RESIDENT TELLS YOU THEY ARE BREAKING LEASE

Your residents have just informed you that they are breaking the lease agreement and moving out. A job transfer, sickness, home purchase or any other reason may be given. They may call you on the phone and then inform you in writing, sending you their new address where they expect you to send the security deposit. They may simply send you a letter telling you their intentions. Most likely you will not agree with the resident’s desires or plans, but you need to decide whether to ignore the letter or respond.

Do You Need To Respond?

There is nothing in the law that requires you to respond to the residents. A letter from residents indicating their intention to break a lease does not have any effect upon the lease agreement or the tenancy. Legally, it is called an anticipatory breach of contract. Will the residents be breaching the contract? Yes, and you do not need to respond. However, when you do not respond, the residents feel they are entitled to break the lease, and they assume your failure to respond indicates acceptance with their intentions. We feel you should respond, but in writing and with specific wording.

The Residents’ Expectations?

What are the residents’ expectations? As we can see in many lease break letters from residents, many feel that a job transfer, sickness or home purchase somehow legally allows them to simply pack up and break the lease. During the sales boom, many real estate salespersons told residents that in the event they purchased a home, the law allowed them to break the lease without penalty. We all know that this just is not the case, but the residents think otherwise. If the residents feel they can break the lease without penalty and send the manager a letter indicating the same and the manager in no way responds to the residents, the residents may feel that everything is fine and that the manager is in complete agreement.

How to Respond

When residents have already broken or will break a lease, the manager must immediately become vigilant and communicate only in writing with the residents. Remember, the residents are attempting to get out of a serious contract, and anything can and will happen. The manager may be caught off guard, the residents may be desperate, and the parties begin a verbal communication which is subject to interpretation and misunderstanding. The act of residents breaking a lease is a legally significant and dangerous situation (from the standpoint of the agent’s potential liability), and nothing should be done unless it is in writing. Too often we see cases in which deals are made, conditions are set, and conversations ensue in which the manager and the residents each end up having a completely different understanding of the situation. This results in conflicting testimony in a later court case. Unfortunately, some people can lie more convincingly than others can tell the truth, so when the residents go to court and claim the manager said they could break the lease, no one has anything in writing other than the residents who have a letter written to the manager indicating they could break the lease. The judge is put in an unfortunate situation in which he or she must decide who to believe. You may be on the losing end that day.

Common Manager Mistakes

Upon learning of a lease break or anticipatory lease break, the manager may tell the residents that if a new resident is obtained, the departing residents will not have to pay any further rent. This immediately creates an expectation on the part of the residents that the manager will mitigate his damages and suddenly get a new resident. Under current market conditions, we all know that finding a new resident may be a lot harder than it was two years ago. The manager may make the mistake of agreeing that the departing residents will find a replacement resident. Often this happens, and the person the breaching residents find does not meet the manager’s criteria and is not accepted, causing the breaching residents to feel that the manager does not want to rent the unit out. Another mistake is to make a payment arrangement with the residents for money owed, but at that time no one really knows what is owed or how long the unit will be vacant. Lastly the manager may find a new resident, but at a lower rent amount. Does this mean the lease breaking residents are now off the hook? All the foregoing mistakes are made by managers, and often they are part and parcel of the verbal agreements with the residents.

The Proper Response

Now that you are convinced that the manager should never respond unless in writing, you need to know what to say. Simply put, the manager should tell the residents that the lease agreement stands, and that the residents’ vacating shall constitute a breach of the lease agreement. Since automatic forfeitures of security deposits, liquidated damages and accelerated rents are not expressly legal, this will not be discussed. The correspondence should be short and simple.

The Residents Have Left. Can You Take Possession?

If you do not agree with the residents’ intention to break the lease by vacating and the residents vacate, how does the manager know if he can take possession? Often residents will wait to see if the manager takes possession. They will have a neighbor watch the property and notify them if the manager is seen going into the unit. Possibly, the rent will be current, and if so, the manager cannot take possession unless the residents have granted possession. If the residents have indeed vacated and the unit is abandoned, meaning the unit has been vacant for 15 days and the rent is unpaid, the manager may take possession. If the residents have told the manager in writing that they will be vacating on a particular date and in fact do so, the manager will most likely have possession of the premises, but should be sure by inspecting the unit and running this by their attorney. By sending the residents a proper response, the manager can accomplish a number of things to help minimize a bad situation and dispel the uncertainty of whether possession is or is not granted.

Sample Response Letter to the Lease breaking Resident

Dear Resident,

We are in receipt of your letter (or phone call) in which you have indicated that you are vacating the premises on (month, day, and year). Please note that under the terms of the lease agreement that you signed your lease and rent obligations continue until the end of the lease term. We will expect you to continue paying the rent and all charges due under the terms of the lease until the earlier of the date we may be able to re-rent the unit, if we decide to do so, or the end of the lease agreement. If we are only able to rent the premises at a lower rental rate than the amount for which you are currently responsible, you will also be liable for that deficiency. Please inform us in writing when you have vacated the premises, and return all keys, garage door openers or any other property belonging to us at that time, so we can avoid filing a possible eviction action. Please note that by vacating prior to the end of your lease agreement, you are in breach of the lease agreement, and we shall exercise all our rights under the lease and Florida law.

