SERVING THE THREE DAY NOTICE

Preparing, serving and acting on a Three Day Notice is a lot more complex than most property managers realize. A proper Three Day Notice is referred to as “jurisdictional”, which means that if it is not correct in any way, the court will lack jurisdiction to entertain an eviction action. This may result in the case being completely thrown out, and the property manager must start from scratch before filing a new eviction action. If there is an attorney representing the resident, the attorney in addition to getting the case dismissed can also ask the court to award attorney’s fees and costs, all because the Three Day Notice was prepared or served incorrectly. This article will only deal with one aspect of the Three Day Notice, and that is how it is served by the property manager.

THE LAW VERSUS THE LEASE Florida law states that a notice may be served by posting on the premises, hand-delivery to the resident or occupant, or by mail. The problem we run into sometimes are lease agreements which require a different or specific type of delivery. The lease may require that the notice be mailed to the resident. If this is the case, even though the law allows you to post the notice on the premises or hand-deliver the notice, you MUST mail the notice, because the lease says so. Clauses such as these are often found deep in the lease, requiring that all notices by either party to be in writing and by mail, sometimes even certified mail. “All notices” can be interpreted to include the Three Day Notice. Though the majority of leases do not have clauses which govern how the manager delivers notices, it is a good idea that you check the lease carefully to see if this is the case. Many managers have leases which were prepared by out of state attorneys, are store bought or purchased from the internet, so review of the lease is a must. If you are preparing a lease, it is best not to even mention how the manager is to give the Three Day Notice, as Florida law is completely clear.

SERVICE BY POSTING ON THE PREMISES The law allows the property manager to serve the notice by “posting on the premises” in the absence of the resident. We interpret this to mean posting on the door most commonly used by the resident for entry to and exit from the premises. The notice should be either folded over or placed in an unmarked envelope and securely taped to the door. You may ask why it should not be simply taped to the door, so it is immediately obvious that it is indeed a Three Day Notice. It can be. We do not advise this though, as the resident may have already paid the rent and you misplaced the payment, or the resident could be on the way to your office just as you are posting the notice. Human nature will make one look at a notice that is posted on someone’s door, so you could end up causing embarrassment to a resident who did indeed pay the rent. In these times of increasing consumer rights, the resident could actually sue you for attempting to collect a debt that was already paid. Note that the resident must be absent. If you do not make any attempt to bang loudly on the door and ring the doorbell (if applicable), but rather pre-tape the notice and quietly affix the notice to the door, you are not serving the notice properly.

SERVICE BY PLACING INSIDE THE DOOR While some attorneys feel this is a good way to serve notice, we are firmly against it. Entering a person’s unit unnecessarily will only enrage the resident and increase the risk of you being accused of stealing something out of the unit. Remember that a resident who has not paid rent is often in a desperate situation and will do anything to get out of paying the rent or turning the tables on you.

SERVICE BY HAND-DELIVERY TO SOMEONE OTHER THAN THE RESIDENT If someone other than the resident answers the door, and the resident is not home, you may serve the notice to an occupant who is 15 years of age or older. If you are uncertain about the age of the person who answers the door, it is best to deliver the notice to the person and also securely tape the notice to the door. If the person who answers the door is not an occupant but rather a visitor, babysitter or anyone other than persons who appear on the lease agreement, we recommend that you serve the notice by taping the notice to the door.

SERVICE BY HAND-DELIVERY TO THE RESIDENT This is by far the best way to serve a notice and is in fact required if the resident is present. There is no need for the resident to sign the notice acknowledging receipt. All you need to do is get the identity of the party and hand him the notice. If he rips the notice up and throws it on the ground, you have still done your job. After you have served the notice, fill out the certificate of service on your original, and keep it safely in the file. If you feel that the resident may be volatile or it could be a dangerous situation for you, you can have a process server serve the notice for you. Remember to make sure that the process server actually serves the notice on the day the notice is dated, or the notice will be incorrect. If the resident subsequently denies receiving the notice, the process server may be required to testify in court concerning the issue.

ARE WITNESSES NECESSARY? The law does not require that you have a witness or witnesses with you when you serve a notice. In tens of thousands of evictions we have filed, many where the resident denied receiving the notice, we have only had a few situations in which the judge believed the resident’s story that he did not receive the notice and denied the eviction. Witnesses are certainly great to have but not legally required. We recommend for safety purposes, or if you suspect the resident will pay games with you, the property manager consider bringing a witness along in appropriate circumstances.

SERVICE BY MAIL This is by far the worst way to serve a Three Day Notice and should only be done if the lease specifically requires you to do so. You may be thinking that this is the easiest way to serve the notice, or even the most certain way, especially if you use certified mail. Certified mail is either refused or unclaimed over 50% of the time by a resident. If the resident refuses or fails to claim the certified mail, the resident has not received notice. Stay far away from attempting to serve a Three Day Notice by certified mail. An interesting problem arises when you serve a notice by mail. The law required that when serving a notice by mail, you must add 5 business days to the notice for mailing time. This automatically makes your Three Day Notice, which is 3 business days, into an 8-business day notice. On top of that, the law also states that if you demand payment through the mail, you must add another 5 business days for the resident to mail you the payment. Now we have 13 business days? As you can see, mailing is the least preferred and least recommended way to ever serve a Three Day Notice.

THE ORIGINAL OR THE COPY? The most common mistake among property managers when serving the Three Day Notice is to give the resident the original of the notice and keep a copy in the file. The resident should not get the original, but rather get a copy of the notice. The property manager should retain the original of the notice, and on that original the property manager will fill out the certificate of service.

