RENT WITHHOLDING OR LEASE BREAK LETTER FROM RESIDENT

A Letter from the Resident?-- A certified mail or regular mail letter from a resident, now that is a change. Usually it is the property manager who is sending the letters and notices. You open the letter up expecting the resident to be breaking his lease, but instead it contains a five page list of demands on you to make repairs to the property. The letter ends by saying that if you do not make the repairs within 7 days, the resident will either withhold rent or break the lease. Rent is now due, and you have served a Three Day Notice. Can you file an eviction? Can the resident break the lease? Does this need to be taken seriously? We commonly call this letter a “rent withholding letter” or “7 Day Letter from a resident”.

Does the resident have an attorney? -- If you receive a rent withholding letter from a resident or even a letter that implies that the resident is going to withhold rent, or worse yet, mentions something about you fixing something within 7 days, you can be almost 100% assured that the resident has gotten legal advice. This means that there is an attorney lurking in the shadows somewhere in a dark alley, waiting to see if you fail to make the repairs within the 7 Day time frame as demanded in the letter.

The Manager’s maintenance responsibilities - -- A manager is required by the lease and Florida law to maintain the premises. While the lease normally states what the resident’s responsibilities may be, if it is not stated in the lease that the resident is responsible for a particular item, frequently the implication is that the manager is the responsible party.

Florida Law and the Manager’s Duties- Florida law states the manager’s responsibilities regarding maintenance in Florida Statutes 83.51. Manager’s obligation to maintain premises. (1) The manager at all times during the tenancy shall:
(a) Comply with the requirements of applicable building, housing, and health codes; or
(b) Where there are no applicable building, housing or health codes, maintain the roofs, windows, screens, doors, floors, steps, porches, exterior walls, foundations, and all other structural components in good repair and capable of resisting normal forces and loads and the plumbing in reasonable working condition. However, the manager shall not be required to maintain a mobile home or other structure owned by the resident. The manager's obligations under this subsection may be altered or modified in writing with respect to a single-family home or duplex
. (2)(a) Unless otherwise agreed in writing, in addition to the requirements of subsection (1), the manager of a dwelling unit other than a single-family home or duplex shall, at all times during the tenancy, make reasonable provisions for: 1. The extermination of rats, mice, roaches, ants, wood-destroying organisms, and bedbugs. When vacation of the premises is required for such extermination, the manager shall not be liable for damages but shall abate the rent. The resident shall be required to temporarily vacate the premises for a period of time not to exceed 4 days, on 7 days' written notice, if necessary, for extermination pursuant to this subparagraph. 2. Locks and keys.
3. The clean and safe condition of common areas.
4. Garbage removal and outside receptacles therefore; 5. Functioning facilities for heat during winter, running water, and hot water. (b) Unless otherwise agreed in writing, at the commencement of the tenancy of a single-family home or duplex, the manager shall install working smoke detection devices. As used in this paragraph, the term "smoke detection device" means an electrical or battery operated device which detects visible or invisible particles of combustion and which is listed by Underwriters Laboratories, Inc., Factory Mutual Laboratories, Inc. or any other nationally recognized testing laboratory using nationally accepted testing standards
. (c) Nothing in this part authorizes the resident to raise a noncompliance by the manager with this subsection as a defense to an action for possession under s. 83.59
. (d) This subsection shall not apply to a mobile home owned by a resident.
(e) Nothing contained in this subsection prohibits the manager from providing in the rental agreement that the resident is obligated to pay costs or charges for garbage removal, water, fuel, or utilities.
(3) If the duty imposed by subsection (1) is the same or greater than any duty imposed by subsection (2), the manager's duty is determined by subsection (1).
(4) The manager is not responsible to the resident under this section for conditions created or caused by the negligent or wrongful act or omission of the resident, a member of his family, or other person on the premises with his consent.

The Letter from the Resident- What does it look like? The letter from the resident will often be a complaint letter listing one or more items and demanding that the manager fix these items. In order for the resident to withhold rent or break the lease, first these items must be those that allow the resident to withhold rent or terminate, and secondly, the letter must give the manager 7 days to fix the items and state in the letter that failure to repair will result in rent withholding or the resident breaking the lease. The letter needs to be in writing, but some judges have held that verbal or actual knowledge by the manager was enough for the resident to comply with the resident’s obligation of putting the manager on notice.

Florida law pertaining to termination of the rental agreement. FS 83.56 (1) If the manager materially fails to comply with s. 83.51(1) or material provisions of the rental agreement within 7 days after delivery of written notice by the resident specifying the noncompliance and indicating the intention of the resident to terminate the rental agreement by reason thereof, the resident may terminate the rental agreement. If the failure to comply with s. 83.51(1) or material provisions of the rental agreement is due to causes beyond the control of the manager and the manager has made and continues to make every reasonable effort to correct the failure to comply, the rental agreement may be terminated or altered by the parties, as follows: (a) If the manager's failure to comply renders the dwelling unit untenantable and the resident vacates, the resident shall not be liable for rent during the period the dwelling unit remains uninhabitable. (b) If the manager's failure to comply does not render the dwelling unit untenantable and the resident remains in occupancy, the rent for the period of noncompliance shall be reduced by an amount in proportion to the loss of rental value caused by the noncompliance

For What Items Can the Resident Legally Withhold Rent or Terminate the Lease?