 

RESIDENT SKIPS AND YOUR OPTIONS

 

Residents are “skipping” at a record rate. Skipping of course is the common name given to the act of simply walking out on a lease. The lease is signed, the residents move in, live in the unit for a while, and then for whatever reason, decide to pack up and move. Can you stop them? Of course not. Just like you cannot force a person to pay the rent or prevent them from moving in unauthorized occupants or getting those 5 pit bulls, a resident who is desirous of leaving will do so. It is that simple. Since the resident has decided to leave and does, you are now faced with the dilemma of an empty unit and rent owed to you. What can you do? Suppose you are managing a unit for another. The property owner who is often out of state is baffled and cannot understand how this can be. Often we hear them say, “But they have a lease!” or, “Why did we even have a lease? It is worth nothing”. What do you tell this angry and baffled property owner? How do you handle it when it happens to you? This article will examine some of the harsh realities of the resident “skip” and how you can deal with the problem. Notice I said, “deal with the problem”, not solve the problem. If anyone knows how to solve the problem of the resident skip, you call me right away! This article will examine the three simple paths you can take when a resident skips out on you.

 

Sue the Resident

 

When a resident skips before the end of the lease term, the resident will owe rent until the unit is re-rented or until the end of the lease, whichever occurs first. This statement assumes that no other document is in place, or the resident has not signed an early termination addendum which may liquidate the amount owed. What does the resident owe? You will not know until the unit is re-rented or the lease expiration date.

 

Now the big question: should you sue the resident? In most cases we will advise you to do a careful cost/benefit and risk analysis when deciding whether to sue the resident. Before you can even think about suing, you must know where the resident is, so he can be served with the lawsuit. In many skips, the resident disappears and cannot be found. If you cannot find him, you cannot sue him.

 

a. Cost: Unless you can find an attorney who will file a lawsuit on a contingency basis where you pay nothing unless or until you win, using an attorney to file a lawsuit is often cost prohibitive. Many managers are under the impression that the resident will be responsible for their attorney’s fees and costs, and this is true in most cases, but just because you “win” in court does not mean you will collect a dime. Most attorneys will not take a case like this on a contingency basis.

 

b. Benefit: By suing the resident you may be able to get a judgment against the resident, allowing you to lien any real property the resident owns, and also may be used in attempting to garnish wages, another expensive, cumbersome process full of exemptions. Will you collect your money even if you win? Probably not. People who skip do not care much about getting sued, because if they did, they would not have skipped in the first place. They are usually what we call “judgment proof”.

 

c. Risk: The risk involved in filing a lawsuit against a resident may come as a real surprise. Why would there be risk? The resident owes you money after all. The risk arises when the resident claims there was a “legitimate reason” why she skipped out. She may claim you failed to maintain the property, felt unsafe, was told she could leave early, you name it. There are a thousand reasons that a resident who is being sued can come up with to justify why she broke the lease, and the judge in the case might believe the early departure was justified. If the judge finds for the resident, YOU will have to pay the resident’s attorney’s fees PLUS your attorney’s fees, if you hired a lawyer to fight the case.

 

If the property owner has a lot of time on his hands and wants to file a small claims case without a lawyer, there is probably nothing wrong in giving it a try, UNLESS an attorney pops into the picture and defends the resident. If you are managing the property and the owner asks you to do it, just say NO. Property management agents should not be acting as the attorney for the owner.

 

Settle With the Resident

 

Once you know how much the resident owes, if you are able to get in touch with the resident, writing a demand letter or having your lawyer write a demand letter at minimal cost is not a bad idea. A demand letter may open up some dialogue and result in an offer by the resident to pay all, something or possibly set up a payment plan. Settlement is not a bad word. It is often the smart thing to do. Your attorney can provide you with the proper form to use when settling with the resident, as everything should be in writing.

 

Forget About the Whole Thing and Move On

 

Your final option is to do nothing. Direct your energies into getting the unit rerented. You can always decide to sue at a later time, and you have up to 5 years to do this.

 

Conclusion

If you are a seasoned property manager or owner, you probably understand everything you have just read. The problem is your out of state owners who just doesn’t understand how Florida law works, and that Florida is what is known as a “debtor” state. If you are managing property for them, you will often get unreasonable demands about collecting the money. In many states, the creditor has significantly greater rights in pursuing the debtor. Florida is known for its lenient laws as they pertain to collecting money from a debtor. There are head of household exemptions, personal property exemptions and although not unique to Florida, bankruptcy protection. Does this mean that it is impossible to collect a debt? Absolutely not. In many cases people will pay. Most cases? Probably not. The best approach is to have your lawyer take a look at your the situation or send your property owner to the lawyer for a quick look, and have the lawyer give the advice necessary for you or the owner to make an informed decision. Exercise care in what lawyer you may send the owner to as some lawyers may not be completely honest and will choose to take a case AND you or your owner’s money knowing full well that the chances of collection are slim.