THE CERTIFICATE OF SERVICE The certificate of service is usually found on the bottom of the Three Day Notice. If it is not there, it should be. This section usually states “I hereby certify that a copy of this Three Day Notice has been served on…” and then has a spot to check off how it was served, to whom and the date of service. The certificate of service only has to be filled out on the original Three Day Notice that you are retaining for your file. The certificate of service is your way of keeping a record on how the notice was served, so the judge will know how, when and to whom it was served. It is not necessary to fill the certificate of service out on the resident’s copy. She knows how it was received, so it is unnecessary to complete this section on their copy. This actually makes notice serving easier. When going to the rental unit, you can have the original on one side of your folder, the copy on the other. Serve the copy, and immediately fill out the certificate of service on the original you are keeping for your file.

CONCLUSION As you can see, this article only addressed the issue of “serving” the Three Day Notice. Properly serving an incorrect Three Day Notice is just as bad as improperly serving a correct notice. Before you even attempt to serve a Three Day Notice, you must be well versed on how to prepare the notice and what you can demand from the resident on this notice.  

 

SERVING NOTICES AND WITNESSES

Thousands of Three Day Notices, Seven Day Notices and Notices of Nonrenewal are served each week by managers. Most are served by posting on the premises or hand delivered to the resident if the resident is present. While most residents comply, there are many times when the manager files an eviction and the resident denies receiving the notice. Most likely an agent for the manager served the notice by himself or herself with no witnesses, so the judge will have to decide who to believe if this is brought up as a defense to the eviction. While witnesses are not necessary, they sometimes can be crucial to your case.

Florida Law

There is absolutely no requirement in Florida law that the manager must have a witness or witnesses present when serving a notice. This article simply deals with recommendations based on our experiences.

The Dangerous Resident

Serving notices can be dangerous. Here you have a situation where a manager is required to knock on a door, only to meet a less than friendly resident or other occupant of the premises, whether authorized or not. Each year, managers get assaulted while in the process of serving notices, and recently in Florida a manager was killed serving a Three Day Notice

The Mailing “back up” Mistake

A manager sometimes will want to insure that the resident receives a notice and sends this notice by mail, in addition to posting on the premises or hand delivery. This can be a serious mistake as the law extends the expiration time of a notice if it is mailed. If a Three Day Notice is mailed, the law allows 5 days for the resident to receive the notice and an additional 5 days for the resident to pay by mail even if you don’t want the resident to pay by mail. This can result in a Three Day Notice becoming a Thirteen Day Notice. On top of this, confusion can occur because the Three Day Notice was given one day but another Three Day Notice received a few days later by mail causing a conflict and possibly voiding out the first Three Day Notice. In the case of a Notice of Nonrenewal, the manager may be under a strict timeframe in which to give the resident notice. For instance a month to month tenancy needs to be terminated by the manager giving no less than 15 days notice prior to the beginning of the next monthly rental period. If the notice is mailed on say August 14, adding 5 days for mailing would make the notice short.

The Desperate Resident

There are no limits to the lies that residents will come up with if they do not have the rent. The most common one is that they did not receive the Three Day Notice. Judges hear this one all the time, and in most cases, as long as the manager or someone else testifies that they served the notice, this defense will not be successful. If this defense is raised in court, you better be certain that the person who served the notice is in court with you, and better yet, another witness.

The “I Paid the Manager by Cash” Defense

Occasionally a resident will raise the defense of payment. They will claim that they paid the manager when the manager met them at the door. Sometimes they will allege that they paid the manager in cash. In most cases this is not a very credible defense, but if the resident can show that the manager accepted cash in the past, the defense becomes stronger. Having a witness who can also testify that no payment was made by the resident could be crucial if this defense is raised.

Alternative Delivery Methods

Private process servers are available in most counties and are often certified to serve notices by the Circuit Court. The process server will prepare an affidavit of service which will be attached to your Three Day Notice that you file with the Court. Most judges will take this seriously, but still, if a process server is used, we would recommend that the process server comes to the eviction hearing or trial. A word of caution when using process servers: make sure the date on your notice and the expiration date are proper, and that the process server serves the notice immediately. We have seen cases in which the manager hired a process server, gave the process server the notice. but the Three Day Notice was not served until the next day, requiring the notice to be completely redone, and the manager had to start over again.

The Sympathetic Judge

Judges are human and in some cases feel sorry for the resident‘s plight. Some residents can weave a great story, and some residents indeed do have legitimate problems. While most judges will follow the law, giving the judge one little excuse to deny the eviction action might be enough for you to walk out of the courtroom with unexpected results. Never underestimate what a resident will do in Court. Our office handled a cut and dry non-payment of rent case, in which the resident denied receiving the Three Day Notice. The manager testified that he gave the notice. The resident had no other legal defense whatsoever, and the judge decided to dismiss the eviction action, stating he did not feel that the resident received the notice. If we had a witness to the notice serving, we doubt that the judge would have considered both the manager and the witness to be liars, and we feel that we would have prevailed in the eviction action.

Our Recommendation

If at all possible bring a witness with you when you are serving notices. If you feel that you have a dishonest or dangerous resident on your hands, or possibly you have accepted rent in cash in the past, it is the safer approach and can mean the difference in whether you win or lose the eviction action.

 

SERVICE MEMBERS AND THE LEASE

Whether you are property manager for a small duplex, or a property manager for an 800 unit high-rise apartment community, you can expect to field questions from service-members and their family members or dependents in regard to their lease obligations. These once obscure questions are becoming more commonplace, especially as our military deploys soldiers where there is conflict or where natural disasters have occurred. The military is also educating like never before our service-members or their dependents or family members concerning their legal rights as lease signers. There are also numerous, not for profit military advocacy groups which are disseminating legal information to the rank and file of the military who are renters of residential property. Nobody should argue that this is a bad development. In fact, we want our service-members to be protected while renting their homes or apartments. They are under enough stress as it is, and we do not want them distracted while they are in the military, or penalized after leaving the military after serving their country. However, you as a property manager should also be well versed in the law, so you can intelligently discuss the options your military residents have in regard to releasing them from their leases due to their military service. This article will provide legal advice on how to effectively deal with a number of common scenarios involving service-members who wish to terminate their leases. If you decide you do not want the hassle of renting to service-members, be advised that Florida law specifically prohibits you from discriminating against service-members, so you will be opening up your company to potentially significant liability under an unlawful discrimination suit!

