management fails to send out the Notice of Intention to Impose Claim on Security Deposit in time or properly, the management MUST return 100% of the deposit, but still can sue the resident in court and get a judgment for the underlying claim in the event management went to court and prevailed.

Prior Law – Nothing addresses the safety or security of a resident’s security deposit on a sale of a property, and often the old owner or manager kept it; hence the resident lost it with no recourse against the long gone prior owner.

New Law – There is a rebuttable presumption that the new owner or management received the deposit from the old owner or management, and this presumption is limited to one month’s rent.

SCREENS

Prior Law – Management was responsible for screens. This created a problem, as often the screens were damaged or destroyed by the resident, guest, child or pet, and management continually had to make repairs and replacements.

New Law – At the beginning of the lease, management must make sure the screens are installed and in reasonable condition, and management now only must repair screens once annually. We still recommend you keep up screens as it can become a code enforcement/inspection issue.

CRIMINAL OFFENSES

Prior Law – Rights and duties under the Landlord-Tenant Act were enforceable only by civil action.

New Law – If there is a crime by management or resident, the law is now clarified to show that it now can be enforced by a criminal action as well.

CURABLE NONCOMPLIANCES

Prior Law – If a resident committed a curable noncompliance, that resident was given a Seven Day Notice of Noncompliance with Opportunity to Cure. If the resident committed the act again within 12 months, management would arguably have to serve the resident a Seven Day Notice of Termination and wait seven more days before filing an eviction.

New Law – After a resident is given a Seven Day Notice of Noncompliance with Opportunity to Cure and the seven days are up, if the resident subsequently commits the same or similar offense, NO NEW NOTICE must be given, and management can go straight to eviction. NOTE: We still recommend that in many instances, you serve a new Seven Day Notice of Noncompliance with Opportunity to Cure or a Seven Day Notice of Termination prior to evicting depending on the type of offense and time periods elapsing.

PARTIAL RENT

Prior Law – Some judges, very few actually, incorrectly were ruling that if management accepted a partial rent payment, management could not take any action against that resident in that month that partial payment was accepted: no notices, no evictions. This interpretation of the law actually hurt residents, as management would simply evict and not bother trying to work with the resident.

New Law – It is now clear that management can accept a partial rent payment and also proceed with an eviction that same month if management does one of 3 things: (1) Give the resident a receipt for the partial rent accepted, OR (2) Place the amount of the partial rent into the Court Registry if an eviction is filed, OR (3) post a new 3-day notice. Most attorneys including us will recommend that you do #3: post a new 3-day notice with the balance owed. The new law has a “glitch”; it indicates a posting is required for the new 3-day notice. Does this mean management cannot “hand deliver” the new 3-day notice? No one knows yet. We recommend following the existing standard of the law, which allows a posting if the resident does not come to the door in an effort to hand-deliver the three-day notice. If you hand-deliver the 3-day notice, you can also additionally post a copy of the new 3-day notice in an abundance of caution.

SUBSIDIZED HOUSING/CRIME/NONCOMPLIANCES/EVICTIONS

Prior Law – In certain subsidized/government housing, if management did not file an eviction against a resident within 45 days of the resident committing a crime or noncompliance on the property, management would be prohibited by law from filing an eviction. The problem was that often management did not find out about the crime or noncompliance until after 45 days had gone by.

New Law – Management now has 45 days from the time management DISCOVERS the crime or noncompliance has occurred to file an eviction action.

NOTICE TO RESIDENT OF LEASE ENDING

Prior Law – Management could require a resident to give management notice prior to the end of the lease stating that the resident is vacating.

New Law – Now there is reciprocity. If management requires 30 days’ notice from the resident, then management must also give 30 days’ notice. The notice required can be up to 60 days, and it must be the same for the management and the resident.

EVICTIONS

Prior Law – If a 3-day notice had a defect, no matter how small or insignificant, the resident or resident’s attorney could file a motion to dismiss, get the case thrown out of court, and in some cases, attorneys were getting huge awards of attorney’s fees. This type of decision might help the nonpaying resident in the short run, but was in no way helping the general public who had to pick up the slack caused the landlord’s higher cost of doing business, hurting management companies, and especially the mom and pop rental property owner who did not know the law inside and out.

New Law- Judges are now NOT to dismiss cases because a 3-day notice is defective. The resident MUST place the rent money into the court registry prior to objecting to notice deficiencies, and if there is a defect in the notice, management now legally has the ability to cure the defect in the notice, serve a new one, or file an amended pleading rather than have the case dismissed. We are hoping the judges will follow this very clear new law.

WRIT OF POSSESSION

Prior Law – Generally, the writ of possession, the final stage in the eviction, was never served on a Saturday, Sunday or Legal Holiday, and these days were excluded in the 24 hour computation of time from service of the writ of possession to execution of the writ of possession.

New Law – The writ of possession can NOW be “served” or “executed” on a Saturday, Sunday or Legal Holiday, and if for example, a writ of possession is “served” at 4 p.m. on a Friday, technically, now the sheriff’s deputy could legally “execute” the writ of possession on a Monday. The sheriff’s deputy will still likely not be serving or executing a writ of possession on weekends or holidays; the significance is that these days are no longer excluded when calculating the 24 hours.