 

RESIDENT SIGNING A PET ADDENDUM WHEN NO CURRENT PET

The Pet Addendum

When a resident moves in with one or more pets, we strongly recommend that the manager use a pet addendum, an agreement that can provide for the collection of pet fees and/or pet deposits, and also lays out the full regulations concerning pet conduct. We also strongly recommend that the manager “interview” the pet before authorizing it, to make sure the pet is friendly enough, not excessively loud, and does not violate any breed or weight restrictions in place.

No Current Pets, But a Pet Addendum is Signed?

Some managers have all residents at move-in sign a pet addendum, even if the resident does not have a pet a move-in. This is a practice we strongly discourage. Typically, when a resident at move-in does not have a pet, the pet addendum will indicate zero pet fee and/or zero pet deposit. Although there may be a reference on the addendum to “no pet at this time”, the resident may be able to successfully argue that the agreement was an implied authorization to obtain a pet at a later date, and at no charge. This use of the pet addendum at move-in may also hamstring your ability to screen out an undesirable pet, particularly if some dollar amount is referenced in the pet fee or pet deposit section.

The Lease

The manager’s standard lease should simply indicate that no pets are allowed without prior written authorization. If you then become aware of a resident obtaining a pet after move-in, you can give a Seven Day Notice of Noncompliance with Opportunity to Cure for an unauthorized pet on the premises. You can explain to that resident the only way you will authorize the pet will be conditioned upon a pet agreement being signed, along with collection of charges you normally would assess for a pet. Otherwise, you will continue to view the pet as unauthorized, and will terminate the tenancy, if necessary.

The Common Pet Discovery Mistake

A common mistake made by managers when discovering an unauthorized pet is to cite unpaid pet fees or pet deposits on a 7-day cure notice, particularly if the manager is not even willing to authorize the pet because of breed, weight or disturbance issues. If you actually collect some pet fee or deposit, you are authorizing the pet. Even if the unauthorized pet is one the manager would be willing to authorize, the resident has typically not yet agreed in writing to pay the pet fee and/or pet deposit. The resident has failed to comply with the lease by not getting prior written authorization for the pet, and that is what the cure notice should cite.

The Pet Interview

One last point about pet interviews: frequently, we have clients tell us they believe a resident has an unauthorized breed, or that a pet appears to be over the allowed weight limit. It is usually much more difficult to deal with this problem after the pet has been authorized, as opposed to simply denying authorization of the pet initially.

 

RESIDENT OR SQUATTER

 

Your resident moves out, and you decide to check out the condition of the property. “Robert” answers the door eating a ham sandwich and says he is living there with the permission of the former resident. Surprised and angry, you call the police, and they respond, “It is a civil matter, you will need to evict the person.” But wait! Isn’t this person a trespasser or squatter? A typical manager would make the assumption that this individual is not a resident but rather an illegal trespasser or squatter on the premises, and in many cases the manager would be correct. The problem is that law enforcement does not look at this the same way, as well as possibly Florida law.

Is this Person an Unauthorized Occupant?

Often the person who remains behind after the resident has vacated the premises will claim that she is there with the permission of the resident. This unsubstantiated claim alone transforms the individual into an unauthorized occupant (unauthorized by you), rather than a squatter or a trespasser, and this prevents law enforcement from using their powers to remove the individual. Law enforcement officers are often called upon by managers to assist in removing people from rental property, and they are extremely cautious that they are not being used by the manager to effectuate an “eviction” of a resident who has a right to be on the premises until legally evicted from the premises. In most cases, law enforcement will inform the manager that the problem is a “civil matter”, i.e. you need to call your attorney, serve the proper notices and begin the eviction process. While this may seem absurd to the manager who has never seen the individual occupying the premises, had no contact with this person and never received any rent from this person, unfortunately an eviction will be necessary.

Will Law Enforcement Ever Take Action?

If pressed hard enough, law enforcement may cooperate with the manager, if the manager is insistent that the person is in fact a trespasser or squatter, and the evidence does point to this fact. The manager needs to be clear with law enforcement that they have no idea who this person is, and they feel that this person has broken into the unit or entered the unit after the prior resident has vacated. Law enforcement may question the individual and sometimes get an admission from the individual that she indeed does not have a key to the premises and should not be in the unit. In limited situations, law enforcement will then trespass the person and assist you in removing this trespasser from the property. In some cases, people do enter vacant units and camp out until law enforcement involvement. A good relationship with law enforcement and a concerned officer will often aid in assisting the manager in removing a true trespasser who does not have any permission from the prior resident to be in the unit. When calling law enforcement, the manager needs to be clear that the person is a trespasser if they will get law enforcement to even remotely consider any involvement. Any statement by the individual that she is in there with permission will stop the process and force the manager to begin eviction. If a manager removes a person from the unit either by himself, uses law enforcement, changes the locks, removes the doors, shuts off utilities or does anything to make this person leave, and this person can then prove in court that she had possession with permission, the manager will be faced with being sued for an unlawful or wrongful eviction and/or prohibited practice(s).