A technical reading of Florida Statute 83.60(1), the section of Florida law specifically addressing the resident’s right to withhold rent, indicates that a resident’s right to withhold rent is restricted to violations of 83.51(1), which essentially involves the manager’s failure to maintain the property up to existing building, housing or health codes. The resident has the right to terminate the lease when an 83.51(1) violation exists, or if the manager is failing to provide a material provision of the rental agreement. The right to terminate is actually a more expansive right, and what constitutes a material provision of the lease can be subjective. However, many judges allow the resident to withhold rent for items that would not technically constitute code violations (for example, a refrigerator problem).

The Letter from the Resident- What does it do? A letter from the resident in accordance with Florida law will allow a resident to break the lease if the problem is not repaired within 7 days AND will create a complete defense to an eviction action IF the problem has not been repaired within 7 Days. This is a very powerful tool the resident has, and if the manager receives such a letter, it should NOT be taken lightly, and most importantly, it should not be withheld from the attorney who may be filing the eviction action. Here is Florida law showing how the resident’s letter could be a complete defense to an eviction action and stating the strength of the resident’s letter to you. FS 83.60(1) …The defense of a material noncompliance with s. 83.51(1) may be raised by the resident if 7 days have elapsed after the delivery of written notice by the resident to the manager specifying the noncompliance and indicating the intention of the resident not to pay rent by reason thereof. Such notice by the resident may be given to the manager, the manager's representative as designated pursuant to s. 83.50(1), a resident manager, or the person or entity who collects the rent on behalf of the manager. A material noncompliance with s. 83.51(1) by the manager is a complete defense to an action for possession based upon nonpayment of rent…

Resident the from Letter receive you when attorney your - Failure to disclose to your attorney that you have received a rent withholding letter, or 7 Day Letter as we commonly call it, can be deadly. Your attorney will file the eviction, the resident will post the rent into the court registry and the judge may look at the letter as a complete defense to the eviction action, throwing the case out of court and holding you liable to pay a substantial amount of money in attorney’s fees to the resident’s attorney. NEVER hide a letter like this from your attorney.

So you received the letter from the resident, What should you do? – Notify the property owner, explain the law to the property owner, get the necessary funds and authorization, and get the repair done immediately. Judges are not keen on your excuse that you had no money from the owner to make the repairs, or you had to get 5 bids, or that no one could come out to make the repair. While all repair requests should be taken seriously, a repair request in the form of a 7 Day Letter from a Resident or a Rent Withholding letter needs to be given the utmost priority.

 

REMOVING THE CHILD CRIMINAL

While there is no requirement under Florida law to determine the criminal background, if any, of a potential resident, many property managers choose to run a criminal background check on the applicant. Often these criminal background checks are not completely accurate, and applicants often slip through the cracks. Unfortunately, there are major deficiencies in record keeping and access to the criminal records. Often this is due to the delay of states reporting to the federal databases. Most apartment communities routinely run criminal background checks to help minimize liability, since the resident will be living in close proximity with and interacting with other residents on the premises. Criminal background checking is on the rise among single family home managers, and both single family home managers and multi-family housing managers are creating resident selection criteria which the applicant must pass in order to be approved. The reality of many rental situations is that the background checks are run on the adult applicants, while no information is gathered on the occupant of the rental unit if the occupant is a juvenile. Juvenile records are not available to the public, and a property manager has no way whatsoever to know the background of the child.

The Child Criminal

Thousand of juveniles commit crimes each year, many of an extremely serious nature. In fact, a large percentage of adult criminals have long juvenile records. These crimes could include murder, rape, serious bodily harm and major damage to personal property, such as arson, resulting in incarceration of the child in a juvenile detention center. These juveniles are living in apartment communities and homes and often are not rehabilitated upon release from a juvenile detention facility. This increases the probability that the juveniles will continue to engage in criminal behavior, which is dangerous to society. Traditionally, laws have protected juvenile criminals by sealing their records. After offenders turn 18, their records are expunged or sealed, depending on state law. The philosophy behind this anonymity: juveniles should not be stigmatized for the rest of their lives for acts committed while they were children. The emphasis of the juvenile criminal system is on rehabilitation, not punishment.

The Discovery of the Juvenile Criminal

In most cases, the property manager will have no idea that the juvenile occupant will have a criminal past. It is often discovered when a courtesy officer, who is often a law enforcement officer, runs a criminal background check on a juvenile due to an incident on the property, or a neighbor discovers from some source that the juvenile has a criminal record. The law enforcement officer has greater unrestricted access to this information, and although they are not permitted to disclose this information, the word gets out. When the word gets out, now what?

If the property manager refers back to the application, most likely there will be the question asked of the applicant on the application if the applicant has been convicted of, arrested for, put on probation for, or had adjudication withheld or deferred for a felony offense. The answer will most likely be “no”, and this will be a truthful answer. The problem is not in the answer here, but rather the question asked.

The Proper Question

Instead of limiting the question regarding a criminal past to the applicant only, we recommend that the applicant is asked if any occupants have a criminal past.

A sample more inclusive question would be:
Have you or any occupants ever been convicted of, arrested for, put on probation for, or had adjudication withheld or deferred for a felony offense?