Service-members Civil Relief Act “SCRA”

The Service-members’ Civil Relief Act, also known as “SCRA”, is a federal law which affords United States military personnel a number of protections in civil lawsuits. Some of these protections allow service-members or their family members, or dependents in some cases, to delay or suspend civil liabilities, as well as providing a mechanism for terminating leases, including residential leases. Our March-2010 Newsletter contains information concerning service-members and evictions and can be reviewed under the following link: http://evict.com/?page=legnew1003#milres. That article contains a more detailed history of the SCRA and should be read carefully, especially since a property manager could be subject to criminal liability if the eviction provisions of the statute are not followed. SCRA covers all persons on active duty with the uniformed services, including Reserve and National Guard members who are activated to federal active duty. SCRA does not apply to Reserve or National Guard members not on active duty, retired military personnel or troops called to duty under state orders.

Application of SCRA

Three of your residents have requested that you release them from their respective lease obligations. Samantha signed a lease three months ago. Two weeks ago she joined the Army. Her commanding officer has called you to verify this, even though you have not received anything in writing from the resident regarding her military service. Darren has provided you in writing his permanent change of station orders along with a written termination notice pursuant to SCRA. He delivered them in person to you. Larry was an Army reservist who was deployed to Iraq for 75 days and mailed his termination notice and orders to you by certified mail return receipt requested. Which of these residents are allowed to terminate their leases? In Samantha’s case, she is obligated to deliver to the manager, either in person or by certified mail return receipt requested, a written termination notice stating that it is pursuant to SCRA, along with a copy of her military orders. Oral notice is not sufficient. Therefore, Samantha has not yet successfully terminated her lease obligations based upon her oral notice. Darren will be permitted to terminate his lease, because he provided proper notice, and SCRA covers active duty service-members who receive permanent change of station orders. Larry is not covered by SCRA. Even though he provided written notice, SCRA covers service-members deployed for 90 days or more. That leaves Larry 15 days short under federal law. However, as you will see, Florida law may allow Larry to terminate his lease. Any advance rent or security deposit must also be returned to Darren in conjunction with the early lease termination assuming that rent is current and there are no damages to the premises in excess of reasonable wear and tear. You are also prohibited from holding Darren responsible for the lease balance, or charging Darren any early lease termination liquidated damage amounts if the resident chose that option at lease signing. It is also important to note that the service-member must be a lease holder for these protections to apply. For example, a wife of a service-member who is deployed cannot terminate the lease if the service-member is not listed as a party to the lease. However, you should also keep in mind though the wife would still enjoy certain eviction stay protections under SCRA, so it would still make sense to try and shorten her lease term if you think that payment of the rent will become an issue due to the husband’s deployment.

Calculating the Lease Termination Dates Under SCRA

For all tenancies under which rent is due monthly, the lease will terminate 30 days after the first date on which the next rent payment is due after the lease termination notice is delivered. So, if the rent is due on the first of the month and the notice is delivered to you in person on July 3, the lease obligations will terminate August 30. For any other tenancy, the lease will terminate on the last day of the month after the month in which the correct notice is provided. Therefore, if rent is due quarterly (a rare tenancy to be sure), and notice was given on July 3, the lease termination date will be August 31.

Florida Statute’s Treatment of Lease Termination Rights by Service-members

Bernice, one of your residents, has just emailed you. She is going to provide you with written orders from the Navy along with a 30-day notice that she intends to terminate the lease. Bernice was on active duty when she signed the lease; however, she is no longer on active duty and plans to relocate to a city 41 miles away which is where Bernice lived just prior to her naval active duty. There is five months left on the term of Bernice’s lease. Meanwhile, Vic has received permanent change of station orders to move 33 miles from your apartment community. Finally, Michael was released from active military duty due to conduct issues. Michael and Vic would both like to vacate in 30 days, even though both have many months left on their respective leases. Can these residents terminate their leases you wonder? In addition to the federal law protections that military members receive from SCRA, the Florida legislature enacted state law mandated legal protection for service-members attempting to terminate their residential rental agreements. These provisions are contained in Florida Statute 83.682 - TERMINATION OF RENTAL AGREEMENT BY A SERVICE-MEMBER. First, each and every time a resident invokes termination rights pursuant to this statute; at least 30 days’ written notice must be provided to the manager and must be accompanied by either a copy of the official military orders or written verification signed by the service-member’s commanding officer. Bernice will be allowed to terminate her lease, because a service-member released from active duty or state active duty after having leased the premises while on active duty or state active duty status is eligible for lease termination rights when the rental premises is 35 miles or more from the service-member’s home of record prior to entering active duty or state active duty. Michael also will be able to terminate his lease early under chapter 83.682, because the protection applies to a service-member who is prematurely or involuntarily discharged or released from active duty or state active duty. Vic may not be as fortunate, as the protection under Florida law requires the change of station orders to be 35 miles or more from the location of the rental premises. However, Vic is still protected under SCRA, because the federal law does not impose a geographical limit for permanent change of station orders. Service-members are also covered under the Florida Statute if the service-member has leased the property, but prior to taking possession of the rental premises, receives a change of orders to an area that is 35 miles or more from the location of the rental premises. You should also be aware that Florida Statute covers a service-member who after entering into a rental agreement, receives military orders requiring him to move into governmental quarters, or the service-member becomes eligible to live in and opts to move into governmental quarters. The Florida Statute also covers service-members who receive temporary duty orders, temporary change of station orders, or state active duty orders to an area 35 miles or more from the location of the rental premises, provided such orders are for a period exceeding 60 days. If the service-member is eligible to break the lease under Florida law, the resident’s rental obligations run for thirty straight days from the time formal notice is provided.

 

SECURITY DEPOSIT PRIMER PART 2 INITIAL DISCLOSURES

 

All security deposits and advanced rents are governed by Florida Statute Section 83.49.  The statute obligates the manager to inform the resident of particular information whenever a security deposit or advance rent is held.