The Individual Fails to Move and Law Enforcement Does Nothing

If the manager in unsuccessful with law enforcement, the manager now needs to serve a Seven Day Notice of Noncompliance With Opportunity to Cure to the prior resident by posting the notice on the door of the unit. The notice will state “You have an unauthorized occupant residing on the premises in violation of the terms of your lease agreement”. The manager needs to act as if the prior resident is still in the unit, even though most likely the prior resident will never get the notice. If the manager has any way to get in touch with the prior resident, all efforts should be made to do this, as it is possible that the prior resident does not even know that his friend or relative is still in the unit, and if faced with a legal action may get this person out for you. If after seven days the person or persons are still in the unit, a Seven Day Notice of Termination needs to be served. After seven days, an eviction can be filed.

Suppose the Manager Takes Rent From the Individual?

If the manager accepts any rent from the individual, they will have created an even greater problem, as they will have potentially established a manager/resident relationship with the person minus any written documents such as a lease. No matter how desperate a manager may be for the money, taking rent from the individual can be a fatal mistake.

Will the Manager Succeed in Eviction?

In most of these eviction cases, the “squatter” or “trespasser” will not fight the eviction. We have seen cases where the individual will fight the eviction, claiming that they paid rent to the prior resident, and that the prior resident failed to pay the manager. This is rare, and the manager can have a fair amount of certainty that they will prevail in the eviction action. The key is making sure that the manager resists all urges for self-help, as this can completely derail an eviction action and create a major legal problem.

 

RESIDENT NONRENEWING THE MONTH TO MONTH TENANCY

While we have written many articles on how to non-renew a resident, there is still much confusion as to how much notice the resident must give in the event of month to month tenancy non-renewals. This article will give concrete examples of what will happen and when, depending upon the date the notice is given by the resident. Now, a weird lease provision could change everything, so this article assumes a normal lease with normal legal clauses or no clause at all. It also assumes that rent is due on the first day of the month and not on any day other than the first. If the rent is due on a day other than the first of the month, everything will change and become more complicated. This is just one of the reasons why it is good to be consistent and have the rent always due on the first day of the month.

Month to Month Tenancies

A month to month tenancy is created when the manager allows the resident to stay after the expiration of the lease agreement, or in the event that there was never even a lease in the fist place and the resident pays monthly. The resident presumably continues to pay the rent money until such time as either the manager or the resident decides to terminate the tenancy. The law clearly states that a month to month tenancy can be terminated by either party giving at least 15 days’ notice prior to the end of the monthly rental period.

1. Resident gives manager notice on 5th of September saying he is leaving on the 30th of September.

Result: This is proper notice and the resident must pay the entire month’s rent for September.

2. Resident gives manager notice on 5th September saying she is leaving on the 20th of September.

Result: This is likely proper notice, but the resident must pay the entire month’s rent for September. No prorated rent is due back.

3. Resident gives manager notice on 5th of September saying he is leaving on the 10th of September.

Result: Although not 15 days’ notice, this notice will likely hold up, but the resident must pay the entire month’s rent for September. No prorated rent is due back.

4. Resident gives manager notice on 20th of September saying she is leaving on the 30th of September.

Result: This is short notice and resident must pay or will owe the entire month’s rent for October unless the manager re-rents the unit prior to October 31.

5. Resident gives manager notice on 1st of September saying he is leaving on the 16th of September.

Result: This is likely proper notice, but the resident must pay the entire month’s rent for September. No prorated rent is due back.

6. Resident gives manager notice on the 20th of September saying she is leaving on the 5th of October.

Result: This is short notice and resident must pay or owe the entire month of October unless the manager re-rents the unit prior to October 31. In examples 2, 3, and 5 above, the resident does not actually inform the manager that he or she will be out effective September 30. The manager’s non-renewal notice to the resident must be accurate concerning this date. It is usually a good idea to “cross-notice” the resident with your own notice of non-renewal in these situations; this will also help to clarify your position that full September rent is owed.

The Partial Rent Acceptance Problem

As you can see from the examples above, a resident may or may not give you proper notice, and depending upon the notice, may or may not owe the next month’s rent. Here is the problem though. Often a resident will not give you proper notice OR will give you a partial rent payment covering the time period in which they will stay. If you accept that partial payment, you may be accepting the “terms” of the resident’s notice, be it proper or improper. If you take a partial rent payment when the resident has given you insufficient notice, you may not be able to charge the resident for the remaining days in the month in which he leaves, even if he has otherwise given you proper notice. For example if the resident gives you notice on September 1st that she is leaving on September 16, and you accept the 16 days partial payment for September, you may have waived your right to the rest of September rent. Likewise, if the resident gives you short notice telling you on September 20th that they will be leaving on October 6th and you accept the 6 days of rent for October, you most likely will have waived your ability to charge or collect for the rest of October.