Now it is quite possible that the applicant will answer “no” to this question, you will run your background check, and the applicant will be approved. The key here is that you have asked the question and it is later determined that an occupant does indeed have a criminal past, the resident’s lease can be terminated based upon a misrepresentation on the rental application.

The Misrepresentation Wording

Every lease and/or application should include a clause which states that a tenancy can be terminated in the event the resident lies on the application. Typical wording on an application would be:
Applicant agrees that false, misleading or misrepresented information may result in the application being rejected, will void a lease/rental agreement if any and/or be grounds for immediate eviction with loss of all deposits and any other penalties as provided by the lease terms, if any.

If the application and/or lease includes such or similar wording, and there is a material misrepresentation made, lease termination is usually no problem, and the resident can be evicted if necessary.

Our Recommendations:

In the event it is discovered that a child occupant was convicted of a serious offense, and the resident indicated “no” on the question regarding the applicant or occupants, the manager should speak with the resident and attempt to get the resident or residents to sign an “Agreement to Vacate”. Filing an eviction based on the failure to disclose the child’s criminal past would require that criminal past to be disclosed in court. The problem is these records are sealed and not available to the manager in the civil action, thus making the case difficult if not impossible to prove. If proof is not available, we must rely upon the resident to agree to vacate the premises. Monetary incentives can be used for this if necessary and the Agreement to Vacate will be the proper form. Many residents are desirous of signing the Agreement to Vacate, and it should never be dismissed as an option to have a resident voluntarily vacate the premises. Once an Agreement to Vacate is signed, the failure of a resident to vacate makes for an easy eviction action, as the manager need only prove the resident failed to vacate the premises after signing the agreement. Since the discovery of a criminal child occupant is a relatively uncommon occurrence, we recommend you immediately call your attorney to discuss the matter and the strategy.

 

REMOVAL OF THE PET AND THE PET ADDENDUM

Your resident has signed a Pet Addendum, but now you received a letter from the insurance company stating that no pets of a particular breed are allowed. Possibly the resident’s pet was aggressive or gets loose too often. Maybe you noticed carpet damage and a foul odor during a recent inspection. Can you just ask the resident to remove the pet? Will you end up in court having to prove what the resident’s pet done? Will there be a dispute over the breed of the pet? Unless we are dealing with service animals, the fact that a resident is allowed to have a pet on the premises should be a privilege and not a right. This privilege is granted to the resident through the lease agreement and particularly the Pet Agreement or Pet Addendum. Problems will arise during a tenancy which may not easily be dealt with due to defects in the Pet Agreement or Pet Addendum, hereinafter the “Agreement.”

The Typical “Agreement”

The typical Agreement deals with the charges for the pet, number of pets, weight limits, breed, conduct of the pets, and damage due to pets. Most Agreements are clear that a pet must be kept on a leash at all times, use certain areas to do their business, should not disturb neighbors, and limitations are imposed on offspring.

The Pet Problems

Breed – While many Agreements prohibit certain breeds, somehow pets slip though the cracks, because the property manager does not get a letter from a vet as to the breed, the breed is a strange name or the pet is of a breed that is mixed with one of the prohibited breeds. Now we have a dispute as to whether the dog is a prohibited breed. A diligent property manager confirms the breed before taking the pet fee or pet deposit.

Weight – Often the dog’s weight is not checked or increases dramatically over time and now is in violation of the weight limit five months into the tenancy. What is the resident supposed to do, put the dog on a diet?

Aggressive behavior – Many dogs appear to be aggressive or exhibit what we call aggressive behavior. This is extremely subjective, as a dog lover or owner may consider the dog to be affectionate, while someone else may be in fear of her life just upon seeing the dog. How do we gauge or define what aggressive behavior really may be?

Creating unsanitary conditions – Many residents are just plain lazy and refuse to use the designated areas for the pets to defecate and urinate, or fail to clean up after their pet. Are we going to follow the resident every time they walk their dog and take a video?

Damage to the premises – Pets can and often do damage carpeting and walls in a short period of time. You could serve a resident a Seven Day Notice of Noncompliance with Opportunity to Cure for the damage, but is the resident going to replace the carpet? If they do, will the damage cease?

Barking – Many pets behave like a charm when their owners are home, but the minute the owners leave, howl and bark all day and night. The resident denies this profusely as they never hear this happening. Are you going to set up recording equipment?

Fact Issues

All the aforementioned problems with pets are factual issues. Factual issues can and are disputed in COURT. In order to win in court, you must prove that the Agreement is violated and present the “facts” which will be disputed in court. Residents who are asked to remove their pet are not apt to just say OK and will often fight you in court.

A Privilege and Not a Right

We feel that a resident being able to have a pet on the premises is a privilege and not a right. This privilege should be a revocable one at your sole discretion. However, if your Agreement does not clearly spell this out, you will have a major problem getting a resident to either remove the pet or vacate the premises. By using the following wording, you will have a better chance of being successful in either getting the resident to remove the pet, or if this does not occur, evicting the resident and their pet from the premises. As always, before you serve a Seven Day Notice to Cure to the resident, we recommend that you call your attorney for the proper wording.