PROHIBITED PRACTICES

Prior Law – A number of prohibited practices applying to management are enumerated in the law. Examples include prohibitions on lock outs, cutting off utilities, discrimination against service members, and retaliating against a resident for organizing a resident group, among many others.

New Law – Two new items have been added regarding retaliation prohibitions against a resident. It is now illegal to retaliate against a resident if that resident is required to pay rent to a condominium or homeowners association after a legal rent demand, and it is now illegal to retaliate against a resident if that person exercised any rights under state, local or federal fair housing laws. Most responsible property managers would never have done this anyway, but it is now clearly stated in the law.

CONCLUSION

Carefully read and understand the changes to the Landlord-Tenant Act. Notify your owner or management company of the need to modify the lease agreement. The lease should be immediately modified to provide for reciprocity of notice to the resident prior to the end of the lease, and, by January 1, 2014, all leases must have the new security deposit disclosure.

Provided by the Law Offices of Heist, Weisse and Wolk, P.A 1 800 253 8428 www.evict.com info@evict.com

 

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The New Law and the Single Family Home Manager
by Harry Heist, Attorney at Law

 

On June 7, 2013, Governor Rick Scott signed into law House Bill 77, the most extensive change in over 20 years to the Residential Landlord-Tenant Act found in Florida Statutes, Section 83 Part II. The changes, additions and subtractions help to clarify some of the greyer areas of law that have developed over the years, and give guidance to property managers, landlords, attorneys and judges. The landlord-tenant relationship is affected by the lease agreement, statutory law and decisions by judges creating case law when the statute or lease is unclear. In the residential setting, most cases are decided in county court. If a judge rules in a way that may not be in accordance with the law, other judges often will follow suit. This creates situations where in one county or circuit the judges rule one way, and in another county or circuit, the judges rule an opposing way. Often judges in the same county or circuit will rule in opposing ways. Inconsistencies create a problem of uncertainty for property managers and landlords and since under Florida law, the prevailing party in a Landlord-Tenant action is entitled to an award of attorney’s fees, the stakes can get extremely high for all parties involved. The Landlord-Tenant Act in Florida is extremely fair, and for the most part clear and concise, but nothing is perfect. The changes to the law clarify a number of areas of the law which will be examined here. Just because the law has changed, we must warn property managers that not all judges will follow the law, especially in the beginning, and some still will interpret the law in a way that you and your attorney may disagree with. When this occurs, there is an option of filing an appeal to a higher court, but due to the expense and time involved, this is not usually done. This article will explain the new law. The new law goes into effect on July 1, 2013, and the new security deposit disclosure wording must be placed in all leases beginning on January 1, 2014.

EXCLUSIONS FROM LANDLORD-TENANT LAW

Prior Law – If a tenant was occupying a home, paying rent or maybe having paid a deposit intending to buy the home under a contract for sale, the landlord could not evict that tenant if they failed to pay the rent. The landlord was forced to file a foreclosure or ejectment action.

New Law - UNLESS the tenant has paid at least 12 months rent or has given the landlord at least 5% of the purchase price of the home, the landlord can now file an eviction if the tenant fails to pay the rent.

ATTORNEY’S FEES

Prior Law – The Landlord-Tenant Act provides that the prevailing party in a case seeking to enforce the provisions of a rental agreement or the Landlord-Tenant Act is entitled to an award of attorney’s fees. In some cases, tenants would be injured on a property, a slip and fall for example, and the attorney for the injured party would seek attorney’s fees. Personal injury law does not provide that the injured person receives attorney’s fees, but this grey area was being exploited by some personal injury attorneys to ask for and receive attorney’s fees.

New Law- The new language clarifies that attorney’s fees will NOT be awarded in an action in which a person was injured on a rental property, AND a lease cannot be modified to allow a landlord to attempt to force a tenant to waive away their rights to attorney’s fees in non-personal injury cases.

SECURITY DEPOSITS AND ADVANCE RENT

Prior Law – It was unclear in prior law whether the landlord had to notify the tenant if a bank’s name had changed, was sold, or one bank merged with another. That bank would be the one holding the deposits.

New Law – Landlords are now clearly not required to notify the tenant of a bank change, merger or bank sale.

Prior Law – Landlords were required to provide the tenant with a section of Florida Statutes 83.49(3), explaining timing and procedures that governed the landlord and tenant if the landlord were to make a claim upon the deposit, return the deposit, or if the tenant disputed claims made against the deposit.

New Law- A brand new disclosure is now required in the lease for all leases beginning January 1, 2014. Until that time, you can continue to use the old law wording, or you can update your lease right now. The new disclosure clarifies that you do not have to notify the tenant if you are using the advance rent when it becomes due, clarifies that the landlord has 30 days from the time of tenant “move out” to send the Notice of Intention to Impose the Claim on Security Deposit, and encourages the landlord and the tenant to try to informally settle disputes, and if not, either party can sue as before. Basically the procedures regarding security deposits have not changed, just the new disclosure is required. If a tenant disputes, the new law still does not clarify if the landlord is permitted to retain the “disputed” amount, or if the disputed amount can be disbursed to the landlord or put into a manager’s operating account.