 

When Disclosures Must Be Made.

 

No later than 30 days after a manager receives advance rent or a security deposit, the manager must make the disclosures to the resident.  The notification must be in writing and given in person or mailed to the resident.

 

Many times, the disclosure is in the lease itself.  This is the best way to present the information, because later, there can be no dispute that the disclosure was made. 

 

What Must Be Disclosed?

 

The manager must disclose where and how the security deposit and advance rent is being held.  The disclosure must tell the resident the rate of interest, if any, the resident is to receive and when the interest payments are to be paid to the resident.

 

The Written Disclosure Must Show:

 

1. The name and address of the depository where the advance rent or security deposit is being held;

 

It is best to use the whole street address of the bank, not just the name of the City. However, the complete name of the bank and the name of the City is likely to be considered adequate.

 

2. Whether the advance rent or security deposit is being held in a separate account for the benefit of the resident or is commingled with other funds of the manager;

 

This does NOT mean that it is ok to commingle the funds.

 

3. Whether the funds are deposited in an interest-bearing or non-interest bearing account.

 

4. If the account is interest-bearing, the disclosure must state when the interest payments will be made to the resident.

 

5. Include a copy of the provisions of Florida Statute 83.49 (3).

 

 

Subsequent Disclosures.

 

After the manager makes the initial disclosures, circumstances can change – a bank closes, a new owner takes over, etc.  If the manager changes the manner or location in which the funds are being held, the manager must notify the resident, in writing, within 30 days of the change.

 

Consequences of Non-Disclosure.

 

Unlike other portions of the security deposit statute, there is no clearly defined “penalty” to be applied to a manager who fails to make the disclosures.  Thus, a resident who sues a manager for failing to make the required disclosures must prove that the non-disclosure resulted in losses suffered by the resident.

 

For licensed real estate professionals, the failure to make the disclosures can be a violation of FREC rules. 

Even if there is no lawsuit or FREC complaint, the failure to disclose marks a very sloppy lease-up procedure.  It tends to cast the manager in a very poor light, which can be problematic if the manager has to defend himself before a judge. 

SECURITY DEPOSIT PRIMER PART 1 HOLDING THE FUNDS

A hundred years ago, a manager had few obligations in how he handled the security deposit. There was no statute telling him to keep it separate from his other funds. There was no obligation to make a “claim” on the deposit. He did not have to tell the resident where the deposit was being held. That was then, this is now.

What Does The Statute Cover?

All security deposits are governed by Florida Statute Section 83.49. The statute defines a security deposit as all funds that are “deposited or advanced by a resident on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period.” That means that any money held for some future event, like future rent coming due or repairing damages after the resident moves out, is covered by the statute.

Three Ways To Hold the Funds.

The manager is obligated to hold the security deposit and advance rent in one of three ways.

The first option is to hold it in a separate non-interest-bearing account in a Florida banking institution. The manager cannot commingle the money with any other funds of his or otherwise make use of the funds, until the funds are actually due the manager.

The second option is to hold the security deposit in a separate interest-bearing account in a Florida banking institution. If this option is used, the resident is entitled to receive interest. The amount of interest shall either be 75 percent of the annualized average interest rate payable on the account OR 5 percent per year, simple interest. The manager chooses. As with the first option, the manager cannot commingle the money with any other funds of his or otherwise make use of the funds, until the funds are actually due the manager.

The third option is to post a surety bond. The bond must be in an amount equal to the total amount of the security deposits and advance rent or $50,000, whichever is less. This option is so rarely used that this article will skip the remaining details.

Keeping the Deposit In A Florida Bank.

Any security deposit account, whether interest bearing or not, MUST be kept in a Florida bank.

The account must be in a bank that is chartered to do business in Florida. Most, but not all, banks that are physically located within the state fit into this category. [Not sure about your bank? Ask them if they are chartered in Florida. They easily know the answer.] If an out-of-state owner wants to hold the deposit in his own account, it needs to meet this criteria. It is not sufficient for the owner to place the deposit in a national bank located in his home state which has branches in Florida.

Keeping Deposit Funds Separate.

The deposit and advance rent must be kept separate from other funds.

If an agent collects the funds on behalf of the manager, the agent should either deposit them into the escrow account that is set up in the agent’s office, OR send the funds to the Florida bank account that the manager has set up. It is not proper to send them directly to the manager.

If an owner is holding a deposit, it must be in an account that is set up for the purpose of holding the deposit. It cannot be mixed in with the owner’s other funds in a checking or saving account.

 

 

 

 

THE  SECURITY DEPOSIT DISPUTE

When receiving a Notice of Intention to Impose a Claim on the Security Deposit, invariably a Tenant will one day dispute what you have charged. You will usually be notified of this in a long rambling letter, in which the Tenant goes on and on about how the premises were left cleaner than when he/she moved in. The Tenant’s letter usually ends with a threat that if she does not receive her money back within a certain period of time, she will sue. Sometimes you will receive a letter from an attorney and if you do, you MUST take it seriously.

What is the Manager or Landlord Required to Do When a Security Deposit Claim is Disputed?

The easy simple answer is NOTHING. Contrary to popular belief, there is no legal obligation to respond in any way to a Tenant’s verbal or written security deposit dispute. Remember, your response can be used against you so if you respond, chose your words carefully.  Should you completely ignore it though?

The Four Options When There is a Dispute

1. Do absolutely nothing and ignore the Tenant’s dispute. This will most likely infuriate the Tenant. You will either hear nothing from the Tenant or you may receive a letter from an attorney for the Tenant, or a lawsuit could be filed against you, the property owner or both. Chances are you will hear nothing but you never know.