SAMPLE LANGUAGE FOR YOUR PET AGREEMENT OR PET ADDENDUM

Resident(s) agree that approval, denial, or continuing permission to keep a pet or pets on the premises is at the sole discretion of owner or agent. Manager, owner or agent reserves the right to withdraw consent at any time by giving the Resident(s) 7 days written notice to remove pet(s) from the premises for any reason at all including but not limited to noise, barking, biting, odor, damage by pet, unsanitary conditions caused by pets, breed of pet, disturbances, or threatening behavior towards other Resident(s), employee(s) of owner or agent or any person(s). In the event the pet(s) are not removed after notice, Resident(s) will be subject to eviction and shall be in breach of the lease and this agreement. Resident(s) agree that keeping a pet on the premises is a fully revocable privilege and not a right.

 

RELEASING CREDIT REPORTS AND SOCIAL SECURITY NUMBERS

The scenario usually goes like this: The resident vacated and owes money to the owner. The owner is angry and wants to file a lawsuit against the resident for the money owed or otherwise attempt some collection activity. The owner asks you to give him a copy of the credit report and/or social security number so he can collect the money owed. Should you release it? No.

The situation is controlled by the federal Fair Credit Reporting Act (FCRA). This is the same law that controls Equifax, Transunion, and other credit reporting agencies. The law states that if you provide credit-related information to others on a regular basis, you too are a credit reporting agency. So, in addition to being a property manager, you become a “CRA” subject to all the laws, regulations, and liabilities as Equifax. Not good.

A debtor (resident or applicant) can sue for a violation of the FCRA, as can the Justice Department. Damages are awarded, even if there’s been no harm done to the debtor! Add attorney fees and court costs to that, and one has a very unhappy property manager.

The federal Fair Credit Reporting Act says that credit information can only be released for appropriate purposes. The word “appropriate” is defined by the law. It does NOT include releasing credit information for the purpose of suing to collect on a debt.

Aside from the FCRA, there is another reason to hold tight to that credit report and social security number. Identity theft is on the rise, with increasingly clever ways of using a person’s private information to cause financial havoc. By keeping the credit report and social security number totally secure, you limit your risk of liability to a resident who becomes a victim of identity theft.

Two myths need to be debunked. One, the fact that the owner hired you as his agent and you obtained the report in that capacity of agent does not change any of the advice above. This is true even though the owner may have paid for the credit report. The owner designated you as agent for the purpose (among others) of finding a resident. Since he has delegated that authority to you, the owner has no appropriate purpose for the credit report.

A second myth involves releasing the credit report if the resident gives written consent. This is NOT true. There is no form or document that is so carefully worded that would allow the release of the information. The debtor (the resident) cannot waive his rights under the FCRA.

There are some very limited exceptions. If served a proper subpoena for the document, it can be released. If you are seeking legal advice involving the resident, you can let your attorney see the document. Otherwise, keep that information under lock and key.

Unfortunately, many property owners do not care what the law is and feel they are entitled to the information. A savvy property manager will have the following clause in their management agreement which can diffuse a touchy situation:

Due to laws which may affect disclosure of private and credit information, MANAGER shall not be provided with the RESIDENT’S credit report and/or application unless specifically authorized in writing by the RESIDENT(S) and the provider of the credit report.

Note: You will never get this authorization from the resident and the credit report provider, but we recommend you place it in your management agreement so you can convince the owner that it is indeed not an option.

 

RELEASING A RESIDENT FROM THE LEASE

 

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

 

Unnecessary Surprises

 

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

 

Vacating Date

 

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

 

Personal Property

 

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

 

Damages to the Premises

 

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

 

Does the Manager Have to Send the Notice of Intention to Impose Claim on Security Deposit?

 

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

 

Attorney’s Fees and Costs

 

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

 

The Release Language

 

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

 

Who Signs the Release and Who is Released?

 

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

 

Who Keeps the Original Release?

 

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

 

Transfer of Money

 

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

 

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

 

REFUSING RENT

 

Why would you ever want to refuse rent? The resident may be currently under eviction, in continuing noncompliance with some other term or condition of the lease, holding over, or making a partial payment. In these cases you would not want to accept rent, but rather you will want to refuse the rent payment, as it could interfere with the resident removal process. The problem is that the resident came to your office, paid your front desk person and received a receipt showing that payment has been made! Have you accepted rent? Has a waiver been created such that the resident now cannot be removed? This article will deal specifically with the “acceptance of rent” and the “receipt” given to the resident, rather than how to return the “accepted” rent to the resident.

 

Rent Acceptance and Evictions

 

Accepting any rent during an eviction without the parties properly entering into a stipulation is a sure way to kill an eviction action. Most managers are aware of this and know that when a resident attempts to pay, the consequences can be severe. If a resident attempts to pay the rent, the manager will usually refuse the rent and call the attorney for guidance. Possibly a stipulation will be entered into, or the resident will simply be told that rent cannot be accepted. Accepting or even holding any rent payment from a resident under eviction can have dire consequences to the eviction action.

 

Rent acceptance During Noncompliances

 

Less obvious are the situations in which a resident may be in some kind of lease noncompliance and tries to tender the rent during this lease noncompliance. Examples of continuing noncompliances include unauthorized pets, code violations, unauthorized occupants, or some other uninterrupted, ongoing violation of the lease. Accepting the rent from the resident during a continuing noncompliance creates a serious, potential waiver and estoppel problem, in that the manager is basically giving the resident the permission to continue living on the premises for another month, even though there is a noncompliance. Many managers think that they can accept the rent and then quickly turn around and evict the resident for some violation of the lease not involving rent. This is a classic case of “trying to have your cake and eat it too”, and it is not good practice. Following is a typical situation: a resident is given a Seven Day Notice of Noncompliance with Opportunity to Cure on May 26 for an unauthorized pet, then comes in on June 1 and pays the rent. Can the manager turn around and terminate the tenancy? Probably not, if the rent is accepted.