Prior Law – If the landlord failed to send out the Notice of Intention to Impose Claim on Security Deposit in time or properly, it was unclear if the landlord had to refund the entire amount of the deposit or could “set it off” against the amount the tenant may have owed and return the rest to the tenant.

New Law – It is clear now that if the landlord fails to send out the Notice of Intention to Impose Claim on Security Deposit in time or properly, the landlord MUST return 100% of the deposit, but still can sue the tenant in court and get a judgment for the underlying claim in the event the landlord went to court and prevailed.

Prior Law – Nothing addresses the safety or security of a tenant’s security deposit on a sale of a property, and often the old landlord or manager kept it; hence the tenant lost it with no recourse against the long gone prior owner.

New Law – There is a rebuttable presumption that the new landlord or agent received the deposit from the old landlord or agent, and this presumption is limited to one month’s rent.

SCREENS

Prior Law – Landlord’s were responsible for screens. This created a problem, as often the screens were damaged or destroyed by the tenant, guest, child or pet, and the landlord continually had to make repairs and replacements.

New Law – At the beginning of the lease, the landlord must make sure the screens are installed and in reasonable condition, and the landlord now only must repair screens once annually. We still recommend you keep up screens as it can become a code enforcement/inspection issue.

CRIMINAL OFFENSES

Prior Law – Rights and duties under the Landlord-Tenant Act were enforceable only by civil action.

New Law – If there is a crime by the landlord or tenant, the law is now clarified to show that it now can be enforced by a criminal action as well.

CURABLE NONCOMPLIANCES

Prior Law – If a tenant committed a curable noncompliance, that tenant was given a Seven Day Notice of Noncompliance with Opportunity to Cure. If the tenant committed the act again within 12 months, the landlord would arguably have to serve the tenant a Seven Day Notice of Termination and wait seven more days before filing an eviction.

New Law – After a tenant is given a Seven Day Notice of Noncompliance with Opportunity to Cure and the seven days are up, if the tenant subsequently commits the same or similar offense, NO NEW NOTICE must be given, and the landlord can go straight to eviction. NOTE: We still recommend that in many instances, you serve a new Seven Day Notice of Noncompliance with Opportunity to Cure or a Seven Day Notice of Termination prior to evicting depending on the type of offense and time periods elapsing.

PARTIAL RENT

Prior Law – Some judges, very few actually, incorrectly were ruling that if the landlord accepted a partial rent payment, the landlord could not take any action against that tenant in that month that partial payment was accepted: no notices, no evictions. This interpretation of the law actually hurt tenants, as landlords would simply evict and not bother trying to work with the tenant.

New Law – It is now clear that the landlord can accept a partial rent payment and also proceed with an eviction that same month if the landlord does one of 3 things: (1) Give the tenant a receipt for the partial rent accepted, OR (2) Place the amount of the partial rent into the Court Registry if an eviction is filed, OR (3) post a new 3-day notice. Most attorneys including us will recommend that you do #3: post a new 3-day notice with the balance owed. The new law has a “glitch”; it indicates a “posting” is required for the new 3-day notice. Does this mean the landlord cannot “hand deliver” the new 3-day notice? No one knows yet. We recommend following the existing standard of the law, which allows a posting if the tenant does not come to the door in an effort to hand-deliver the 3-day notice. If you hand-deliver the 3-day notice, you can also additionally post a copy of the new 3-day notice in an abundance of caution.

SUBSIDIZED HOUSING/CRIME/NONCOMPLIANCES/EVICTIONS

Prior Law – In certain subsidized/government housing, if the landlord did not file an eviction against a tenant within 45 days of the tenant committing a crime or noncompliance on the property, the landlord would be prohibited by law from filing an eviction. The problem was that often the landlord did not find out about the crime or noncompliance until after 45 days had gone by.

New Law – The landlord now has 45 days from the time the landlord DISCOVERS the crime or noncompliance has occurred to file an eviction action.

NOTICE TO TENANT OF LEASE ENDING

Prior Law – Landlords could require a tenant to give the landlord notice prior to the end of the lease stating that the tenant is vacating.

New Law – Now there is reciprocity. If the landlord requires 30 days’ notice from the tenant, then the landlord must also give 30 days’ notice. The notice required can be up to 60 days, and it must be the same for the landlord and the tenant.

EVICTIONS

Prior Law – If a 3-day notice had a defect, no matter how small or insignificant, the tenant or tenant’s attorney could file a motion to dismiss, get the case thrown out of court, and in some cases, attorneys were getting huge awards of attorney’s fees. This type of decision might help the nonpaying tenant in the short run, but was in no way helping the general public who had to pick up the slack caused by the landlord’s higher cost of doing business, hurting landlords, and especially the mom and pop landlords who did not know the law inside and out.

