BILLING FOR WATER NOW OR IN THE FUTURE

Traditionally in apartment communities, water is paid for by the property owner and included in the resident’s rental amount. Most apartment communities do not have separate water meters for each unit. Due to the increasing cost of water and technological advances in water flow measuring and resulting lower costs of retrofitting, many apartment communities are hiring companies to sub-meter their units and handle the billing aspects. This cost shifting results in tremendous savings to the owners of the apartment communities, and most likely also results in water conservation overall. The task of sub-metering is not difficult in most buildings but the legalities of getting the resident to now pay for the water that was once included in their rent presents some challenges.

The Current Resident Problem

Most leases simply state that water is included in the rent or it is the owner’s responsibility to pay water. In cases like this, if an apartment community decides to sub-meter, there is no way possible to make the current resident under the current lease pay for the water. If it was not in the contract, they are under no legal obligation to pay for water. The only option the manager has is to non-renew the resident’s lease at the end of the term and offer a new lease with the proper wording in the lease stating that the water is the resident’s responsibility.

A common provision found in many Florida leases states the following:

Insufficient Lease Clause

…Unless separately metered, we supply the water and sewer for normal usage. If separately metered, you must pay the water and sewer as additional rent when rent is due. If you do not have separately metered water, we may add separate metering…

As you can see from this clause, it would appear that in the event the unit was sub- metered after the resident moved in, you would be able to now make the resident pay for the water as additional rent when rent is due. Unfortunately the clause is not very clear, does not cover all scenarios and we know that ambiguity is construed in favor of the resident.

Suppose You are Going to Institute a RUBS Program?

Ratio Utility Billing Systems (RUBS) is a system whereby the manager charges water use by a ratio like the square feet of the unit, bedrooms and/or the number of residents in a unit. This system avoids the retrofitting necessary to sub-meter an apartment building, but has its own problems as well. Many residents feel this system is unfair, as it could be inaccurate, as some residents will invariably overpay for usage, while other residents will underpay as these systems assume constant and equal water usage. Can an apartment community use the sample clause above if they decide to implement a RUBS program? The answer would be no, as that clause only addresses sub-metering. Therefore, if the lease does not address the possible future implementation of a RUBS program, there is no way you can impose it on a current resident.

A Possible Lease Clause Based Solution

Even if you have no immediate plans to sub-meter an apartment community or institute a RUBS program, we feel that your lease should allow for the possibility at a later time. Water costs may increase dramatically, you may sell the apartment community, or you may just decide that RUBS or sub-metering is the way to go. Without a proper lease clause, your hands are tied.

Sample Lease Clause

Currently water and/or sewer is provided by the Manager and Resident agrees to use same in a reasonable manner. Resident agrees that at some time in the future, Manager may pass this cost on to the Resident, and Resident agrees to pay for water and/or sewer each month upon demand with the monthly rental payments as additional rent, as Manager may decide to sub-meter the apartment or institute a Ratio Utility Billing System whereby Resident agrees to pay upon demand the cost of water and/or sewer based upon a formula taking into account factors including but not limited to the unit square feet, number of bedrooms and/or the number of residents. Resident shall be given 30 days prior written notice by Manager if Resident becomes responsible for paying for water and/or sewer.

The Importance of Disclosure

While a clause potentially making a resident responsible for water at a future time is legal, when the time comes to implement the clause and begin billing the resident, sparks will fly. There will be cries of unfairness, surprise and alleged verbal promises. If you intend to use such a clause, we recommend that it is clearly pointed out to the resident or possibly placed in a separate document as an addendum. A water/sewer bill could substantially increase the rental amount, and we recommend that before you sub-meter or implement a RUBS program you check with your attorney on the plan of action and legalities.

 

BETTER BUSINESS BUREAU AND THE PROPERTY MANAGER

 

The Better Business Bureau is a non-profit organization. It is composed of local businesses that voluntarily join and pay dues for membership. Its members commit to a code of ethics in dealing with the public. One of the services it offers is to assist in the resolution of issues between businesses and consumers.

 

The BBB Complaint

 

The consumer initiates the process by filing a “complaint” with the BBB. The complaint can be against any business, whether a BBB member or not. The BBB will not handle complaints involving employment practices or discrimination. The BBB indicates that these complaints are better made to and handled by the government agencies created to deal with these issues.

 

The BBB complaint process begins with the consumer filing a complaint, either in person or online. Anonymous complaints are not taken. Based upon the business’s zip code, the complaint is assigned to the local BBB. The complaint questionnaire asks the consumer to describe his/her complaint and the settlement sought. The BBB assigns a case number to the complaint, and within two business days the complaint is forwarded to the company. The company is asked to respond, normally within ten days. If a response is not received, the BBB issues a second request. If the BBB does not receive a response within thirty days, it closes the complaint as unresolved without a response.

 

A Response Isn’t Required

 

There is no legal requirement that any business, whether a BBB member or not, respond to a BBB complaint. BBB member businesses are expected to respond to complaints. A member business’s failure to respond may affect its continued membership in the BBB. Any response by non-member businesses is completely voluntary.

 

The Legal Complaint

 

The manager should not be confused by the BBB’s use of the term “complaint”. Managers are familiar with a legal “Complaint”. This is the legal document that is filed with a court to start a lawsuit. A legal Complaint should always be reviewed by the manager’s attorney, as it requires some response. On the other hand, a BBB complaint does not start any legal process. It does not necessarily have to be reviewed by a lawyer. It does not require a response.

 

Benefits of Responding

 

If responding, the manager should make a reasoned, professional response correcting any resident misrepresentations, indicating the efforts made to address the resident’s concerns, and citing the results obtained. In the response, the manager should refrain from any hostile attacks on the resident, inflammatory accusations or belittling language. Responding to a BBB complaint, even in instances of resident misrepresentation, demonstrates that the manager is acting professionally and in good faith. Also, at a later date in a different setting (court) the resident may try to argue that the unanswered complaint indicated the manager was unwilling to address the resident’s issues or that the complaint was accurate.