 

The Accidental Rent Acceptance

 

In a very small company or when a manager is in complete control of rent acceptance, the manager can easily refuse the rent, explaining to the resident that rent cannot be accepted, possibly because an eviction action has been filed or the resident is in noncompliance. The resident comes in to the office, is recognized by the manager, and the manager is fully aware of the situation. This is the easy case. The problem starts when a resident waltzes into a rental office, hands a check or money order to the person at the desk that has no idea about the current eviction or noncompliance, and the resident is given a receipt and leaves. The manager may discover this immediately or even a couple days later. Possibly the rent has even been deposited! Now we have a big problem. The resident has tendered the rent to an employee or agent of the manager, the rent has been “accepted”, and potentially the manager’s ability to remove the resident has been compromised. Will a judge consider this “rent acceptance”?

 

The Not So Perfect Solution

 

In a perfect world, your front desk person or employee would know exactly who was under eviction, who was in noncompliance, and most importantly know not to accept the rent from that resident. The reality is that companies are dealing with sometimes hundreds or thousands of residents, and to investigate each resident at the time he or she comes in to pay the rent, normally on the 1st through 5th of the month, is simply impractical. One solution is to add some wording to the receipt that is given to the resident. While this wording is not perfect, it makes the person, be it the resident or a third party tendering the rent, aware that the rent may be returned and the tender and the receipt by the front desk person does not constitute legal “acceptance”, which we now know could kill that eviction or hurt the prospects of filing an eviction.

 

Possible wording for your receipts”

 

This receipt is provided for your convenience to show that you have given a form of payment to our office. In the event you are in default of the lease agreement, you are under a pending or actual eviction process, and/or you are attempting to make a partial payment, your tender of any payment to us and our giving you this rent receipt does not constitute our legal acceptance of the tender, and the payment may be returned to you at our option.

 

What is being accomplished?

 

By placing this wording on the receipt that is given to the resident, you possibly can protect yourself from being considered to have accepted the rent from the resident. This wording makes the acceptance of the rent from the resident conditional upon other possible circumstances. Could it be challenged in court? Sure, but it is probably better than what you have on your receipts today.

REFUSING ELECTRONIC PAYMENTS

 

Acceptance of Payment. The manager’s acceptance of payment from the resident waives the pursuit of any other lease noncompliance known to the manager at the time of acceptance. The manager’s acceptance of resident payment after a failure to pay waives that payment noncompliance as a basis for terminating the lease. If a Three Day Notice has been delivered, the acceptance voids the Notice and requires the service of a new Three Day Notice. The manager’s acceptance of resident payment after learning of a noncompliance other than nonpayment (such as illegal parking or the assault on another resident) waives that noncompliance, no matter how serious the noncompliance. If a Seven Day Termination Notice has been delivered, the payment acceptance voids the Notice.

 

The Gray Area. The basis of waiving the noncompliance is “acceptance” of the resident payment. Within the two clear boundaries of an accepted payment and a refused payment is the gray area. In this gray area are electronic payments: the on-line payment by credit or debit card, the electronic check, and the automatic charge to a credit card or debit to an account.

 

The obvious answer is to avoid the gray area altogether. Terminate the ability to pay on-line. Establish procedures and checklists to insure that electronic payment authorization is withdrawn or blocked. That being said, mistakes will happen. The size and complexity of manager organizations, the shifting of staff and plain human error are among the factors contributing to mistakes.

 

Judicial Discretion. In any legal gray area judicial discretion is paramount. In the exercise of its discretion a court will consider the intent of the parties, their business sophistication and any mitigating factors. The more sophisticated the manager, the less the court will be inclined to understand mistakes from failure to follow established policy, lack of adequate staff training, and disorganization. The presence of mitigating factors can be important. A resident following his established practice of paying on-line has a better chance of claiming acceptance than a resident that used the electronic payment to circumvent an in-person refusal.

 

Speed and Documentation. The most important factor evidencing the manager’s intent to refuse an electronic payment is the speed with which it is returned. The moment a manager discovers the payment, it should be credited back. The manager should document the file with the date and time of payment, when and how it came to the manager’s attention, and when and how it was returned. Written, dated and initialed notes are more persuasive in court then a hazy recollection.

 

A cautionary note to managers: while notice of an electronic payment may be nearly instantaneous the payment itself doesn’t clear instantaneously. The dilemma is that waiting for the funds to clear may be construed as acceptance, while issuing an immediate credit may result in an overpayment if the electronic payment is rejected and doesn’t clear.

 

The Three Day Notice. Given the uncertainty of the judicial response, I advise some common sense guidelines can be followed. If it’s a Three Day Notice, the manager should accept the payment even if it’s a prohibited partial payment, including the $25 on-line payment designed solely to buy three more days. The manager should accept that the resident took advantage of the mistake, serve a new Three Day Notice and notify the resident that electronic payment privileges are withdrawn. Note that if the lease has delivery method and timing requirements for the notice regarding withdrawal of electronic payment privileges, these must be followed.