New Law- Judges are now NOT to dismiss cases because a 3-day notice is defective. The tenant MUST place the rent money into the court registry prior to objecting to notice deficiencies, and if there is a defect in the notice, the landlord now legally has the ability to cure the defect in the notice, serve a new one, or file an amended pleading rather than have the case dismissed. We are hoping the judges will follow this very clear new law.

WRIT OF POSSESSION

Prior Law – Generally, the Writ of Possession, the final stage in the eviction, was never served on a Saturday, Sunday or Legal Holiday, and these days were excluded in the 24 hour computation of time from service of the Writ of Possession to execution of the Writ of Possession.

New Law – The Writ of Possession can NOW be “served” or “executed” on a Saturday, Sunday or Legal Holiday, and if for example, a Writ of Possession is “served” at 4 p.m. on a Friday, technically, now the sheriff’s deputy could legally “execute” the Writ of Possession on a Monday. The sheriff’s deputy will still likely not be serving or executing a Writ of Possession on weekends or holidays; the significance is that these days are no longer excluded when calculating the 24 hours.

PROHIBITED PRACTICES

Prior Law – A number of prohibited practices applying to landlords are enumerated in the law. Examples include prohibitions on lock outs, cutting off utilities, discrimination against service members, and retaliating against a tenant for organizing a tenant group, among many others.

New Law – Two new items have been added regarding retaliation prohibitions against a tenant. It is now illegal to retaliate against a tenant if that tenant is required to pay rent to a condominium or homeowner’s association after a legal rent demand, and it is now illegal to retaliate against a tenant if that person exercised any rights under state, local or federal fair housing laws. Most responsible landlords would never have done this anyway, but it is now clearly stated in the law.

CONCLUSION

Carefully read and understand the changes to the Landlord-Tenant Act. The lease should be immediately modified to provide for reciprocity of notice to the tenant prior to the end of the lease, and, by January 1, 2014, all leases must have the new security deposit disclosure.

Provided by the Law Offices of Heist, Weisse and Wolk, P.A 1 800 253 8428 www.evict.com info@evict.com

 

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Vendor Contracts and the Property Manager
by Harry Heist, Attorney at Law

 

Often a vendor just does not quite “work out”. It may be a carpet cleaner, pool cleaner, water extractor, landscaper or any other outside vendor you may be using. Sometimes the vendor is hired after careful research and other times in an emergency. When things don’t work out, you notify your regional who tells you to “fire the vendor”, and you then notify the vendor verbally or in writing that their services are no longer needed. However, the problem is that terminating a contract often requires following the detailed terms and conditions within the contract. Possibly there is a curative period, penalty to be paid, liquidated damages, type or form of notice, or a specific number of days’ notice is required. Failure to follow the often complicated contract terms could result in the contract continuing, or your company having to pay for work that is no longer being performed. Remember that most vendor contracts were written by the attorney for the vendor, so beware!

Researching the Vendor

One of the benefits of being active in your local apartment association or property management association is exposure to many different vendors of products and services for the property management industry, and you also hopefully get to meet some of their customers. Some of these products are innovative and work out very well, while others are the “latest thing” that have not been tested or used sufficiently by others in the industry. Some are downright illegal in Florida, but will the salesperson tell you this? Doubtful. Avoid the temptation to jump on the latest, newest thing, and take your time to ask other members and associates about the product, problems, customer service etc. With many contracts, if the price seems too low or below the general market rate, something may be wrong.

Commitment Term

While the longer the commitment term, the lower the price in most cases, try to keep the commitment term short with newer, untested vendors, as longer, better priced contracts can usually be negotiated later if the product or service is working well for you. Promises by vendors that ending a contract is “no problem” or “no big deal” cannot be relied upon. It is said all the time by the salespersons for the vendors, but will not hold up once that contract is signed. Once the contract is signed, the terms and conditions rule, while the salesperson could be long gone.

Who is the Contract really with?

The two main forms of management consist of ownership management and third party management. In most single family home management, it is third party management, and with multi-family, it varies greatly. The management agreement or contract with the owner determines the parameters of to what the management company can or cannot bind the owner. While that may seem simple, the vendor often could not be concerned about this. The vendor wants a signature on a contract, and that signature can be unexpectedly binding upon a party that was not the intended party. Under law, there is apparent authority and actual authority. A maintenance tech who in reality lacks actual authority may have “apparent” authority to deal with a vendor. When this is the case, a person with apparent authority could end up binding the owner or management company, and this liability is often hard to escape in the event of litigation because of the apparent authority problem.

The Property Management Agreement

A quality property management agreement should clearly spell out what the third party manager can and cannot expend or contract for on behalf of the owner. While this may not solve a problem between the management company and the vendor, at least management can prove to the property owner that the owner had given management permission to contract or expend money on behalf of the owner, and ultimately the owner may be the responsible party and pulled into a lawsuit against a management company. Often property management agreements cannot anticipate everything that may occur down the road, so it is crucial that unless the management agreement clearly spells out the rights of the management company, no contract is signed or money expended unless a separate agreement is signed by the management company and the owner, or the vendor contract is directly with the owner of the property. If the authority of the management company is not 100% clear, no contracts should ever be signed.