 

The BBB does keep track of the number of complaints filed against a business and the number of complaints resolved. Because this information is available to the public, responding to complaints may be good public relations.

 

Since it is the resident’s version of the facts, the BBB complaint is usually one-sided. However, it does give the manager notice that the resident considers the issues important enough that the resident has taken the time and made the effort to file the BBB complaint. It’s quite possible that the complaint is the manager’s first notice that the resident has these issues. Thus, the complaint may actually help a manager address and resolve a resident’s problems. Resolving a resident’s issues at this stage may avoid further complications. The resident’s next step may be to involve a governmental agency or issue a rent withholding letter to the manager.

 

Problems With Responding

 

While some residents’ BBB complaints may be filed in good faith, some are just another chapter in many residents’ continuing harassment of the manager. The complaint may be a complete misrepresentation of a situation which the manager has already fully and fairly addressed. It may be a request for relief that the manager is not required to give and has determined not to provide. It may be a waste of time to respond.

 

Although the BBB complaint and the manager’s response are not legal documents, the manager should give thought to the wording of his response. The complaint and the response are subject to being introduced as evidence should the matter eventually become the subject of litigation. The manager should not disclose any information that may later be used against him. The manager should be careful with regard to making any admissions of responsibility, liability or negligence. If in doubt about what he is disclosing, the manager should not respond.

 

Require a Privacy Waiver

 

The resident’s filing of the complaint can be considered his consent for the manager to disclose information necessary to answer the complaint. Unwarranted disclosure of the resident’s personal information unassociated with the complaint would be a privacy violation. The prudent manager should respond that privacy concerns prevent any response without a privacy waiver by the resident and enclose a waiver for the resident’s signature.

If the manager has any doubts about responding or the wording of the response, he should consult with his attorney.

BELLIGERENT RESIDENTS

Every manager will someday deal with the situation when a resident comes storming into the office acting in a threatening or belligerent fashion. He may be unhappy about the rent going up, or because you are non-renewing him, or possibly because his car was towed, and it is all your fault according to him. He storms into your office, spewing profanities and acting aggressively towards you or others. It is possible that you have other prospects in the office who have to be subjected to this behavior by the resident. This can be a frightening experience, as the resident could go as far as threatening the life of staff members, or throwing objects about the office. Can you evict a resident for this behavior? Should he and other leaseholders of his apartment be served any type of notice?

Calling the Police

Unless the dispute is minor, we recommend that the police are called immediately. Although they most likely will not do anything but speak to you, your staff and the resident, it will send a clear message to the resident that you mean business and will not tolerate such behavior in or out of the office. By calling the police, you will also create the much needed paper trail in the event another incident of a similar nature occurs again.

Trespassing the Resident

If a disruptive incident happened more than once, a threat was made, you were put in fear of your life, the resident did some physical damage to the premises or interfered in a serious way with you conducting business in the office, you have a right to request that the attending police office or sheriff’s deputy file a trespass warning against the resident. If the sheriff does trespass the resident from the office and the resident returns, the resident can be arrested.

The Proper Notice to Use

If the office disturbance is such where there is yelling, profanity and general inappropriate behavior, while the manager would love to terminate the resident, this would not make for a strong termination case. In such a situation, a Seven Day Notice of Noncompliance with Opportunity to Cure should be given, and you should consult your attorney for the proper wording. If the disturbance rises to a much more serious level including direct threats of physical harm to persons or property, a Seven Day Notice of Termination would be the proper notice to use. Never prepare a Seven Day Notice of Termination yourself, but immediately call your attorney for guidance,

Continued Behavior

If a Seven Day Notice of Noncompliance With Opportunity To Cure has been served, and similar disturbances occur after the notice expires of which you have good proof, it will be possible to serve a Seven Day Notice of Termination. Again, your attorney should assist you in making that decision.

Some Final Thoughts

Most self-respecting managers will eventually have their vehicle keyed or their tires slashed by an angry resident. A number of situations occur each year in which managers and apartment community staff in Florida are injured and even killed by irate residents. Learn to try to diffuse situations whenever possible, as the risk is high that something serious can occur.

 

BARKING DOG DISTURBANCES

 

You are trying to kick someone out of their apartment because their  dog barks too much. Said like that, it puts your case in perspective from a judge’s viewpoint. You know that the barking dog is keeping the neighbors awake at 2:00 a.m., or that the unattended, whining dog on the balcony is interfering with the neighbors’ quiet enjoyment of their apartments. You know that because you have the irate phone calls, the complaining notes and even a neighbor’s letter refusing to renew. The means to turn what you know into a successful eviction is called evidence.

 

Do you want to win in court? Then you have to use your common sense.

 

Common sense

 

1. A dog barking too much occasionally isn’t that unreasonable.
2. If it isn’t important enough to come to court, it’s not that important.
3. If someone can’t remember when it happened, it wasn’t that serious.
4. If someone waits a week to do anything, it wasn’t that bothersome.
5. If only one family is complaining, it may be an overreaction.

 

Witnesses

 

The earlier they’re on board, the better. Speak to them personally. Tell them your lawyer said (always blame it on the lawyer) no witnesses, no case. Witnesses need to write it down – keep a log: date, time, duration, how loud. This also calms the angry neighbors, because now someone is doing something to address their problem. You have a plan.

 

Your staff and courtesy officer can testify to barking. Have them complete incident reports. You still need neighbors to testify. It’s the neighbors whose quiet enjoyment of their apartments is being disturbed. Unless your staff is on-site at night, they can’t help with night barking, because they must actually hear the barking. You need at least two witnesses, each from a different apartment. The more witnesses, the better your case will be. One witness alone is subject to a tie in testimony. He said, she said. You lose all ties.