2. Give the Tenant what he or she wants. If the Tenant is demanding a return of the security deposit in full or in part, you can simply cave in and return the money. That is a fairly certain way to calm the Tenant down, but it is doubtful that you or the property owner really wants to do this. If you are the property manager for an owner, it is recommended that you notify the owner of the dispute and ask them if they would like to do this. Many owners do not want to be remotely bothered with a dispute and may choose this to avoid any possibility of litigation. If a dispute blows up into a major lawsuit, the property owner could blame you for not giving them this option in the beginning. Never try to guess what path an owner will take. Let them make this decision.

3. Respond to the Tenant. Tell the Tenant in writing that you have reviewed the file and that the charges stand. There is no need to explain the charges if they are clear. Remember that you are building a paper trail when you respond, so be careful you do not disclose any weaknesses. Your response will at least show that you are not ignoring the Tenant and may calm the Tenant down.

4. Receive settlement authorization from the owner. After review of the file and possibly consultation with the owner, you may feel that certain charges are not easy to prove or were not warranted. If you receive a fixed amount of settlement authority in writing from the owner, you or your attorney can attempt to settle the matter. If settled, a release can be drawn up and the money disbursed according to the agreement. If settling, do not send the Tenant money unless a release is used  

Can You Disburse a Disputed Security Deposit?

The law is 100% unclear. Florida law does not specifically allow you to disburse the security deposit as you see fit. The days of having to notify FREC, file an interpleader or file a lawsuit in court are OVER. Do you increase the chance of getting sued if you disburse the balance to the owner? Yes.  

Suppose the Tenant sues?

If the Tenant hires an attorney and sues, and if the judge determines that you took one cent too much, YOU WILL LOSE the case and you or the owner will have to pay 100% of the attorney’s fees of the Tenant. We have seen as little as $1000 and as much as $35,000 in attorneys fee awards. Can a Tenant pay their attorney? They usually do not have to. There are hundreds of attorneys who will represent the Tenant FOR FREE and on a contingency basis.

Some Final Advice

ALWAYS MAKE SURE YOU SENT OR SEND THE MONEY THAT YOU WERE PLANNING ON GIVING TO THE TENANT. ONE OF THE WORST MISTAKES IS TO HOLD THE TENANT’S MONEY. IF THEY WERE GOING TO GET SOME MONEY BACK, MAKE SURE THEY GET IT BACK WHETHER OR NOT THERE IS A DISPUTE. IF YOU WERE GOING TO GIVE SOME OF THE MONEY BACK, GET IT BACK TO THEM. IT IS THEIR MONEY.

In the event of a lawsuit, if you manage the property for an owner, you do not want to be named a party to the lawsuit. You are merely holding the money, or you may have already disbursed. Always make sure that you have the following wording clearly stated in your lease agreement:

DISPUTES AND LITIGATION: In the event of a dispute concerning the security deposit and tenancy created by this agreement, TENANT agrees that if the premises are being managed by an agent for the record owner TENANT agrees to hold agent, its heirs, employees and assigns harmless and shall look solely to the record owner of the premises in the event of a legal dispute.

 LAW OFFICES OF HEIST, WEISSE & WOLK, P.A.

1-800-253-8428

INFO@EVICT.COM

 

 

 

SECURITY DEPOSIT DEDUCTIONS

A security deposit is collected under most residential leases, and in most of those situations, the manager will seek to make at least some claim against the security deposit after the tenancy has concluded.

Statutory Definition

Florida Statutes 83.43(12) defines security deposits to mean “any moneys held by the manager as security for the performance of the rental agreement, including, but not limited to, monetary damage to the manager caused by the resident's breach of lease prior to the expiration thereof.” Florida Statutes 83.49 permits the manager to impose a claim on the security deposit and sets forth the procedure to do so. Thus, the manager can impose a claim on the security deposit, not only for physical damage claims, but for any failure in the performance of the rental agreement by the resident.

There is a lot of confusion surrounding the term “damages”. As FS 83.43(12) clearly states the term isn’t limited to just monetary damage, such as the lost rent. Damages are the compensation recoverable for any loss suffered by the manager due to the resident’s breach of the lease. In the following paragraphs I have listed some of the common items for which deductions are made. The listings are examples only and are not intended to be exhaustive.

Most Common Damages

The most common damages chargeable against the security deposit are rent (the unpaid rent for the month of vacating: the entire month can be claimed, not just the prorated rent through the vacating date), late charges, NSF fees, accrued utilities, including water, sewer, gas, electric and garbage (utilities are often billed in arrears), pest control, valet trash service, eviction court costs and attorney’s fees. Court Registry funds which are already the subject of a court order in the manager’s favor should not be listed.

Concession recapture is not permitted without clear authorization under the lease. Even then, there may not be a clear answer as to whether a concession can be recaptured. Our firm believes that the recapture should be allowed, since the statute places no prohibition on this. However, a judge could take the position that the statute does not directly provide the manager with this remedy, and therefore the recapture of the concession is prohibited.

Our firm advises against accelerating rent or any other charges in order to deduct them against the security deposit. If after deducting all the current damages, a security deposit balance remains and the lease term has not expired, the manager should contact his attorney to discuss his options.

Physical Damages

Physical damages to the rental in excess of ordinary wear and tear are valid claims against the security deposit. The manager should remember that after a year or more of use, there will be some ordinary wear which should not be charged to the resident. The manager should also remember that many judges will build in a depreciation factor to many items supposedly needing repair or replacement. Thus, a manager should not attempt to charge a resident for the full cost of carpet replacement, when the useful life of the carpet was already 90% exhausted prior to that resident taking occupancy. The term “ordinary wear and tear” does not appear in the Landlord/Tenant Act, but most judges will enforce a variation of this concept. Particularly with regard to physical damage claims, managers would be well advised to settle with residents, if possible, rather than risk an adverse court decision. The amount in dispute is usually small compared to the liability for the prevailing party’s attorney fees.

When the unit has not been left clean, cleaning charges can be deducted. Like ordinary wear and tear, “clean” has no statutory definition, and resident disputes are better settled then litigated. If the manager imposes a standard nonrefundable redecorating or cleaning fee, then the manager may have waived the right to charge for any further painting or cleaning, as the case may be.