But Wait! The Lease Requires the Resident to Give More Notice!

Many leases attempt to make the resident give you more notice than 15 days in order to terminate the month to month tenancy. Often we see 30 days as a typical requirement in the lease. While the lease may clearly state this, and the resident by signing the lease has presumably agreed to it, the law will prevail. A month to month tenancy can be terminated by the resident giving at least 15 days’ notice prior to the end of the monthly rental period. No more can be required. If your lease has a clause requiring more notice, remember that it probably cannot be enforced, and you do not want to give your property owner the impression that just because it is in the lease, it is legal.

Looking to Avoid Misunderstandings?

One of the best ways to avoid misunderstandings is to thoroughly explain in writing to the resident how much notice has to be given, when notice must be given, and what will be owed. Before you can explain this to the resident, you must fully understand it yourself. Most residents assume that giving 15 days’ notice means just that. They give 15 days’ notice and leave, not realizing that they may owe for the rest of the month or even the entire next month depending upon when notice is given. Many leases are unclear as to this as well, and ambiguities are construed in favor of the resident. Taking the time to create a little cheat sheet using the above information and explaining how notice must be given can go a long way in preventing misunderstandings or legal disputes.

 

RESIDENT INFORMING YOU OF LEASE BREAK

Your residents have just informed you that they are breaking the lease agreement and moving out. A job transfer, sickness, home purchase or any other reason may be given. They may call you on the phone and then inform you in writing, sending you their new address where they expect you to send the security deposit. They may simply send you a letter telling you their intentions. Most likely you will not agree with the resident’s desires or plans, but you need to decide whether to ignore the letter or respond.

Do You Need To Respond?

There is nothing in the law that requires you to respond to the residents. A letter from residents indicating their intention to break a lease does not have any effect upon the lease agreement or the tenancy. Legally, it is called an anticipatory breach of contract. Will the residents be breaching the contract? Yes, and you do not need to respond. However, when you do not respond, the residents feel they are entitled to break the lease, and they assume your failure to respond indicates acceptance with their intentions. We feel you should respond, but in writing and with specific wording.

The Residents’ Expectations?

What are the residents’ expectations? As we can see in many lease break letters from residents, many feel that a job transfer, sickness or home purchase somehow legally allows them to simply pack up and break the lease. During the sales boom, many real estate salespersons told residents that in the event they purchased a home, the law allowed them to break the lease without penalty. We all know that this just is not the case, but the residents think otherwise. If the residents feel they can break the lease without penalty and send the manager a letter indicating the same and the manager in no way responds to the residents, the residents may feel that everything is fine and that the manager is in complete agreement.

How to Respond

When residents have already broken or will break a lease, the manager must immediately become vigilant and communicate only in writing with the residents. Remember, the residents are attempting to get out of a serious contract, and anything can and will happen. The manager may be caught off guard, the residents may be desperate, and the parties begin a verbal communication which is subject to interpretation and misunderstanding. The act of residents breaking a lease is a legally significant and dangerous situation (from the standpoint of the agent’s potential liability), and nothing should be done unless it is in writing. Too often we see cases in which deals are made, conditions are set, and conversations ensue in which the manager and the residents each end up having a completely different understanding of the situation. This results in conflicting testimony in a later court case. Unfortunately, some people can lie more convincingly than others can tell the truth, so when the residents go to court and claim the manager said they could break the lease, no one has anything in writing other than the residents who have a letter written to the manager indicating they could break the lease. The judge is put in an unfortunate situation in which he or she must decide who to believe. You may be on the losing end that day.

Common Manager Mistakes

Upon learning of a lease break or anticipatory lease break, the manager may tell the residents that if a new resident is obtained, the departing residents will not have to pay any further rent. This immediately creates an expectation on the part of the residents that the manager will mitigate his damages and suddenly get a new resident. Under current market conditions, we all know that finding a new resident may be a lot harder than it was two years ago. The manager may make the mistake of agreeing that the departing residents will find a replacement resident. Often this happens, and the person the breaching residents find does not meet the manager’s criteria and is not accepted, causing the breaching residents to feel that the manager does not want to rent the unit out. Another mistake is to make a payment arrangement with the residents for money owed, but at that time no one really knows what is owed or how long the unit will be vacant. Lastly the manager may find a new resident, but at a lower rent amount. Does this mean the lease breaking residents are now off the hook? All the foregoing mistakes are made by managers, and often they are part and parcel of the verbal agreements with the residents.