 

Continuing

 

All notices should be within 90 days to show the barking is a continuing disturbance and not an infrequent lapse. Immediately serve a Seven Day Notice of Noncompliance with Opportunity to Cure. If the barking continues after the Notice expires, a termination notice can theoretically be served, but you need to seriously consider serving another Seven Day Notice of Noncompliance with Opportunity to Cure notice. If the barking continues after the second cure notice expires, check with your witnesses. Did they keep logs? Will they testify? If yes, then contact your attorney about the Seven Day Notice of Noncompliance without Opportunity to Cure (the Seven Day Notice to Terminate).

Attorney

 

Involve your attorney early. Have your attorney do all the Seven Day Notices  of Noncompliance with Opportunity to Cure

 

SOME PROOF THAT IS NECESSARY PRIOR TO TERMINATING THE RESIDENT FOR THE BARKING DOG

 

1. Witnesses who will testify in court that they heard the barking AFTER the Seven Day Notice of Noncompliance with Opportunity to Cure expired and are prepared to show the judge proof (logs and/or incident reports).

 

2. Police reports where the police indicate in the reports that they heard the barking and it was unreasonably loud AFTER the Seven Day Notice of Noncompliance with Opportunity to Cure expired.
3. Animal control reports in which the animal control warden indicates in the report that the dog was unattended and/or barking loudly AFTER the Seven Day Notice of Noncompliance with Opportunity to Cure expired.

 

4. Tape recordings of the dog barking AFTER the Seven Day Notice of Noncompliance with Opportunity to Cure expires.

 

5. Written admissions by the dog owner that the barking is unreasonable, i.e. an apology note from him.

 

6. Multiple Seven Day Notices of Noncompliance with Opportunity to Cure to show that you gave several chances for the resident to save his home.

 

7. Notices within a reasonably close span of time to show this was a not several, isolated incidents in an entire year. This barking was a continuing, serious, unreasonable disturbance of the neighbors.

 

8. Do not accept money after learning the dogs are still barking, if you are going to give a Seven Day Termination notice for that particular barking. Accepting money after learning of a noncompliance is a waiver of that noncompliance. Remember in accepting money the key is when you LEARN of the noncompliance, not when you serve the Seven Day to Terminate.

 

9. Do not accept money after serving a Seven Day to Terminate.

 

IF YOU DO NOT HAVE A STRONG CASE, YOU WILL LOSE. EXPECT THE RESIDENT TO DENY THE BARKING IS FREQUENT OR LOUD AND TO HAVE HIS FAMILY OR FRIENDS TESTIFY TO THAT. REMEMBER THE JUDGE WILL NEED TO BE CONVINCED THAT THE DOG BARKING IS SO UNREASONABLE THAT HE WILL TAKE THE RESIDENT’S HOME AWAY.

 

BANKRUPTCY AND RESIDENT
 

It is the 5th of the month and you have not received the rent for one of your tenants. You are carefully preparing the Three Day Notice when the mail arrives. An official looking document from the Bankruptcy Court is addressed to you. Upon opening the envelope, you see that it is a “Notice of Commencement of Bankruptcy”, naming your tenant as the debtor. Unfortunately this scenario is becoming quite common, as bankruptcy filings are on the rise, with many of the bankruptcies being filed by renters. Can the tenant live there for free now? Can you evict that tenant? Can you cancel the tenant’s lease?

Once you receive notice from a tenant that he or she has filed for bankruptcy, you are prohibited by federal law to take certain actions. You are not allowed to attempt to collect the rent owed to you or seek possession of the rental premises without first obtaining permission from the bankruptcy court. If you had already served the tenant a Three Day Notice, you cannot file an eviction. If you had already served a Three Day Notice and filed an eviction, the eviction comes to a screeching halt. Even if you already received a Final Judgment of eviction from the County Court Judge and the Sheriff has served the Writ of Possession scheduling a lock out within hours, the lockout will be “stayed.” We have had tenants file bankruptcy minutes after the judge signed a final judgment of eviction in court. The bottom line is that a bankruptcy filing stops all collection and eviction proceedings cold. Any time you give a tenant a break or voluntarily delay finishing up an eviction, you run the risk of the tenant filing bankruptcy. If you violate the bankruptcy laws and attempt to continue collect the debt or regain the rental premises, you could incur serious penalties and sanctions. Is all hope lost?

Immediately upon receiving a written suggestion of bankruptcy, or even if the tenant verbally tells you that he or she has filed for bankruptcy, you should immediately call your attorney, who will check with the Federal Bankruptcy Court to see if a bankruptcy has indeed been filed. If it is verified that a bankruptcy has been filed, your attorney can prepare a motion to “obtain relief from the automatic stay” of bankruptcy. Since the bankruptcy filing “stays” or “stops” everything, you must petition the bankruptcy court to allow the “stay” to be lifted for the purposes of collecting your debt or continuing to pursue your eviction. The procedure of petitioning the bankruptcy court to successfully lift the stay will typically take 30-45 days with regard to a Chapter 7 petition, and 45-60 days with regard to a Chapter 13 petition. If the delinquent tenant in bankruptcy actually attempts to make payments to the landlord within the bankruptcy proceeding, the above timetables will be expanded, but in most cases, payment will not be forthcoming.

The most common bankruptcy filing you will see is what is called a Chapter 7 petition. This is also called a "liquidation” and often occurs when a tenant has mounting credit card debt, car payments, and hospital bills and just cannot get out of the proverbial debt trap. Most of the creditors, including you, will probably never see a dime of money once the bankruptcy is completed, but thankfully, the law has carved out a niche that at least allows you to prevent the tenant from living on the premises until the bankruptcy is completed. A typical Chapter 7 bankruptcy petition takes a few months and sometimes over a year to be completed, but a swift call to your attorney the moment you receive the dreaded Suggestion of Bankruptcy will usually result in about a month’s delay in removal of the tenant, in addition to the normal eviction timetable.