The Vendor Contract

The contract will list the parties, the services or products provided and the details, the cost, payment terms, other terms of the contract, and often termination of the contract. Most vendor contracts are written by the attorney of a law firm representing the vendor, and can and often do include very hard to understand legalese. In a typical consumer relationship, vendors are often required to make a contract clear and easy to understand. In a business to business relationship, both businesses are expected to understand the contract, and if they do not, they should be hiring an attorney. A judge will not be sympathetic to your company if you failed to hire an attorney to explain a contract to you or interpret it prior to signing. Remember, this attorney needs to be YOUR attorney, not that of the vendor, and sometimes not that of the owner either.

Who is allowed to enter into Contracts?

Your company needs to have a clear and set policies on who is allowed to “sign on the dotted line”. Every year we have cases in which employees of the management companies sign contracts binding the management company and often the owners. If the regional manager tells an employee to sign a contract, that employee should retain a copy of the email, as months later, this may be crucial evidence. While it may sound silly and trivial, every year we see employees scammed by the phony “yellow page” ads. While usually these can be addressed easily, the contract for supplies or services may be a much larger one, when many thousands of dollars are at stake. That simple signature by the maintenance tech could result in your company exclusively buying thousands of dollars worth of product from one company for maybe years.

Contract Terms

Effective Date: When does the contract actually begin or end? If it begins before you may have properly terminated an existing contract with another vendor, you may be liable for paying two vendors at once.

Pricing: Is this clear? Can the amount change over time? If a vendor’s cost for a product or service increases, are you agreeing to pay this increased cost? You must make sure that there are no clauses which may cause a price to change and your company being forced to pay, unless this is agreed upon.

Parties: Who are the parties to the contract? The ownership entity? The management company? If something says, “XYZ Management” or “Mountainview Apartments”, are either of these legal names? The name listed on the contract should be the actual legal entity name as it appears on the Secretary of State’s website. Sales Tax: Many vendors will try to sell you on their product by claiming that there is no sales tax, because they are based out of state. Many owners and management companies do not know that Florida law requires you to pay USE TAX no matter where you bought the product. That company in Virginia who you think is saving you 6% in sales tax may not be required to collect the tax, but under Florida law, you are required to pay it. Please read our article on this. Each year, the Florida Department of Revenue is bringing in millions of dollars in taxes and penalties from companies who thought that they did not have to pay sales tax because they were dealing with an out of state company. If you buy from a company out of state, you are required to remit USE TAX to the Florida Department of Revenue. Few people or companies are aware of this.

Automatic Renewal Clauses: You are so happy that the contract you have with your terrible landscaper is soon over. Whoops, it just auto-renewed for another year, because you failed to read the contract carefully or follow the termination procedure. Missing a date by one day could be enough to bind you for another year. Auto-renewal clauses are routinely upheld by the courts, so read these contracts carefully, and follow the terms exactly.

Terminations: If you love your vendor and everything is working out, the termination clause is really not too important. It is when things don’t work out when you MUST strictly follow the terms and conditions of termination, and in some cases, the vendor must be given an opportunity to cure a problem whether you like it or not! All this is the real deal, and if you fail to follow the terms, you may end up paying penalties or paying multiple vendors.

Method of Termination: The method by which a contract is terminated is usually governed by the contract. It may be certified mail, registered mail, express mail or email. Whatever the contract provides will govern. It has been so easy in the computer age to fire off an email. The message gets across, but if it is not consistent with the terms of the contact, the termination may be invalid.

Venue Clauses: You have a dispute with a vendor who decides to take you to court. The problem is that the lawsuit filed against you is in Texas, as this is where the contract says that all litigation will be filed. The “venue” for litigation is where the lawsuit will be filed. If this is what the contract provides, you may be forced to hire a lawyer in Texas and make multiple trips to Texas in the event of a trial.

Binding Future Owners or Management Companies: You may assume that the contract with your vendor is between your company and the vendor or the current ownership and the vendor, and you may be correct, OR you may not realize that the contract that was signed is a 10 year laundry equipment contract that ends up being a deal breaker in the event your owner wishes to sell the property. With whom is the contract? Who will it bind? Will it bind a new owner? You need to consult a lawyer.

Due Diligence prior to Management : When deciding to purchase a property or third party management, it is crucial to do your due diligence in finding out every single contract that is out there, who it binds, and all the details. Failure to do this could seriously take away some of the profits that you intend to receive when buying the property or managing the account. You must properly demand this information from the owner of the property you will manage or purchase.

The Vendor Agreement: Often when we get a new multi-family client managed by a third party, we are required to sign an agreement with the management company, under which we are being told that the company with whom we are dealing is a third party manager, and if for some reason we do not get paid, we are agreeing that we will not sue the third party manager. Ironically, most third party managers do not use such a form, and they put themselves at risk with all the vendors with whom they work. If you do not have such a vendor agreement, call our office for some samples. You don’t want to be stuck paying the bill of a broke or dishonest owner for whom you managed.