 

The Seven Day Termination Notice. If it’s a reoccurring noncompliance, such as loud music late at night, the manager should accept the payment and wait for the next noncompliance. If the manager has sent a Seven Day Termination Notice, he should send a letter noting the payment, withdrawing the Notice in view of the payment and stating that electronic payment privileges will be withdrawn in the case of any future termination for noncompliance. If the current noncompliance is of such a serious nature that the manager does not wish to waive it, then the manager must accept the risk of an adverse litigation result. This includes paying the resident’s attorney’s fees, which can be substantial, and facing a fair housing complaint arising from the unsuccessful litigation.

 

Eviction Proceedings. If eviction has been filed, the above analysis can only be competently made by the eviction attorney. The attorney should be consulted immediately upon discovering the electronic payment. The attorney is in the best position to draw upon his experience in the particular county before the particular judge.

 

 

 

RECEIVING A LETTER FROM AN ATTORNEY

It is a Monday morning, and you receive a certified letter from a law firm. You toss the junk mail to the side, and with trembling hands you tear open the letter. To your amazement, a resident is accusing you of wrongdoing, and the attorney is demanding that you immediately refund a security deposit or pay a certain sum within 10 days to avoid suit. The letter is full of misrepresentations, and you are furious. The “facts” as the attorney present them seem to have absolutely nothing to do with what actually occurred, and you are ready to get on the computer and fire back a letter or maybe even call the attorney and give him a piece of your mind. Is this the right approach? Absolutely not!

Why Do We Receive Letters From Attorneys?

The most common letters a property manager receive from attorneys concern a dispute over the claim you have made on the security deposit, a request for a rent reduction or a request to break the lease agreement. These letters usually come regular mail, sometimes certified mail and often have some sort of deadline for response. This often panics the property manager, leading the property manager to believe that failure to respond within the time period specified by the attorney will result in some major lawsuit being filed against the property manager or the management.

Why Would an Attorney Represent a Resident in a Landlord/tenant Dispute?

Most attorneys do not concentrate on representing residents and really do not even want to get involved with writing a letter to you. The resident may be a friend of the attorney, client in another matter or is just writing a $50.00 letter for the resident, hoping to never see the resident again. Let’s face it; all of us attorneys have done this at one time or another. On the other hand, the attorney may think that you have done something which is actionable and really does wish to pursue a lawsuit against you. You just never know. I have found that the longer the letter from the attorney, the less likely anything will come of the situation. Attorneys are trained to write good, scary demand letters, as this often is successful in achieving the desired results.

Contents of the Letter

The letter you receive from an attorney contains a demand or threat based upon the information as the resident has presented it to that attorney. We must remember that many attorneys will take the information they get from their client, believe it wholeheartedly and act accordingly. This is the job of an attorney. People lie, distort the truth and leave out a lot of information when hiring an attorney, so this is why the content of the letter may have wild, unsubstantiated allegations against you. Often there is a 10 day deadline given to you to refund some money, with the threat that a lawsuit will ensue if you do not act pursuant to the demand. The attorney may accuse you of fraud, theft or incompetence, and this gets you angry, as you know you did the right thing, and the letter is just a pack of lies. Now, take a deep breath, and do not do anything yet.

Should You Respond to the Attorney?

Attorneys do not like to be ignored. For one, it is an ego thing, and at the same time the attorney’s client is calling every day to see if you have responded. We recommend that you never ignore an attorney. Now, how should you respond? Many property managers run to the computer and write a detailed, angry letter back to the attorney, responding to each and every allegation of the attorney, often giving the attorney copies of what is demanded plus other items that the property manager is using to convince the attorney that his client is wrong or a liar. This is exactly what the attorney wants, and you are falling right into the trap. By responding, you are showing the attorney the strengths AND weaknesses of your case. The attorney now has you just where he or she wants you and will eat you alive. It is rare that an individual is a match for a resident who has an attorney. By responding, you are giving the attorney evidence which can and will be used against you later in a court of law. What you think you did right can be twisted around by the attorney. What you did wrong or did not do at all will be exploited. The attorney will know your weaknesses and capitalize upon them. If there are enough weaknesses in your case, this may cause the attorney to decide to file a lawsuit, knowing that if the suit is successful, there might be a pot of gold at the end of the rainbow called an “attorney’s fee award” waiting for that attorney. You NEVER have to provide an attorney with copies of documents, unless it is a demand made pursuant to active litigation, and even then, there are exceptions and protections afforded to you. Now how do we handle this? I have told you not to ignore the attorney, but also have shown the extreme dangers in responding.

Here is the Easy Solution.

1. Write a letter to the attorney immediately stating the following and nothing more. “We are in receipt of your letter concerning your client John Smith, and my attorney Bob Jones at 555-1212 will be contacting you shortly. Please deal directly with my attorney.”

This accomplishes two things. First it lets the attorney know that you have an attorney handling all your matters, and second it now prevents this attorney from calling you up on the phone. The Florida Bar rules prohibit an attorney from contacting another person who he or she knows is represented by counsel. If this attorney then calls you up on the phone, a violation of the Bar rules will have occurred. Many young, inexperienced attorneys will ignore or not be aware of the importance of this Bar rule.