The Proper Response

Now that you are convinced that the manager should never respond unless in writing, you need to know what to say. Simply put, the manager should tell the residents that the lease agreement stands, and that the residents’ vacating shall constitute a breach of the lease agreement. Since automatic forfeitures of security deposits, liquidated damages and accelerated rents are not expressly legal, this will not be discussed. The correspondence should be short and simple.

The Residents Have Left. Can You Take Possession?

If you do not agree with the residents’ intention to break the lease by vacating and the residents vacate, how does the manager know if he can take possession? Often residents will wait to see if the manager takes possession. They will have a neighbor watch the property and notify them if the manager is seen going into the unit. Possibly, the rent will be current, and if so, the manager cannot take possession unless the residents have granted possession. If the residents have indeed vacated and the unit is abandoned, meaning the unit has been vacant for 15 days and the rent is unpaid, the manager may take possession. If the residents have told the manager in writing that they will be vacating on a particular date and in fact do so, the manager will most likely have possession of the premises, but should be sure by inspecting the unit and running this by their attorney. By sending the residents a proper response, the manager can accomplish a number of things to help minimize a bad situation and dispel the uncertainty of whether possession is or is not granted.

Sample Response Letter to the Lease breaking Resident

Dear Resident,

We are in receipt of your letter (or phone call) in which you have indicated that you are vacating the premises on (month, day, and year). Please note that under the terms of the lease agreement that you signed your lease and rent obligations continue until the end of the lease term. We will expect you to continue paying the rent and all charges due under the terms of the lease until the earlier of the date we may be able to re-rent the unit, if we decide to do so, or the end of the lease agreement. If we are only able to rent the premises at a lower rental rate than the amount for which you are currently responsible, you will also be liable for that deficiency. Please inform us in writing when you have vacated the premises, and return all keys, garage door openers or any other property belonging to us at that time, so we can avoid filing a possible eviction action. Please note that by vacating prior to the end of your lease agreement, you are in breach of the lease agreement, and we shall exercise all our rights under the lease and Florida law.

 

RESIDENT DEATH AND THE OBSOLETE LEASE

 

Prior to the law change, if the last remaining resident in a dwelling unit died leaving personal property behind in the unit, serious problems were created for the property manager. Upon the resident’s death, relatives often would request keys or access to the unit to retrieve personal belongings of the deceased. If the property manager provided such access to the relatives or friend of the deceased, massive liability was potentially created, as heirs could later appear claiming a property interest in something that they said was or indeed was willed to them by the deceased. Since the property manager was not allowed to provide access, the result was that the relatives of the deceased would need to open up a probate estate so a personal representative, referred to in some states as an executor, could be appointed, and the property manager could then deal with the executor directly, possibly get possession of the rental unit from the executor, or even serve notice on the executor and file an eviction if necessary. Since more often than not an estate was never opened, the property manager was left in a legal limbo, and would frequently have to consider hiring an attorney to open up an estate at significant expense and delay.

 

Florida Statutes Section 83.67 solves the problem of the deceased resident and the abandoned property, BUT it only will be effective and applicable if the proper wording is in the lease agreement.

 

The Wording Which MUST Be in the Lease Is As Follows:

 

BY SIGNING THIS RENTAL AGREEMENT, THE RESIDENT AGREES THAT UPON SURRENDER, ABANDONMENT, OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING RESIDENT, AS PROVIDED BY CHAPTER 83, FLORIDA STATUTES, THE MANAGER SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE RESIDENT'S PERSONAL PROPERTY.

 

Is This Wording in Your Lease? Really? Are you sure?

 

Take another look and see if these words: OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING RESIDENT are in your abandoned property clause. Chances are the words are not there. Fix it now!!! Failure to fix this clause can mean the difference between getting possession 60 days after a resident’s death or having to wait many months and spending thousands of dollars in attorneys’ fees. 

RENTERS INSURANCE

If you are unsure as to exactly what renters insurance is, then you are not alone. Renters insurance is a topic that perplexes both residents and property managers, because there is not an adequate one or two sentence description that will do justice to this topic. There are many nuances involved, and a capable property manager should be aware of them. The good news is that you do not have to be an expert in the field of insurance to gain a basic understanding of renters insurance. However, what you do need to do is set aside some time to learn about it. Our hope is that this article will assist you in that process. Some studies suggest that the number of renters have increased steadliy. Some studies suggest only 43 percent of renters have renters insurance, while 96 percent of those who own homes have homeowners insurance. Why is there such a gap? Your residents have personal property just like homeowners. Do they not want to protect their personal belongings? Do not get the wrong impression, though; renters insurance has the capacity to protect the residents from much more than just personal property loss.

How Does Renters Insurance Protect the Resident From Personal Property Loss?