Conclusion

What you just read above was only the very tip of the vendor contract iceberg. It is hard to comprehend how complex this all can become. A 25-page contract is not 25 pages just because someone was having fun. Who should review a vendor contract? A contract attorney. Unless your landlord tenant lawyer is an experienced contract law attorney, and most are not, he or she is probably not the one for the job. Who should pay for the review? This is between you and the owner if you are third party managing. Never take these contracts lightly, no matter how well you may know the representative or salesperson working for the company. A short contract can be just as insidious and evil as a very long contract. When you terminate a contract, you often will have on your hands a very unhappy business which will do everything in its power to either enforce the contract or make you pay for termination.

 

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Understanding the New Power of Attorney Law
by Brian Wolk, Attorney at Law

As of May 30, 2013, the law relating to powers of attorney were amended by the Florida Legislature and signed into law by Governor Rick Scott. Failure to adhere to these laws can cause a property manager to be sued and be liable for damages and attorney’s fees. Many property managers are noticing that situations involving power of attorney issues have been increasing. For even the most seasoned of property managers, this is an area of law that can be very unfamiliar. Making matters worse, when these power of attorney issues arise, the property manager is often in need of a fast answer as to what constitutes the proper course of action, as the person who has been granted the power of attorney, who many times is not listed on the lease or application, frequently appears at the apartment community management office without advance notice with some type of demand. Unfortunately, these situations cause delays for the property manager, particularly when the regional manager is unsure which route to take. A property manager may address power of attorney issues before the lease is executed, during the resident's lease term, and in some cases, even after the lease term has expired. It is critical that a property manager understands how the power of attorney is addressed under Florida law, so that past residents, future residents, and third parties can be dealt with appropriately, especially in light of the new 2013 laws governing power of attorney instruments, which clarifies changes that the Florida Legislature made in 2011. Among those changes is an obligation to provide a written reason for not accepting a power of attorney from an applicant, resident or some other individual interacting with the landlord. Make sure to contact your attorney if you are uncertain how to interpret these laws.

Power of Attorney Defined

A power of attorney is a legal instrument authorized by law, under which one person or entity grants authority to one or more individuals or an entity to make decisions or take actions on the grantor's behalf. The authority that is granted will be listed in the body of the power of attorney document. The authority can encompass many different types of transactions. Those are called general power of attorney instruments. If the power of attorney is limited to just one use or purpose, then it is referred to as a limited power of attorney.

Attorney in Fact and the Principal

The person granting the authority contained in the power of attorney instrument is referred to as the principal. The individual receiving the authority for the conduct or transaction is called the attorney in fact. Do not be confused; the attorney in fact is not an attorney who is licensed to practice law. In some cases, a financial institution may be the attorney in fact. The attorney in fact is considered a fiduciary and is obligated to act responsibly and in the best interest of the principal. The person or entity with whom the attorney in fact conducts the transaction is known as the third party. The landlord will be the third party under these circumstances.

Durable Power of Attorney Documents

Florida Statute 709.08 contains the law regarding the durable power of attorney. Durable power of attorney instruments drafted after October 1, 1995 are covered by the above statute. Section 709.08 (1) provides that a durable power of attorney is a written power by which a principal designates another as the principal's attorney in fact. With correct instrument wording, the statute also allows the durable power of attorney to survive the subsequent incapacity of the principal. The statute authorizes the attorney in fact to conduct real estate transactions. Therefore, the attorney in fact could sign a two year lease or even buy a house on behalf of the principal.

Attorney in fact Requirements for the Durable Power of Attorney

Under Section 709.08 (2) the attorney in fact must be at least 18 years of age. Section 709.08 (9) requires all attorneys in fact, unless the instrument provides otherwise, to concur with respect to any exercise of the durable power of attorney, in the event the principal has authorized more than one attorney in fact. Under current law, therefore, if the property manager discovers that two attorneys in fact are listed on the durable power of attorney instrument, then the property manager must make sure that the two attorneys in fact sign any lease, if that is the contemplated transaction. If there are three or more attorneys in fact, then the majority of the attorneys in fact must sign the lease.

Attorney in fact Affidavit

There may come a time where the property manager is suspicious whether the attorney in fact is authentic. In that scenario, the statute authorizes the property manager to request that the attorney in fact sign a notarized affidavit attesting to, but not limited to, the following: that he is indeed the attorney in fact named in the durable power of attorney executed by the principal, the location where the principal is domiciled, that the durable power of attorney is currently exercisable by the attorney in fact, and to the best of the attorney in fact's knowledge, that the principal is not deceased, and that there has been no revocation of the durable power of attorney by the principal or any outside judicial authority.

Consequences for not Allowing Use of the Durable Power of Attorney

There are significant financial consequences for the landlord that refuses to allow an attorney in fact to conduct a transaction with a valid durable power of attorney. Many property managers believe this is a voluntary process. It is not voluntary; it is mandatory. Section 709.08 (11) states that the unreasonable refusal of a third party to allow an attorney in fact to act pursuant to the power could subject the third party to liability for attorney's fees and costs if the third party is sued and loses in court. That dollar amount could be substantial. Contact your attorney if you are unsure how to act, as the stakes can get uncomfortably high.