If the resident has made unauthorized alterations to the rental, then the removal of the alterations and restoration charges are valid deductions from the security deposit. If the resident has made authorized alterations, which the manager is leaving in place, then there should be no deduction from the security deposit. If the manager is removing the authorized alterations, then the lease should indicate that it is the resident’s duty to restore the premises to the original condition. If the lease is silent or unclear on this duty, then the authorization may be seen as a waiver of any resident obligation to restore.

Most capital improvements are the manager’s responsibility, such as roof, plumping pipes, outside or patio painting. Unless the damage is the result of the resident’s intentional act or negligence, it is inappropriate to charge the resident for these repairs or repainting. Claims based upon the resident’s intentional act or negligence are often difficult to prove.

Problem Areas

Managers, who are placing the rental for sale or re-occupying the rental, are tempted to overreach when charging the resident for cleaning and repairs, and judges are very aware of this dynamic. Another issue arises when a deduction is made without an actual repair subsequently being conducted. There is no legal requirement that a particular damage be repaired in order to entitle the manager to a deduction from the security deposit. However, claiming damages without making the repair will require clear and convincing proof. Managers should have particularly well documented files for any charges in the above scenarios.

Courts have held that certain damages are chargeable against the security deposit only if the lease provides for them in explicit, unambiguous language. Leases can maximize the claims against the security deposit by identifying these items as damages. If the lease isn’t specific, a general catch-all clause may suffice. However, reliance on general language is risky. Examples of these damages are often found when a single family home, townhome or condo lease is breached by a resident vacating early: continuing lawn care and pool service, continuing electric or gas for the fan, air conditioning or heat (to prevent mold or freezing damage to pipes), commissions, re-leasing fees, advertising charges, and administrative or delivery charges for the delivery of Three-Day or Seven-Day Notices. Even if the lease language clearly provides deductions for certain types of damages, a judge can decide not to enforce these charges against the resident, but rather make the manager bear the cost, such as administrative fees of the manager’s agent.

Charge lists for repairs or replacements, when reasonable, will likely be upheld. It is overreaching that leads to judicial skepticism. If a manager doesn't buy at retail, the charge sheets shouldn't be at retail.

Some damages are not chargeable against the security deposit regardless of a lease provision permitting the charge. Any administrative charge for preparing the notice of claim against the security deposit or the certified mail postage on the notice of claim are the manager’s statutory duties and are not chargeable to the resident.

Notice of Claim

The manager must account on the Notice of Intention to Impose Claim on Security Deposit not only for the security deposit, but also for any pet deposit or other deposits, such as appliance, utility, garage or common area deposits. Although not technically required under Florida Statutes, it is good practice to account for the last month’s rent on the notice of claim.

 

SECURITY DEPOSIT CLAIM FORM BASICS

 

One of the basic documents used in real property management, whether apartment complex, single family home or condominium, is the Notice of Claim against Security Deposit, referred to in this article as the “Notice”. It is called other names such as Statement of Account (SODA) or Move-Out Reconciliation. It ranges from a standard form used by many owners and management companies to a letter individually drafted for each rental. A suggested form is at the end of this article.

 

The Statutory Duty

 

Florida Statutes 83.49(3)(a) states: Upon the vacating of the premises for termination of the lease, if the manager does not intend to impose a claim on the security deposit, the manager shall have 15 days to return the security deposit together with interest if otherwise required, or the manager shall have 30 days to give the resident written notice by certified mail to the resident's last known mailing address of his or her intention to impose a claim on the deposit and the reason for imposing the claim.

 

When To Use the Notice

 

The manager only uses the Notice if he is making a claim against the security deposit, other deposits (pet deposit), or any other unused pre-paid amounts (unapplied last month’s rent in case of a resident skip). All of these together will for purposes of this article be referred to as the “deposit”. If the manager is returning the entire deposit, then there is no need to use the Notice. The manager can simply return the entire deposit by first class mail with a cover letter to the last known address. If the manager is claiming any part of the deposit, then the manager must use the Notice. Technically, a good argument can be made that if the only escrow money held by the manager is last month’s rent, then no Notice has to be sent. Nonetheless, we still recommend notifying residents when any escrow money is retained. If the manager is returning part of the deposit, we suggest that the manager send a check for the balance with the Notice, because it provides a certified mail record of the refund check being received (since the Notice must be sent by certified mail), and the check demonstrates to the resident the manager is genuine about returning the portion of the deposit not claimed. If the resident does not get the check with the Notice, then there is a greater chance that he will object to the Notice. One downside to sending the refund check with the initial claim letter occurs when subsequent damages are discovered within the 30-day notice period, and the manager seeks to send a revised claim letter for a greater amount.

 

If the manager is returning all or a part of the deposit, he should return it to the last known address. In the case of multiple residents, the check should be made payable to all the residents jointly (A, B and C). In the case of a deceased resident, the check should be made payable to “The estate of A”.

 

Certified Mail

 

The statute requires that the Notice be sent by certified mail. Use of a return receipt (the green card) is not required, but we have traditionally advised managers to obtain a return receipt. Since managers now have the ability to track receipt of the Notice online, this position can be reconsidered. However, the green card is powerful evidence in court when the resident denies receiving notice. There is an exception to the rule requiring that you send the Notice. We recommend that you not rely upon this exception, unless you have forgotten to send the Notice within 30 days and are now forced to see if you fit within the exception. See our article entitled Forgetting to Send the Security Deposit Claim.

 

The manager may not charge the resident for the cost of the certified mail. It is a duty imposed on the manager by the statute and is not chargeable to the resident.