The tenant in bankruptcy can often buy more a little time when a Chapter 13 debt reorganization is filed, or in the rare event you rent to a corporation which subsequently files for Chapter 11 business reorganization protection, you could be looking at bigger delays. If you take no action in bankruptcy court as landlord, horror stories abound, since the tenant can occupy the premises for literally years with you having no legal recourse. Whether a Chapter 7, 11 or 13 petition is filed, if the bankruptcy is eventually followed through to the point of discharge, your collection will be limited to your security deposit retention and/or proof of claim filed with the bankruptcy court. The remainder of the tenant’s debt will be legally wiped out forever.

Suppose an applicant comes to you, and the credit report shows that the applicant is currently in a bankruptcy proceeding. Should you rent to that person? Technically, the lease with your company would constitute a “post-petition” transaction, and the automatic stay should not protect that tenant. However, that tenant could potentially seek to amend the bankruptcy petition to include you. Even if the tenant makes no attempt to amend the bankruptcy petition, if the tenant informs the sheriff of the bankruptcy at the end of the eviction, the sheriff is not likely going to make the legal distinction that your lease transaction is “post-petition”, and you will still often be required to obtain official authorization from the bankruptcy court before completing the eviction.

Be very leery of applicants who have a history of filing bankruptcy, but who do not actually follow through to the point of discharge, (known as serial filers). That pattern suggests an applicant who has no qualms about living rent free for a few months before moving on to another landlord to share the same treatment.

The next time you receive a “Suggestion of Bankruptcy” on behalf of a tenant or see any information regarding bankruptcy on an application to rent, call your attorney and get some advice. Not all attorneys are admitted to practice before the bankruptcy courts in Florida and some have to “farm” the bankruptcy proceedings out to another attorney.  

 

 

BAD SECURITY DEPOSIT HABITS

Everybody knows about security deposits, right? You’ve been handling them for so long; you could do them in your sleep. Nothing new to learn. Yikes – Sounds like a situation ripe for a crisis. Although you learned the basics when you started your career, bad habits may have crept into your repertoire.

Security deposits are handled by every property manager. The basics are learned when one starts in the business and then, for the most part, forgotten as habits become learned. Complacency is dangerous, for some of the procedures that become ingrained are simply wrong. Here are a few “bad notions” to be corrected.

“We use the deposit for repairs during the tenancy if the resident caused damages.”

The deposit can only be disbursed or used after the resident has vacated and the claims process has been followed. Never can the manager use part of the deposit to do repairs during the tenancy. Never can the manager start cutting checks from the deposit before the claims process has run its course.

The only exception is if both the manager and the resident sign an agreement for the deposit to be used in this manner. Even if the parties are willing to sign such an agreement, the manager needs to consider whether this is a wise move. Certainly, it allows for a “band-aid” fix to an immediate problem, but it also depletes the reserve for other crises that may arise down the line.

 “We Don’t Send a Claim if the Resident Didn’t Give Us a Forwarding Address.”

The statute requires the manager to send a claim on the deposit no later than 30 days after the resident has vacated. The statute also says, in a situation where the resident vacates the premises early, the claim only has to be sent if the resident gave the manager a forwarding address seven days before the resident vacated. Sounds like a great loophole. It’s not. It should never be relied upon.

Every time a resident vacates, a claim on the security deposit should be sent. It should be sent to the last known address, even if that is the unit he just vacated.

The problem with the “loophole” is it contains its own loopholes, making it very difficult for folks (including judges!) to figure out. It is far better to spend the money for the mailing, than to risk being forced to return the security deposit.

“We Don’t Send a Claim if the Resident Was Evicted.”

An eviction does not mean the resident automatically forfeits her security deposit. Even though a resident was evicted, she is entitled to receive the claim you are making against her deposit.

Every time a resident vacates, a claim on the security deposit should be sent. This is true whether the resident vacates under a writ of possession or surrenders keys four months before the lease expires.

It is common that a resident who was evicted “used up” all of the security deposit. Typically, the resident owes more than the amount of the security deposit. Nonetheless, a claim must be made on the deposit.

“We don’t send a claim if the resident told us to keep the security deposit.” Sometimes a resident will orally tell the manager to keep the deposit. “Use it for what I owe you.” No matter how much you trust the resident’s word, send the claim on the security deposit.

Every time a resident vacates, a claim on the security deposit should be sent. Even if the resident consents to the manager keeping the deposit, the resident is still entitled to receive a claim on the deposit.

Oral directions are only as good as the paper they are written on. They give no protection to the manager.

In addition, if there is more than one resident on the lease, getting the “go ahead” from one resident simply cannot waive the rights of the other residents. Send the claim to all the residents on the lease.

BAD CHECK PROCEDURES

The problem of checks returned on insufficient funds (NSF checks) is often compounded by the manager’s subsequent actions. What starts out as a frustrating nonpayment event can become an eviction case lost with liability for the resident’s attorney fees. Every NSF check forces the manager to spend additional administrative time with such tasks as reversing the payment on the resident’s ledger and collecting the balance owed. It seems reasonable that the manager should be compensated for this additional time and work in the form of appropriate service charges. Yet not all managers are properly set up to pursue such charges.

Dealing with a NSF check will depend on whether the resident remains in possession or has vacated.

Resident Vacated – Collection

If the resident has vacated, then the NSF check is simply a collection issue. The manager adjusts the resident’s ledger to reflect the returned payment. The manager can address NSF checks just as she addresses any other amounts owed. She can pursue collection on her own (send balance due letters and sue) or send the account to a collection agency. The resident is liable for the face amount of the check, any bank fees incurred by the manager and court costs, and attorney’s fees, if suit is filed. The manager may also pursue other civil and criminal penalties, as detailed later in this article.