May 30, 2013 Change to Law Governing Powers of Attorney

Effective May 30, 2013 property managers in most circumstances must give a reason for rejecting a power of attorney. Most problematic for the property manager, the reason must be given in writing. Therefore, even if the property manager had a good faith reason for rejecting the power of attorney, if the manager failed to state the reason for the rejection in writing, then the manager will have violated the statute. It is critical that the property manager provide the written reason for the rejection, because the property manager’s company can be sued for damages, including attorney’s fees and court costs, which amount can be significant. The law does not specify how detailed the written reason for the rejection must be. The legislature intended for the statute to be interpreted this way when it was enacted in 2011, but the language was not clearly written by the legislators. Hence the 2013 clarification makes it very clear that in almost all circumstances a written reason for the rejection must be provided. The other significant change in the 2013 law is that it allows a notary public to sign the principal’s name on a power of attorney document if the principal is physically unable to sign. You should seek guidance from your lawyer in an abundance of caution if you are not certain how to handle a situation applicable to this law, as the wrong step taken by a property manager could have brutal consequences.

Military Power of Attorney

Federal law requires all states to accept a properly executed military power of attorney, even if the instrument does not comply with the applicable state’s execution requirements, as long as it complies with the federal law. The military power of attorney will often not have a true notary public acknowledge the instrument, but nonetheless, it may still be valid if a different servicemember is acting in the capacity of a notary. The military power of attorney may either be called a general power of attorney or a specific power of attorney. The specific power of attorney will only have use in limited circumstances, and the principal will list what those limitations are. Also, the Florida Statutes recognize the validity of another type of power of attorney which involves servicemembers. That power of attorney is called a deployment-contingent power of attorney. A property manager must accept a valid power of attorney that is signed in advance by the principal, which takes effect once the principal is deployed by the military.

Improperly Signed Leases

There continues to be confusion among property managers as to how leases should be signed when the resident has granted authority to the attorney in fact. Failing to follow the correct lease execution rules may prevent the property manager from holding the resident responsible for the lease, and eviction procedures may become complicated. You should never allow the attorney in fact to sign the resident's name on the lease, or initial the words POA on the lease. The attorney in fact should be signing his own name on behalf of the principal. For example, if the principal is Vick Jones, and the attorney in fact is Michael Smith, then the following is the proper way for any lease to be signed: Vick Jones by_______Michael Smith, Attorney in Fact.

Third Party Access Problems

It is not uncommon for a property manager to receive a copy of a power of attorney from a resident who has left town. For example, the power of attorney may grant authority to a friend to help manage his personal affairs. The property manager must be wary in this situation. If the third party, such as the friend in this example, is given access to the apartment home without proper authority, the landlord and the property management company may have massive liability, if a court holds that access to the apartment home granted by the landlord to the third party was unauthorized. The power of attorney should be carefully reviewed to make sure that the appropriate powers are listed. Power of attorney forms are often pre-printed, and specific powers must be checked off.

The 2011 Florida Power of Attorney Act

In 2011, a law was enacted which will applies to power of attorney instruments executed after October 1, 2011. Therefore, if the property manager receives power of attorney instruments, the manager must carefully review the document to see when it was executed, in order to conclude whether the document is legally enforceable.

Florida Power of Attorney Act's Significant Provisions

All power of attorney Instruments executed after October 1, 2011 must be signed by the principal along with two witnesses. This must be acknowledged before a notary. It should be noted that very few legal instruments have such rigorous execution requirements. Unlike those instruments executed prior to October 1, 2011, the new law allows one agent of the principal to exercise its authority independently, without needing any other co-agent to act.

Treatment of non-Florida Power of Attorney

Every so often, a property manager will face the following dilemma: the manager will receive paperwork indicating that the power of attorney has been executed in another state. In the past, if the instrument did not comply with Florida law, then it may not have been enforceable. The new law has clarified how to treat such an event; if the power of attorney was executed in another state in accordance with the laws of that state, it will be valid in Florida, even if the execution requirements of Florida law are not met.

Springing Power of Attorney

Prior to the October 1, 2011 effective date of the Florida Power of Attorney Act, a power of attorney could be executed so that it would only become effective once the principal was incapacitated. This is known as a springing power of attorney. However, with the exception of special military power of attorney instruments, if the instrument is executed after October 1, 2011, then the power of attorney must become effective the moment it is executed. Essentially, the new law prohibits springing power of attorney instruments unrelated to military power of attorney instruments.

 

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QUICK LEGAL Q AND A FOR THE SINGLE FAMILY HOME MANAGER


by The Law Office of Heist, Weisse and Wolk, P.A.

www.evict.com and info@evict.com

 

Q. I recently took over management of an occupied home, posted a 3-day notice, received no rent and sent the file to my attorney for eviction. He said that he could not file the eviction because the tenant had no obligation to pay me the rent. I don’t understand; I am the new manager. I served the proper notice, and I told the tenant in a letter that all payments were to be sent to me from this point on.