 

Last Known Address

 

The Notice must be addressed to all the residents. It must be sent to the last known address. If no forwarding address is given, then the “last known address” is the rental, and it is sent to the rental. If the lease contains an address for notice to the resident, then that is the address to use, unless there is a later forwarding address. In the case of multiple residents who may give multiple forwarding addresses, the notice goes to each of the forwarding addresses. If one of the multiple residents gave no forwarding address, that resident’s Notice goes to the rental address. If multiple residents cannot agree in writing to the forwarding address and a check is being sent to them, the manager should send the check to the last agreed address, probably the rental address or the resident notice address in the lease, with copies of the check and the Notice to the resident’s individual forwarding addresses.

 

Date

 

FS 83.49(3) (a) states: If the manager fails to give the required notice within the 30-day period, he or she forfeits the right to impose a claim upon the security deposit. Whatever the date on the Notice, the postmark date is conclusive. If the postmark is not within 30 days of vacating, then the Notice is late. The courts accept no excuses. For more information on timing, see our article entitled Security Deposit Claim and Refund Timing. Note that the failure to timely comply with the statute only bars claiming the deposit. It does not release the resident from his financial obligation to pay the damages. The manager must return the deposit, but the resident can be sent to collections or sued for the damages.

 

Required Statutory Language

 

FS 83.49(3) (a) states: The notice shall contain a statement in substantially the following form:

 

This is a notice of my intention to impose a claim for damages in the amount of _____ upon your security deposit, due to _____. It is sent to you as required by s. 83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to (manager's address).

 

Judges are familiar with this wording. While the statute permits some wording changes by only requiring a “substantially” similar statement, you are advised to consult with your attorney before making changes. As you can see, the above wording contains a provision that the manager’s address be included in the Notice. This is the complete manager’s (or agent’s) address, where any resident’s objection should be sent, including P.O. Box/street, city, state and zip.

 

Listing the Damages

 

The Notice only deals with the deposit. It is not required by law to be the complete listing of all the damages but it is highly recommended. Confusion can be avoided if the Notice contains a statement to the effect that the Notice does not waive or limit any of the manager’s rights to damages or amounts due, which may exceed the security deposit or the amounts listed on the Notice. The manager may later send the resident a statement of additional amounts due as a result of further damages found or incurred. It is best to send a statement and not a second Notice form, as sending a second Notice may unnecessarily lead the resident to think that the manager was required to send the second Notice within 30 days also.

 

As used in this article “damages” means physical damages to the premises, cleaning charges, unpaid rent or other accrued charges, and any other amounts charged to the resident. It is good practice to list all known damages at the time the Notice is sent. If the damages exceed the deposit, the resident will have a clearer idea of the true status of the account.

 

We advise against accelerating rent owed through the lease expiration date. This is not a right created by Florida Statute 83.595, the statutory section outlining a manager’s collection rights. The disclaimer on the Notice indicating that amounts not listed are not waived should eliminate any doubt that future rents will later become a valid, additional claim if the manager is unable to relet the premises prior to the lease expiration date.

 

Damages Detail

 

The purpose of the statute is to give notice to the resident of the disposition of his deposit. To effectuate that purpose, the courts require that the Notice contain sufficient detail to apprise a reasonable person such that he could make an informed decision as to objecting to a damage item claimed or the charge for that damage. A manager should ask the question, “If this Notice is given to a judge, will he be able to ascertain what was damaged and how much it cost?”

 

The following represent bad practice claims: claiming the deposit without listing any damages; listing the damages without amounts; lump-sum damages, such as “rent, damages and cleaning: $900.00”; and summary listings, such as a long paragraph of the individual itemized damages followed by a total amount. If you are considering referencing an automatic deposit forfeiture on the Notice, please first review our article entitled Forfeiture of the Security Deposit.

 

The Notice can refer to another attached or enclosed list that itemizes the damages and amounts, such as a move-out reconciliation or a final inspection form.

 

The Math

 

All too often the math is wrong. Check and re-check your math. Most importantly, is the balance owed the manager or the refund to the resident correct?

 

An incorrect Notice

 

If you find that you have made a mistake on the Notice, see our article entitled Revising the Security Deposit Claim.

 

Resident Objection

 

FS 83.49(3) (b) states: Unless the resident objects to the imposition of the manager's claim or the amount thereof within 15 days after receipt of the manager's notice of intention to impose a claim, the manager may then deduct the amount of his or her claim and shall remit the balance of the deposit to the resident within 30 days after the date of the notice of intention to impose a claim for damages.

 

The resident has 15 days from receipt of the Notice within which to object to the Notice. Prudent managers wait 20 days, adding another 5 days in case the resident mails his objection on the last day. Since the Notice is sent certified, the manager can track it on-line at the post office website (www.usps.com\). The manager can see when the certified mail is delivered. If it remains undelivered, it will be returned to the manager, who has fulfilled his statutory duty regardless that the mail has been returned. For more information on the resident’s objection time, especially for realtors disbursing the funds see our article entitled The 15 Day security Deposit Dispute Period.

 

Although not covered in this article, in case of a resident objection, see our article entitled The Resident Security Deposit Dispute. Note that the debt is now “disputed”, and it must be referred to as “disputed” in any communications. If the debt has been sent to collections or reported to a credit bureau, they must be informed that it is now "disputed".

 

THE SECURITY DEPOSIT CLAIM AND WHAT THE RESIDENT OWES

One of the most common areas of confusion regarding security deposits is knowing what to put on the Notice of Intention to Impose Claim on Security Deposit, hereinafter called the “Notice”, the form which according to FS 83.49 must be sent out to the resident within 30 days of the resident vacating the premises. We find managers do their best to figure out what the resident owes, either due to breaking the lease or simply leaving at the end of the lease with damages to the premise or otherwise owing the manager money. The problem is that this form only is dealing with the security deposit, or in some cases, advance rent that the manager is holding. This is not a “final bill” to the resident or the total amount a resident will possibly eventually owe. This common misconception causes managers to frequently fill out the Notice incorrectly.

What Amounts Are Put on the “Notice?”

A security deposit is the amount the resident owes to cover damages to the premises, monies owed to the manager under the terms of the lease and for full and faithful performance of the lease terms.