Resident Vacated – Notice of claim

If a Notice of Intent to Impose Claim on Security Deposit has been sent, and the manager is still in possession of the security deposit, and the 30 day period after vacating has not expired, the manager can make an additional claim against the security deposit. She sends an amended notice of claim by certified mail. If a notice of claim has been sent and it already claimed the entire security deposit, then there is no point in sending an amended notice. A balance due letter adding the NSF amount to the outstanding balance is all that’s needed.

Resident in Possession – 3-Day Notice

If the resident is still occupying the rental premises, the manager can serve a 3-Day Notice if the amount still owed is rent or additional rent. In calculating the amount for the 3-Day Notice, the manager should confirm that all amounts on the Notice, including any additional NSF service charges, are designated as rent or additional rent in the lease. The manager should serve a 7-Day Cure Notice for any amount owed that is not rent or additional rent. If the NSF check was tendered for payment of an outstanding 3-Day Notice or 7-Day Cure Notice, then the prior Notice is still viable. A NSF payment is not a valid payment and will not count as “payment” toward the Notice.

Resident in Possession - The Demand Letter.

A common mistake made by managers is to send a demand letter for payment of the NSF check. Almost universally, the demand letter gives the resident so many days to pay. The manager also serves a 3-Day Notice or a 7-Day Notice at or around the same time. If the demand letter and the Notice have different response dates or time periods, the manager has arguably voided her Notice. Of course, the manager’s attorney doesn’t discover this legal flaw until the eviction hearing, and may not be able to extricate the manager from the strong defense competing notices can provide. If the manager loses the eviction case, he will likely be responsible for the resident’s attorney fees, if the resident is formally represented. NEVER SEND A DEMAND LETTER FOR AN NSF CHECK. IF IT IS RENT, SERVE A 3-DAY NOTICE. IF IT ISN’T RENT, SERVE A 7-DAY CURE NOTICE.

Resident in Possession - The NSF Statutory Notice

Many managers are aware that Florida provides for civil penalties under a NSF civil statute. The best advice is to forego this statute and its penalties while the resident is in possession. To invoke the statute, you must send a statutory form and give the person writing the bad check (usually the resident) 30 days to pay. While the 30-day period is running, any 3-Day Notice or 7-Day Cure Notice given may be invalidated, as the payment dates or time periods of such a Notice conflict with the statutory notice.

Criminal Penalties

Florida statutes provide for criminal penalties for intentionally writing an NSF check. If a manager is thinking of pursuing criminal penalties for NSF checks, he should first call the state attorney’s office for the county, in which the rental is located. Some offices have established procedures and particular forms for their county. A review of the appropriate websites may also provide the needed information and forms. Just as with informal demand letters or statutory demand letters attempting to pursue civil remedies, the pursuit of criminal prosecution involves sending a formal demand letter to the person writing the bad check (again, usually the resident), which demand will likely conflict with a 3-Day Notice or 7-Day Cure Notice, so we strongly recommend foregoing the criminal prosecution route while the resident is in possession of the rental premises.

NSF Service Charges

If the lease provides for NSF service charges, then those charges will be applicable. Florida law frowns upon imposing penalties upon residents. Managers are cautioned that service charges should approximate recovery of the economic loss caused by the NSF check for additional administration, loss of the use of the funds, etc. Many leases follow the NSF statutory service charges, on the premise that these charges are a legislative indication of reasonable service charges. As of July 2012 the statutory service charges are: $25 if the check is $50 or less, $30 if the check exceeds $50 but no greater than $300, $40 if the check exceeds $300, or 5% of the check amount, whatever is greater. Absent lease authorization or following cumbersome statutory procedures, the statutory service charges cannot be imposed.

Bank Fees

Almost all banks impose a fee on the manager/depositor if a check bounces. If the lease permits, than these fees are chargeable to the resident. If the lease is silent or there is no lease, the manager may still seek reimbursement of the fees from the resident, but may have to resort to litigation to establish his right to reimbursement.

The Manager’s Checks Bounce

What about the fees charged by the bank for the checks that the manager wrote in reliance on the NSF check? Because the resident’s check bounced, now the manager’s checks may be bouncing. It is unlikely that these bank fees are chargeable to the resident. Absent some extraordinary circumstances, the manager is responsible for giving a deposited check sufficient time to clear before relying on it.

Keep the Lease Up to Date

As a final point, managers should check their leases to insure that NSF charges are assessed, and that these charges approximate current statutory service charges. Leases should provide for reimbursement of bank service charges, and should include clauses providing for recovery of any collection fees or charges, including attorney fees and court costs.

 

AUTHORIZING THE UNAUTHORIZED OCCUPANT

You discover that one of your residents has an unauthorized occupant. This may happen when you are doing an inspection, you see more vehicles than usual, you get a complaint form a neighbor, or possibly someone comes into your office and pays the rent or makes a service request and is not even on the lease. How you deal with this unauthorized occupant will determine if the person can be removed from the premises or properly added to the lease.

The Discovery of the Unauthorized Occupant and Waiver

Once you discover there is an unauthorized occupant on the premises, you need to take swift action. Waiver is an important principle of Florida law and basically means that if you know of a noncompliance, in this case an unauthorized occupant, and you fail to take any corrective enforcement actions or delay these actions while continuing to accept rent, you may not be able to enforce your lease terms and have the person removed. You will in a sense have “waived’ the lease provisions by your inaction and thus modified the lease.

Your First Step Upon Unauthorized Occupant Discovery

Serve a Seven Day Notice of Noncompliance with Opportunity to Cure immediately. This notice will simply say something like “You have an unauthorized occupant residing on the premises in violation of the terms of your lease, and this person must be removed”. Whether or not you intend or hope to have this person authorized and allowed to live on the premises, serve this notice without delay. If rent is coming due and the unauthorized person is still there, AND you want this person removed, DO NOT ACCEPT RENT, as this is a lease noncompliance. But wait! This article is not about removing an unauthorized occupant but rather how to authorize an unauthorized occupant. READ ON!