Mary lives in an apartment home located in Orlando. One night after returning home from work, she saw that her front window was busted. Sure enough, her apartment home was burglarized, and all of her valuable possessions, including her jewelry, were stolen. Edward lives an apartment home in Jacksonville, and a huge storm swept through the area. Edward’s unit was damaged due to flooding related to the storm, and among the items damaged were his valuable baseball card collection. Cindy lives in West Palm Beach and rents a single family home. Unfortunately, a fire swept through the house, and all of Cindy’s clothes and furniture, including her flat screen televisions, were destroyed. Most renter’s insurance policies cover theft and fire, so Mary and Cindy should be able to recoup some or all of their losses. Edward’s situation will be a different story. Property loss due to flooding is not covered in most renter’s insurance policies, so it is important to understand that while renters insurance offers protection, it does not offer complete protection to the resident for losses. The renter’s insurance policy will dictate what is and what is not covered based on the cause of the damage or loss. The policy will list which perils will be covered. Many renters’ insurance policies cover fire, lightning, explosions, vandalism, theft, and overflow of water from plumbing or air conditioning systems. Items typically not covered are sewer back ups, flooding, power failures, negligent or intentional acts. The key is to read what the policy says! Sadly, many residents buy into the fallacy that the manager is responsible in those instances, and that they will be covered by the manager’s insurance policies, when then is often not true.

Cash Value vs. Replacement Value

Elron was surfing the internet during what had been a very nice day. Out of nowhere a bolt of lighting flashed through the sky. The lighting bolt struck Elron’s unit, which in turn caused his computer to be fried. Elron previously purchased renters insurance. Assuming that losses from lightning are covered under the policy, how much money will Elron receive from the insurance carrier? If the policy allows for him to receive actual cash value, then Elron will be reimbursed the depreciated value of the computer. If the computer is very old, then the reimbursement may be minimal. For slightly more money, Elron would have been better served having replacement cost coverage, because it is going to cost him more to replace the computer than what the old computer’s actual value is.

How Does Renters Insurance Protect the Resident From Personal Liability and Loss of Use?

Tim, a resident at the XYZ Apartment Homes, had a very bad day! Tim invited Abby to watch some football playoff games, but an accidental fire started when Tim’s dog, Klumso, knocked a lit candle onto the carpet and newspapers. Tim was filling the bath in anticipation of washing Klumso when the fire started, and in the confusion of the moment, forgot to shut off the water, which then overflowed through the apartment and flooded his neighbor’s unit as well. Abby was injured trying to put the fire out, and Tim was forced to stay in a motel for ten days. If Tim had elected to pay for loss of use coverage in conjunction with his renter’s insurance policy, then he would be reimbursed for additional living expenses incurred, because he could not use his apartment home. Even more importantly, had Tim also selected personal liability coverage with appropriate coverage limits as part of his renters insurance policy, then he would be able to use those proceeds from the policy for potential liability to Abby, such as medical expenses. The resident can be held liable for injuries to guests. Additionally, residents that have accidents which cause damage to a neighbor’s unit can also be held liable. Therefore renters insurance with personal liability coverage is a must.

Why Should the Manager Care?

Mildred leased a two bedroom apartment for $1300 a month. A fire started in her kitchen while she and a guest were inside the unit. The guest was injured trying to put the fire out. Mildred had not purchased a renters insurance policy covering her personal contents or for personal liability. Her manager Mitch tells her it is not his problem, and she will pay the consequences for her failure to secure adequate insurance. Mitch could not be more wrong! Mildred will need to replace her personal contents that were damaged by the fire, such as her clothing, and may also be spending monies on legal bills if she is sued by her guest because of his injuries. How in the world is Mildred going to pay her rent? Renters insurance protects the income stream of the manager. Guests injured in a rented unit can also sue the manager. Soon Mildred’s guest may be coming after Mitch with a personal injury lawsuit in hand. There is no doubt that it is in the best interest of the manager to have residents obtain renters insurance with personal liability coverage.

Waiver of Subrogation

Not all renters’ insurance policies are the same. The manager should require the insurance company to add a waiver of subrogation endorsement to the policy. Without the waiver of subrogation, the insurance company could file a legal action against a third party who causes the loss to the insurance company. Here is how this plays out in the renter’s insurance scenario. The resident obtains a renters insurance policy and agrees that any proceeds will be payable to the manager. Suppose the resident causes an accident in the unit. Without the waiver of subrogation clause, the insurance company would pay the manager and then go after the resident for reimbursement of the amount of the claim that was paid. Such a result could be devastating.