1. The resident breaks the lease by vacating

If the resident simply “skips” out of the lease, the manager can charge the resident rent that is owed at the time the resident skips out. The manager cannot accelerate the rent. Acceleration occurs when the resident is immediately charged for all the remaining rent owed under the terms of the lease. While the lease may provide for this, and it seems logical, acceleration is not a specific collection right granted to managers under Florida default remedies. A “skipping” resident owes rent due at the time of the skip, damages to the premises which exceed ordinary wear and tear, and any other amount legally chargeable to the resident under the lease terms. If a resident paid rent for June and skipped out June 20, it would seem that the resident would owe no rent, and that no rent could be placed upon the Notice. This is certainly not the intent of the statute, and since the manager has 30 days to send out the Notice, by July 1, the resident will owe another month’s rent which can and should be put on the Notice. You do not want to be returning the full security deposit if the resident skips out on the lease, as he will owe you rent. As you can see though, if the unit stays vacant, the resident will owe you more rent, presumably until the earlier of the end of the lease or until the unit is re-rented. How can you put this on the Notice? You can’t, and you don’t need to. The notice is only dealing with the SECURITY DEPOSIT and ADVANCE RENT funds!!!!

2. The resident is evicted

If your resident is evicted, you will be charging them everything in paragraph 1 above, plus your attorney’s fees and court costs, if your lease states that you are entitled to these sums

3. The resident vacates at the end of the lease

If your resident vacates as planned at the end of the lease owing no rent, you will not be charging the resident any rent on the notice, just damages that exceed ordinary wear and tear, and any other sums due under the terms of the lease.

Sums Owed That Exceed the Security Deposits

Often a resident will owe significant sums that exceed the security deposit, or after you send the Notice, you discover at a later time some further damage that was not caught or actually hidden from the manager. If you already claimed the entire deposit, this is not relevant to the prior Notice. While you do want to list on the Notice everything possible that is owed by the resident within the 30 days window you have to send the Notice, if there are other amounts that the resident owes you as time goes on, these amounts will still be owed to you by the resident.

The Danger of the “Notice”

As many managers incorrectly think that the amount on the Notice is the end all total amount owed, the resident also may think this. If a manager were to later sue a resident for accrued rent or later discovered damage, the resident could conceivably convince a judge that since it was not on the Notice, it is not owed. This common misconception can be cleared up by placing the following wording on the bottom of the Notice. This wording, though not required by Florida law, is a reminder to the resident and to the manager that the amounts you have listed on the Notice may not be the actual total amount that the resident will owe you.

This Notice Of Intention to Impose Claim on Security Deposit does not waive or limit any of manager's rights to damages or amounts due which may exceed security deposit or amounts listed on this form. 

SECURITY DEPOSIT CLAIM AND REFUND TIMING

A resident’s security deposit is sacred in the eyes of the law. Specific timing issues are laid out in Florida Statutes which must be followed to avoid the manager having to refund the entire security deposit to the resident, even if the resident owes the manager money. Many managers fail to take the law seriously and are surprised when a resident leaves owing a substantial amount of money to the manager, only to demand the full security deposit back from the manager because the manager failed to send the notice out in time or get the resident the balance of the deposit if any back in time.

When Does the Notice Have to be Sent to the Resident?

The required timing of the Notice of Intention to Impose Claim on Security Deposit, hereinafter “Notice”, depends on whether you are making a claim against the deposit or whether you are returning the full deposit to the resident.

Timing of Notice When Making a Claim

If making a claim against the deposit, the Notice must be sent out within 30 days from the date that the resident vacates the unit and not one day later. Failure to send out this Notice within the 30 days will result in the manager having to refund the full amount of the security deposit to the resident, regardless of amount owed to the manager. The is no excuse for failing to send the Notice out within the 30 day timeframe. A number of years ago, the timeframe was 15 days. Now it is 30 days.

Timing of Notice when returning the full security deposit If you are returning the full security deposit, you do not have to send out the Notice at all! Simply get the money in the mail within 15 days of the date that the resident vacated the premises. Many apartment communities fail to send the money to the resident within 15 days due to accounting issues and the time delays in requisitioning the money and getting a check from the corporate office. Unfortunately the judge does not care how your system works. The money must be sent out within 15 days period.

Returning a Portion of the Deposit

If you sent the Notice out and you are returning a portion of the deposit, you must return this portion of the deposit within 30 days from the date you sent out the Notice.

Examples: 1. Resident vacates September 5 and you are not making a claim against the deposit. You must return the deposit by September 20. The Notice need not be used. Simply send the money.

2. Resident vacates September 5 and you are returning some but not all of the deposit. You must send out the Notice by October 5 and you must return the balance of the deposit within 30 days from the date you sent out the Notice.

The Security Deposit Law 83.49 (3)(a) - (3)(c)

83.49 Deposit money or advance rent; duty of manager and resident

(3)(a) Upon the vacating of the premises for termination of the lease, if the manager does not intend to impose a claim on the security deposit, the manager shall have 15 days to return the security deposit together with interest if otherwise required, or the manager shall have 30 days to give the resident written notice by certified mail to the resident's last known mailing address of his intention to impose a claim on the deposit and the reason for imposing the claim. The notice shall contain a statement in substantially the following form: This is a notice of my intention to impose a claim for damages in the amount of ____________ upon your security deposit, due to ________. It is sent to you as required by S. 83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to (manager's address). If the manager fails to give the required notice within the 30 day period, he forfeits his right to impose a claim upon the security deposit. (b) Unless the resident objects to the imposition of the manager's claim or the amount thereof within 15 days after receipt of the manager's notice of intention to impose a claim, the manager may then deduct the amount of his claim and shall remit the balance of the deposit to the resident within 30 days after the date of the notice of intention to impose a claim for damages. (c) If either party institutes an action in a court of competent jurisdiction to adjudicate his right to the security deposit, the prevailing party is entitled to receive his court costs plus a reasonable fee for his attorney. The court shall advance the cause on the calendar.