How to Authorize the Unauthorized Occupant

If your policy is that all adult occupants must go through a credit and background check, you should never allow an unauthorized occupant to remain on the premises, unless the person passes your Resident Selection Criteria test, just like the current resident in the unit. The problem though is that you have given the resident a Seven Day Notice of Noncompliance with Opportunity to Cure to have the resident remove the occupant. If you give the unauthorized occupant a Rental Application, it would seem to interfere with the Seven Day Notice, and it does. On one hand you are asking the resident to remove the unauthorized occupant, but on the other hand you are giving the occupant an application which will take time to fill out and process.

1. Serve a Seven Day Notice of Noncompliance with Opportunity to Cure.

 

2. Give the unauthorized occupant an application, and take the application fee in certified funds. Give a strict deadline to the resident for the unauthorized occupant to get you back the application, and this should be no more than 3 days. Make sure it states this on the application or supplemental notice that you give with the application. The application needs to state that the lease or Resident Addition Addendum is to be signed within no more than 3 days after approval.

 

3. Process the application, and if the occupant is approved, have the occupant sign the RESIDENT ADDITION ADDENDUM.

 

4. If the unauthorized occupant is NOT APPROVED, let the occupant know this and serve a BRAND NEW Seven Day Notice of Noncompliance with Opportunity to Cure. If the resident fails to remove the unauthorized occupant within the seven days, call your attorney, and you will be advised on how to take further action, which may include eviction.

Why do we need to serve a NEW Seven Day Notice of Noncompliance with Opportunity to Cure if the occupant is not approved?

Nothing in the law says you do, but think about what has happened, You gave the original Seven Day Notice with Opportunity to Cure, but then you opened up the door for possibly approving the occupant. This gave the occupant an expectation that they could be approved, so therefore they did not vacate pending an answer from you regarding approval. By the time you gave them an answer, possibly 4 of the 7 days had elapsed. We think it is a good idea to serve a new notice rather than to create a defense to the resident.

Should You Authorize the Unauthorized Occupant?

This decision needs to be based on your occupancy limits which should be in accordance with HUD guidelines, and if the occupant is approved through your application process. You are under no legal obligation to approve the unauthorized occupant or offer them the chance to be approved. Remember, your resident has violated the lease by allowing the unauthorized occupant to live with them in the first place. Next it will be the new resident’s pet python.

Common Mistakes

The most common mistake made by managers is to do nothing about the unauthorized occupant. As mentioned earlier in this article, this can by waiver authorize the unauthorized occupant, thus tying the hands of the manager and preventing enforcement of the lease. Another common mistake is to ask the resident to pay you more money for rent because of the unauthorized occupant. Here you are basically saying the resident can breach the lease, but the resident must pay more for the privilege. While it is perfectly acceptable for the rent to be raised if you are going to authorize an occupant, you need to do this carefully, in writing and have it agreed to by all the parties. Often the manager is angry, tries to negotiate, delays occur, and the occupant becomes more deeply entrenched in the premises. When talks break down, the manager comes to the attorney after the damage has been done. There will be times when an unauthorized occupant begins to pay rent, and the manager accepts the rent either on purpose or accidentally due to sloppy procedures. We urge managers to never accept rent from anyone other than the actual resident on the lease. Acceptance of rent from an unauthorized occupant is going straight down the path to authorizing this person, when maybe this was not your intention.

 

 

ATTORNEY’S FEES AND LANDLORD TENANT LAW

In most legal disputes, each party, the plaintiff and the defendant, the winner and the loser, each have to hire an attorney and pay their own attorney’s fees to that attorney. An example would be a car crash where I smashed into your car and did $500.00 worth of damages to your fender. If we could not come to an agreement, you might hire an attorney and take me to court. A lawyer who represents himself has a fool for a client, so I go out and hire an attorney to represent me. We go to court, and you can prove that the accident was due to my carelessness. The judge awards you $500.00, which presumably I will go ahead and pay you. Let’s assume that each of us paid our attorney the bargain price of $750.00 to represent each of us in court. The end result would be that you would have to pay for your attorney, I would have to pay mine, and we probably should have just settled this out of court, because the attorneys made more money on this than all of us. The reason that I, as the losing party to the lawsuit, did not have to pay you for the attorney’s fee that you expended is that under Florida law, the losing party in an automobile accident case does not have to pay the attorney’s fees of the winner. Each of us had to bear our own fees and costs, because that is what the law says. Now, let’s step into landlord/tenant court. A resident sues you, because he feels that you took too much of his security deposit. The resident has an attorney. The resident’s attorney convinces the judge that you are the evil manager and that you cannot justify the charges you made on the poor resident’s security deposit. The judge awards the resident $300.00 that the judge feels you took unfairly, but now for the zinger. The judge awards the resident $900.00 in attorney’s fees, meaning that you get a judgment against you for not just the $300.00 but also $900.00. You walk out of the courtroom with your head spinning, holding a $1200.00 judgment against you!!! How did that happen?

THE ATTORNEY’S FEE CONUNDRUM IN FS 83.48 ---- Florida Statutes 83.48 Attorney's Fees states as follows “In any civil action brought to enforce the provisions of the rental agreement or this part, the party in whose favor a judgment or decree has been rendered may recover reasonable court costs, including attorney's fees, from the nonprevailing party”. This statute has major ramifications to the manager and can make a simple couple hundred dollar dispute into a $1000.00 plus nightmare very quickly. The prevailing party, meaning the winning party, in any landlord/tenant dispute can and will get an award of attorney’s fees in the event a court case is filed. In most cases the manager wins, as we see so often in eviction actions, but what good is it if you get an award of attorney’s fee against a resident who can’t even pay you the rent? Getting an award of fees certainly does not mean you will ever see the fees. The problem lies in the resident getting an award against the manager, as this judgment will attach to the property and become a judgment lien against the property.