Requiring Residents to Obtain Renters Insurance

Managers are not prohibited from requiring residents to obtain renters insurance as long as the requirements are reasonable in the eyes of the court. Telling residents they must obtain renters insurance is meaningless on its face. From reading this article you can see that renters insurance can include many different types of coverage. The first step that should be taken when rolling out a program requiring residents to obtain renters insurance is to obtain advice from your corporate attorney and/or risk management department and/or your insurance carrier, as the issues presented are quite complex. For instance, many property managers are more anxious for the resident to obtain personal liability insurance, as that is a huge potential risk for a manager. There should be full disclosure to your residents as to the requirements, and it should be in writing in the lease or in a renter’s insurance addendum. The coverage limits should be reasonable, and the addendum should be easy for the resident to understand, so that they know the differences between liability coverage and personal contents coverage. The lease or addendum should also make it clear that residents may choose the insurance carrier of their own choice. Selling insurance requires a license. If the property manager is mandating which insurance company be used, then the manager is essentially selling insurance and possibly engaging in antitrust activities, both of which are illegal! The lease or addendum should also spell out exactly the type of insurance that is not maintained by the manager, so the resident understands the consequences of not obtaining renters insurance. Finally, the lease or addendum should require the resident to not only obtain the renters insurance policy, but to maintain it as well, and to provide proof of the insurance coverage to the manager. The lease or addendum should also have a clause stating that any noncompliance by the resident with respect to those obligations listed in the lease or addendum would be considered a lease default.

A final caution to managers that do require and confirm the resident has obtained renters insurance: a common fallacy held by managers is that the manager is not responsible for property loss if an item such as a pipe breaks inside a resident’s unit, causing a flood. Most likely there were problems with the pipe or a pre-existing condition prior to the resident moving in, and if so, the resident would not be liable for the resulting property loss. Even if the resident had renters insurance, the manager should not expect the renter’s insurance policy to cover the resulting losses, since the resident is not responsible for those losses. The renter’s insurance carrier may disclaim coverage, looking to the manager’s liability carrier for coverage, or if the damage claim is paid by the renter’s insurance carrier to the resident, the renter’s insurance carrier may then bring a subrogation claim against the manager, as discussed above.

 

RENTAL FURNITURE  ISSUES

Many residents abandon the premises or get evicted leaving rental furniture behind. Most managers know how to deal with the property in these situations. Less common is the situation when the furniture rental company calls the manager or shows up at the office asking the manager to allow them access to the unit to retrieve the furniture for which the resident has not paid. Do you oblige? Can you let the representative from the rental furniture company in the unit? Suppose the eviction will be served on Monday morning. Is there any obligation to the rental company?

The Resident is in Possession

Furniture rental companies will often contact you in the event the resident to whom they rented the furniture fails to pay the rental amount. According to the contract the resident signs with the furniture rental company, the resident agrees to allow the company to pick up the furniture in the event the resident is in default. You, as manager though, are not a party to this contract and have no power or authority to grant the company access to the rental unit. If you are notified by the rental company’s representatives, simply tell them you cannot grant them access. They will try to convince you otherwise, but the bottom line is that retrieval of the rental furniture is their problem and not yours.

The Resident is Under Eviction

The fact that the resident is under eviction changes nothing. An eviction is simply a lawsuit by which you are trying to remove the resident. The resident may pay and stay or end up being evicted. The furniture rental company is not a party to the lawsuit and does not have any greater rights to the rental furniture because of the pending eviction.

The Sheriff is Going to Grant You Possession

Near the end of the eviction process, the sheriff’s office will notify you of a fixed date and time when they will come and meet you to give you possession. If the furniture rental company asks you when this is going to occur, simply refer them to the case number, and they can do their homework. If the company wishes to be at the property when the sheriff executes the Writ of Possession, they certainly can, and they can also retrieve the items from the property line after you have placed them there. Do not allow the rental company employees to enter the unit to retrieve the furniture. You are required to take all items to the property line. You neither have any affirmative duty to notify the rental company of when the writ of possession is to be executed, nor do you have any responsibility for the preservation of the property once you take it to the property line.

The Law and Rental Furniture

Florida law requires the furniture rental company to file a lawsuit in County Court, and obtain a writ of replevin in order to have the right to take the rental furniture from a resident without the resident’s consent, if by taking the furniture, the peace will be breached in any way. If for some strange reason the rent furniture was sitting on a first floor open lanai area, the furniture rental company would be able to simply take the item(s) and leave without the necessity of a replevin action. Since most furniture is kept in the unit though, the legal procedure must be followed.

Abandoned Rental Furniture

If the unit is truly abandoned or surrendered to you and you have the proper abandoned property wording in your lease agreement, you may dispose of the rental furniture and any other personal belongings as you see fit. If the furniture is obviously rental furniture or contains markings identifying it as rental furniture, there is nothing improper about calling the rental furniture company and asking them to retrieve their property. Please be absolutely certain that the unit is abandoned according to Florida law or surrendered before ever removing any resident’s personal property. Check to see if your lease has the current abandoned property wording stated clearly:

BY SIGNING THIS RENTAL AGREEMENT, THE RESIDENT AGREES THAT UPON SURRENDER, ABANDONMENT, OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING RESIDENT, AS PROVIDED BY CHAPTER 83, FLORIDA STATUTES, THE MANAGER SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE RESIDENT'S PERSONAL PROPERTY

 

 

 

RENTAL ASSISTANT FORM DANGERS

 

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

 

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

 

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

 

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

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