OR

2. Send the information to your attorney immediately, giving your attorney your side of the story, and have your attorney simply write a response letter. The more information you give your attorney, including all the documents relating to the dispute, a truthful synopsis of what occurred, your settlement offer or authority for settlement, the easier it will be for your attorney to write a quick letter to the resident’s attorney or assist you in settling the matter, so it does not grow into a litigation situation.

What if You Completely Ignore the Resident’s Attorney?

Completely ignoring a demand letter from an attorney makes the attorney think that you are incompetent and that you will possibly ignore a lawsuit as well, if it is filed against you. It doesn’t make you look tough or strong. Refusing certified mail from an attorney is not good either, and no judge appreciates it when a party refuses mail. Completely ignoring a resident’s attorney greatly increases the risk that the next communication you get from the attorney will be a lawsuit.

The Attorney Letter Trick Exposed

Sometimes an attorney will make a statement or imply an agreement and then go on to say, “We will assume that you have agreed to this unless we hear otherwise from you within 5 days in writing.” This is a little trick to get you to “agree” to an offer or an action by the resident by you NOT responding. Did the fact that you failed to respond mean that you agreed? Not necessarily, but your failure to respond will be used by the attorney to convince a judge that you in fact “agreed”.

So Your Attorney Has Responded, Now What?

The majority of the time, if your attorney responds in a timely matter to the resident’s attorney, the case simply dies a natural death, and you never hear another thing about the matter again. The resident’s attorney wrote the letter for the client, received your attorney’s letter and then dropped the bomb on the resident that if the matter goes any further, the attorney will want a retainer, or possibly your attorney’s response letter convinced the resident’s attorney that the resident has a weak case. In the vast majority of other cases, the two attorneys go back and forth and the matter gets settled, usually to the satisfaction of all parties involved. Most landlord/tenant disputes are not about large sums of money but hurt feelings, a few hundred dollars or just a couple angry people. Many cases that end up in court could have been settled prior. A large percentage of cases are settled “on the courthouse steps”, so why make money for your attorneys? A smart property manger knows that going to court is always the least desirable option, understands the attorney’s fee risk and helps their attorney settle the matter. An experienced property manager will also try to convince a reluctant property owner who is often out of state that settlement is the best way to go.

 

PUBLIC RECORD USE IN SCREENING

If you are currently just obtaining a credit report and performing a criminal background check on your applicants, you may be doing yourself and the owner for whom you manage a serious disservice. You really should consider using a screening company who will perform a comprehensive credit and criminal background check and assist you in the decision making process. Whether you use a screening company or obtain credit and criminal reports on your own, it is important to recognize some of the shortcomings of the information that you are receiving and see how the use of the public records can supplement the information you are currently receiving.

What are the “Public Records?”

The public records include the civil, criminal and property ownership information which is gathered and recorded by the Clerk of the Court and the Property Appraiser in a given county, plus those records that the State of Florida maintains, such as the FDLE information on sexual offenders and predators. In addition to civil and criminal court records for a particular county, the public records also include information on ownership of property which is gathered by the tax appraiser’s office and contains a wealth of information. The public records may include information on your applicant and information on the current or prior manager of your applicant, if that individual or company is located in the county in which you are searching. The information you gather from the respective websites maintained by the county may be more current and comprehensive than the information you received from your screening company.

Developing a Written Company Policy

If you feel uncomfortable about a particular applicant, you may be tempted to get on the computer and begin digging into the public records. You may uncover civil or criminal information that you did not get from your screening company, and based on this information, you may decide not to approve the applicant. Sounds good, right? Well, the problem is that unless you check the public records of every applicant in a given similar situation, you may run afoul of fair housing laws, as you may not be treating all the applicants equally. You need to create a written plan and a policy which will determine under what circumstances you will check the public records and how far you will go with this. As part of this decision and plan, you will need to determine what counties you will check, and understand that in some counties, the information is not readily available and would require written requests or payment for information. You don’t need to get permission to check the public records of an applicant, because the information is indeed public, but if you find something that appears to be a problem, you need to safely use this information without getting yourself in trouble. What county will you check? The applicant may be from one county, the former or current manager from another, and your property is in another. Are you going to check the public records of three different counties? We recommend that you start with one county, that being the one where the property is located.

Eviction Records

While most screening companies have an “eviction database”, these evictions are usually ones that were filed and disposed of by the court months ago. Most screening companies buy eviction information from each county and then put it into their computer systems. Very few companies actually search the eviction records for your county when they are screening the applicant, and they certainly rarely do this for the entire state, as they literally would have to access 67 different computer systems, and the information that they obtain will only be a similar or the same name. Remember, the public record does not contain Social Security numbers, so if a name comes up, there is usually no way to tell if that person you are reading about is the applicant you are screening. Imagine searching a name like John Smith. Thousands will come up in the database. Is this information useless? We don’t think so. We feel that it is worthwhile to search your applicants in the civil court records database of your county. The person who is applying can be under eviction at that very moment, and the screening company most likely will not catch this when you might. This type of applicant is the most dangerous of them all, as they are slipping through the cracks and getting approved before anything shows up on their credit reports or public records information that your screening company has in its system. If you make it a habit to look up an applicant’s name in the civil court records, you may indeed find out that the person is currently under eviction or has been evicted before. The court records will show the co-resident if there is one, and this helps to narrow it down to see if the person applying is the same person in the court records, and the eviction that pops up will show both names. With uncommon names, your job becomes easier. Let’s presume you find the name appearing in the court records. Could it be the same person? Possibly, and this gives you the opportunity to ask the applicant about why his name or someone with the same name appears as a current or past eviction, and this gives him a chance to explain or prove to you that it is someone else and not him. Think about this. On any given Wednesday, we may file 100 evictions. Where do you think some of these people are on Saturday? You are showing them a house or an apartment and have no clue. These people end up getting approved and slip right through. People with bad credit do not always make bad residents, but people who have been evicted or are currently under eviction have a high chance of being evicted again. Do you want to be the next victim? The minute an eviction is filed, it will show up in the computer of the clerk of court.