EVICTIONS AND ATTORNEYS FEES-- The prevailing party in an eviction action is entitled to an award of attorney’s fees and costs. This is authorized by statute and is pled for in the eviction lawsuit. Thus, if you are successful in evicting the resident, you can ask the court to award you fees and costs. Let’s say you lose the eviction. You may have to pay the resident’s fees and costs if the resident retained an attorney. Now what if you simply filed an eviction in error against a resident, thinking that she owed you the rent but the resident had in fact paid the rent and you either misplaced or incorrectly posted the payment. You would of course immediately dismiss the case. No harm done, right? Not if the resident retained an attorney and filed and answer or Motion to Dismiss. Here you would possibly be on the hook for the resident’s attorney’s fees, even though you dropped the case quickly and never pursued it further. You may wonder how you can lose an eviction. There are a number of ways: your Three Day Notice could be wrong, you prepared the notice incorrectly, you served the notice incorrectly, the resident had a valid defense of payment, you failed to make a repair, you accepted late rent on a regular basis, or you are an apartment community and failed to get your fictitious name registered. There are many other ways you can lose a case. The last thing you want is to be on the hook for attorney’s fees of the resident.

ATTORNEY’S FEES AND SECURITY DEPOSIT DISPUTES-- Few managers have not experienced a security deposit dispute at one time or another. Routinely, residents feel that the manager unfairly took too much of a security deposit from them for damages that the resident vehemently denies. While most of these disputes should be and are settled prior to any litigation, in the event they end up in court, managers are often surprised to see how the judge acts quite kindly to the resident, and looks upon the resident as the victim and the manager as the evil person who is trying to rip off the resident. The manager must prove that the resident damaged the premises, there is the uncertainty of whether something is over and above ordinary wear and tear, the manager often does not have a detailed move-in and move-out inspection sheet, and often the manager does not have photos to document the property condition before move-in and after move-out. More often than not, the judge ends up ordering the manager to return some of the security deposit to the resident. Now suppose the manager claimed $500.00 of a $750.00 security deposit, and in court the judge feels the manager was only entitled to $450.00 of the security deposit. Who is the prevailing party? Most of the case law unfortunately says that the resident is the prevailing party because he or she sued and got something back from the manager. This does not seem fair, but most judges will consider the resident in a case such as this the prevailing party. If the resident had retained an attorney to represent him in court, the manager will most likely have to pay a significant amount of attorney’s fees to the resident. The amount of the dispute or the amount the resident wins has no relation to what the attorney can ask the judge for in attorney’s fees. If the attorney can convince a judge that 10 hours were spent on the case at $250.00 hour, the manager could end up having to pay the resident’s attorney $2500.00, when the dispute was only about a $500.00 claim that was made on the security deposit. A word to the wise: if the resident gets an attorney and is threatening a lawsuit, make darn sure you are going to win before you take a stance that you are not going to budge and settle the case.

WHY WORRY ABOUT ATTORNEY’S FEES-- Up until around 10 years ago, it was rare that a resident would retain an attorney to defend them in an eviction action or to pursue a security deposit dispute. With close to 100,000 lawyers now in Florida, things have changed. We now have lawyers who are specializing in representing residents for the sole purpose of extracting attorney’s fees out of the manager. These attorneys are advertising and direct mail marketing to residents who are under eviction, offering free consultations. The attorney then examines the case, looks for a weakness and next thing you know, you are up against an attorney in court who has filed an Answer, Counterclaim and three Motions to Dismiss. Take your time when preparing your notices, evict cautiously, and when making a claim on the security deposit, document absolutely everything you can. Most losses by managers in court are completely avoidable.

THE APPLICATION PROCESS

The application process is arguably one of the most important parts of the landlord/tenant relationship. It is here that you are investigating your prospective resident for approval. The information you glean from this process will be the main factor in your making the determination to rent a significantly valuable asset to a perfect stranger for a period of at least a year in most instances, and the application will have ramifications after the applicant is approved and moved into the unit. We see so many mistakes made in the process, and these mistakes usually manifest themselves into problems later on in the tenancy after it is too late. Once the application is approved and the lease is executed by all parties, the real problems begin. This back to basics article will examine some of the techniques, tips and trick used by successful property managers to properly navigate the application process waters.

Providing the Applicant With a Sample Lease

To avoid any misunderstanding or to forestall a claim by approved applicants that they have changed their minds because they did not agree with the lease terms, we recommend all applicants are provided with a sample of the lease early in the application process, and an information sheet detailing all the charges that will be due and payable in the event of approval. This information sheet should leave nothing out. All charges, deposits, and fees should be clearly listed. In order to hold or bind an approved applicant to signing a lease, the least you must do is make sure they know and understand exactly what they are getting into. The sample lease does not have to be the actual lease they will sign, but a sample that represents the lease all your residents sign. The monetary terms can be on the information sheet.

The Application Form

There are literally thousands of different applications in use in Florida. Each company it seems has created its own preferred application to suit its needs, and often we see problems in the application form itself. If your application form is defective or insufficient in some way, it needs to be fixed. This takes examining your form carefully and seeing if it suits your needs and achieves your desired goals.

The Application Form Layout: The application should be easy to fill out. Too many fill-in-the-blank forms are created where it is nearly impossible to properly fill out each section legibly. Not only is such an application hard to read, but this opens the door up for an applicant to conveniently leave something out or intentionally make something so hard to read that you cannot adequately and accurately process the application. This is often no mistake on the part of an applicant who has a problem in his past or current rental history. Take your own application and pretend you are the applicant, and fill out each and every section. Was it easy? Hard? How was your handwriting? You will probably find parts of the application that need to be made larger or longer so it is easy to fill out completely and read. We are all getting older, so larger spaces never hurt.