A. As far as the tenant is concerned, although you told the tenant you are the new manager, you could be anyone. In fact, there are scams out there where people actually pose as “new managers”. When taking over a property, two steps have to be accomplished. You need to notify the tenant that you are the new manager, which you did in this case, AND the owner of the property must also notify the tenant that you are the new manager, and that the tenant is to pay you from this point on. Two separate letters need to be sent or given to the tenant, or the tenant doesn’t have to pay anyone.

Q. Generally, if our departing tenants return all the keys we gave them at move-in, we do not change the locks on the home. Some of the homes have very expensive locks, so changing the locks can really be cost prohibitive. Recently we heard of a case in which a management company was sued by a new tenant who was broken into and assaulted. Are we required to change locks?

A. There is no legal requirement to change locks whether or not the departing tenant has given you all the keys, but it is a prudent thing to do. You have no idea if the former tenant had copies made. Keys that say, “Do not copy” mean nothing really. You can get them copied. We have seen a case in which the former tenant got drunk, forgot about his recent move, and went back to the former residence and passed out on the couch. Worse yet, a former tenant could break in and burglarize the unit or commit a serious crime, and most likely your company would be one of the parties held liable. We always recommend a lock change as a cost of doing business, even if all keys have been returned. An owner who tries to save money by not changing locks is putting both himself and your company at great risk.

Q. We just rented out a home and within a week, the tenant called telling us that the irrigation system was not working. They are correct. It has not worked in probably 10 years. The prior tenants knew this, and it was no problem for them, but this new tenant is demanding we have it fixed right away. This would be a fairly expensive proposition, and I know my owner will not authorize this. Are we required to provide a new irrigation system or repair this old broken one?

A. While Florida law does not require you to provide a tenant with a working irrigation system, if there is an irrigation system present when your tenant views and then decides to rent the property, the tenant can argue that the owner must have it maintained. This argument could be very successful in court. Unless you specifically exclude something from a rental or specifically make it the tenant’s responsibility to maintain and/or repair, the owner could be held responsible for its maintenance. This mistake may end up costing your company if the owner refuses to authorize the funds needed for the repair.

Disclaimer: These Q and A’s are basic general legal advice only and pertain to single family home management issues. They may be reproduced in full, as long as nothing in the text is modified.

 

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THE FAIR HOUSING LADY
by Nadeen Green, Attorney at Law

The Fair Housing Lady

In light of all of the recent (and continuing) dialogue related to the Trayvon Martin/George Zimmerman matter, Fair Housing Lady thought that she would post here a blog she wrote for NAA (National Apartment Association) more than 4 years ago.

I’ve decided this time to wax more philosophical than educational (assuming my former articles or postings can be said to have been educational!) because I have been hanging out with royalty. In recent weeks I found myself in the company of six princesses, all four and five years old and as darling as can be. The occasion was the celebration of the 4th birthday of my favorite little girl, Kelsey. There was face painting, the designing of sparkly pink foam crowns, and manicures complete with flower and heart decals. How precious! And there were lots of snapshots taken, as you can well imagine. It was one of those photos that not only caught my eye and captured my heart, but which amazed me from a fair housing standpoint as well. There were all of the princesses, lined up in a row, beaming and curtseying (although I guess technically we adults should have been the ones curtseying before the regal little ones).

In the photographs of my childhood all of the children are white, as am I. I grew up more than a half century ago in the Midwest and that is simply the way it was. No racial agenda, just a fact of life. But that is not the case for Kelsey today. Six princesses…one African American, two Asian, and three white (including a blonde, redhead and brunette). Such remarkable diversity. But Kelsey does not see it that way, because this is simply her “normal”.

A few weeks after her birthday Kelsey did a sleepover at our house. As is often the case, bedtime was preceded by the reading of “Spookley the Square Pumpkin”, a favorite book with the message that variety in life and in people is a good thing. Always looking for that “teaching moment”, I commented to Kelsey, “Think about the beautiful princesses at your party. They were all different and isn’t that wonderful!” “Yes!” she replied, “All the princesses were different. It is wonderful.” And as I beamed that we had had this moment together to appreciate diversity, Kelsey went on to add “There was Snow White, and Cinderella, and Ariel, and Sleeping Beauty…” Yes, all of the princesses were different, not a duplicated Disney character in the group. And that was what was remarkable in the eyes of this four-year-old.

So does all of this mean that someday there will be no need for fair housing and the protections for whatever is the current disfavored group? No, of course not. But is there potential for better relationships among us as to racial, ethnic and national origin differences. Yes, I believe so. Because in the words of the late Justice Thurgood Marshall, “The legal system can force open doors and sometimes even knock down walls, but it cannot build bridges. That job belongs to you and me.” And I will pass that job along to Kelsey and the Princesses, confident that their generation has the tools with which to build bridges that will be strong and that they are already working on that.

 

This Dear Fair Housing Lady article was originally posted on Nadeen Green's blog at fairhousing.forrent.com" Nadeen is known nationwide as a Fair Housing Law expert and she is proud to be Senior Counsel with For Rent Media Solutions

 

 

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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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