Criminal Records

The criminal and arrest records you obtain from the computer of your county court system will most likely be more up to date than the information of your screening company. In Florida, there often is a delay in the county relaying information to the Department of Corrections or the Florida Department of Law Enforcement, so when you look up a person’s name, you are getting fresh, up to date information. The problem again will be similar names, which makes it difficult to verify that it is the same person. Many sheriffs’ departments have photos posted online in the arrest reports, so you may be able to look these up to verify that the person who was arrested is the person who is applying. Can you reject an applicant just because of an arrest? Possibly not, as many people are arrested and released with no charges filed, but it gives you a better picture of the applicant if you can look at the criminal information on your computer and ask the applicant further questions. That applicant who was arrested last month for major drug trafficking may be out on bail; your screening company does not have it in its system, but you now have the info. You certainly can deny the applicant if you find that he lied on his application, but without checking the public records, you may never have found out, or you will find out when it is too late. One of the biggest problems you will have to deal with is having a registered sexual offender or predator slip through and accidentally get approved. To help avoid this dilemma, a simple website is available, free and easy to use. Please use it.

Injunctions and Domestic Violence Issues

A check of the public records of the county court may reveal restraining orders and injunctions. These are court orders which prevent a person from contacting or being within a particular number of feet from another person. This is an interesting scenario. It appears that one of your applicants has an injunction against the other, and he is not even allowed to be within 500 feet of the other. How can they be both sitting in your office applying to rent your apartment? Is it possible they have been asked to leave by their current manager due to constant fighting and destruction of the property, and that they just recently reconciled? If one of them is violating the injunction, that person may actually be in the process of committing a crime right there in the office. While we would never want to deny someone solely because they were a victim of domestic violence, we certainly can look into the situation that we have discovered here and ask some probing questions. Without looking in the public records yourself, there is a high chance that this would be missed by your screening company, especially if the injunction was obtained very recently.

The Foreclosure Story

Every property manager has heard one or more versions of the “foreclosure story”. The first version is where the applicant tells you that she was living in a home, and the owner of the home got foreclosed on, forcing her to move. The other story is the applicant was the actual owner of a single family home, was foreclosed on and had to move.

If the applicant was the resident who “supposedly” had to move, you need to verify this. How would you normally do this? Well, you would call the owner of the home that the applicant is or was renting and verify the information. The problem is that the applicant tells you that the owner just “walked away” from the mortgage and will not answer his phone. No one has seen or heard from the owner. Are you going to take this for an answer, feeling sorry for the poor applicant who most likely stopped paying rent months ago when she got served foreclosure papers, or will you try to verify the story? You MUST verify the story, and all you need to do is look at the public records, put in the owner’s name in the civil court records to find the foreclosure, or put in the property address in the tax appraiser’s records and begin to dig. If the owner was truly foreclosed upon, you will find that information in the court records. Additionally, ask the applicant for copies of rent checks to see if she has been paying the rent to the owner for the 8 months the foreclosure has taken, or has the applicant taken advantage of the situation and not paid a dime, further hurting the owner? If the applicant stopped paying rent to her prior manager, what is to stop her from doing it to you?

If the applicant tells you that she was a homeowner and due to unfortunate circumstances, got underwater and ended up being foreclosed upon, you need to use the exact same methods as outlined above and look up the public records. If you can’t find the information, ask more questions. Many people who are foreclosed upon decide to stop paying their mortgage and now all of a sudden have $2000 extra each month which they promptly blow on things they don’t need. Now they are faced with paying real rent to a real manager who can really evict them, and they have no money, no savings and possibly no job. Don’t let your emotions make you sympathetic and let your guard down.

Conclusion

As you can see, the public records are full of valuable information, and you need to figure out how to use them. Start playing around on your computer. Go to the civil court record section of your county court’s website or the sheriff’s department site, and find the screen where you input the names. It is usually simple to use, and once you know how to input a name, it becomes easier. Read the instructions carefully. Sometimes they require last names and first names with a space between them, sometimes a comma. Every single courthouse and even different systems, such as criminal and tax records, within the same courthouse can require a different way of inputting a name or an address. Learn the system, take notes, play around and bookmark the site, putting it in your favorite places, or better yet, save it as an icon on your desktop for easy use. Call our office if you need help, as we are in the court systems all day long, checking dockets and doing research which pertains to the eviction cases, and we will be happy to send you the proper website and page links so you don’t have to waste your time. All it takes is getting started. The more you play around, the more fun you will have, because invariably you will begin looking up your friends and coworkers and find some very interesting stuff indeed! Best yet, there is no need to make a trip to the courthouse, as it is all online.