All adults fill out and sign their own application: We strongly recommend that each adult who will be residing in your unit fills out his or her own application and pays the required fee. Since we always recommend that all adult occupants are lease signers, with some limited exceptions, this means both John and Mary complete individual applications, regardless of the fact that they may be married. Using one application is a lazy shortcut and can result in a messy, confusing application. While it is legal in most places in Florida to charge two single people each a certain fee for processing the application and a married couple less, we recommend you avoid this and charge each person the same to process the application regardless for marriage status. If you were in a municipality that decided to make single status a protected class, charging a lesser amount to a married couple would constitute discrimination against single persons.

Confirm who is filling out the Application: Here is the picture. The applicant comes in, sits down in your comfortable chair, and you give her a clipboard and the application. She carefully and neatly provides his name, Social Security number, driver’s license number, present address, and former address information, and all the other questions are answered and spaces neatly filled out. You send the application off to your screening company, and within minutes you have an approval. The applicant passes with flying colors. A few days later she fills out and executes a lease and moves in. Three months later, you receive a call from someone who stated that his identity was stolen, and coincidentally the person who stole it is your resident who you approved. What happened here? You probably failed to look at the identification and just looked at the application. Maybe the applicant told you she couldn’t find his driver’s license that day or brought the wrong pocket book or wallet, so you let your guard down. Oh YOU would never let this happen. Yes you would! It happens all the time, and we see it.

Is everything filled out?

We are amazed to see how many approved applications are not completely filled out, with questions not answered and spaces left blank. This absolute sloppiness on the part of the property manager allows an applicant who would have otherwise been denied to slip through the cracks. If an applicant were to fail to answer a simple “yes or no question”, did he lie on their application? Probably not. Suppose that question pertained to a criminal background; the applicant was approved and moved in. You later find out that your screening company missed a serious felony, and now you want the person removed from the property. Can he be removed because he lied on their application? No, because he really did not lie. He just conveniently forgot to answer a question, and you failed to catch it.

Asking the right questions on the Application

The Eviction Question: Almost every application asks the following question: “Have you ever been evicted?” The applicant usually answers “no”, and many screening companies will not catch this anyway, especially if the eviction has been recently filed. So the applicant is approved and moves in. You then get a call from a neighboring property or an “anonymous” call informing you that your resident was evicted from their property. You decide to check out the public records, and sure enough, you find 3 evictions filed on the person. The key word here is “filed”. Most people who have evictions filed against them move out before actually getting formally “evicted”. Does this constitute a lie on the application? Possibly not. You see, your question is wrong. Ask the following question instead: “Have you ever had an eviction filed against you, or have you ever been asked to leave by a current or former manager?” As you can see, this question encompasses far more scenarios.

The Criminal Background Question: The other most common question that is often framed incorrectly pertains to the applicant’s criminal background. The question usually is as follows: “Have you ever been convicted of a felony?” The applicant answers “no” and is approved through your screening process, and 2 months later you find out that your resident was arrested 3 times for trafficking cocaine, a felony, but each time “adjudication was withheld”. What does this mean? Did he commit the crime? Of course. Do you want this person living on your property? No, but did he lie? No. The problem here is that your question only asks about “convictions”. Many people are arrested, and for whatever reason, be it good lawyers, first time offenses, cooperating with police or some “deal”, they receive “adjudication withheld”, “adjudication deferred” or “nolle process”. This happens all the time. In an overburdened legal system many people who are arrested are placed into diversion programs or probation type programs rather than jail, even for serious felonies. You must rephrase your application question to something closer to: “Have you or any occupants ever been convicted of a felony or had adjudication withheld or deferred for a felony offense?” As you can see, this question will pertain to far more of your applicants and you can then question them further and make a decision based upon your criteria. Remember, your criteria is just as important as your application form and must work for your needs as well.

The Bankruptcy Question: Renting to a person who has filed bankruptcy in the past is certainly legal and not necessarily dangerous. While a person who has filed bankruptcy in the past may file again, if the bankruptcy was fully discharged, the chances are relatively low. A person who has had all their debts discharged in bankruptcy may actually be a lower risk, since if the bankruptcy was recent, that person most likely has little debt. The question though should be asked nonetheless. If your screening reveals a pattern of bankruptcy filing and dismissals, this may indicate the applicant has used bankruptcy filing and dismissal as a way to stall an eviction, foreclosure or other collection activity. It is important to see if the bankruptcy was dismissed or discharged. Dismissal means that for some reason the bankruptcy was stopped or not pursued any further, while discharge means that the applicant’s listed debts in the bankruptcy petition have likely been permanently wiped out. If an applicant is currently in an open bankruptcy case, we strongly recommend that you do not approve the application, as you may be pulled into the bankruptcy through a conversion or dismissal and subsequent refiling.

Checking Past and Current Managers

Often you are unable to find any credit problems possibly due to an applicant’s lack of credit history, or possibly he has good credit but has current or past problems with managers. There seems to be a growing and troubling trend for property managers to want only to look at a credit report or screening report, and not delve into the applicant’s rental history by calling present or prior managers. The idea that someone with poor credit will make for a poor resident is a complete fallacy. Many residents have horrendous credit histories but make exemplary residents. Some applicants with good credit may be nightmarish residents in other regards. What is more important in our opinion is the information that you get from the current or past manager. The problem is that some managers, either by company policy or for fear of getting in some sort of trouble with privacy issues, are reluctant to tell the truth to you or to give any information out whatsoever. Many property managers (hopefully none reading this article) have given a glowing recommendation to an inquiring manager only to hasten the resident’s departure from their own rental or apartment community. Another classic move is for the applicant to make the phone number of their current or past manager difficult to read so you try to call, but then give up as the number is wrong. This then slips through the cracks and you end up forgoing a proper check of the current or prior manager.

A classic trick by an applicant who is having a problem with her current manager is to provide a phone number on the application that is not that of her real manager, but to a friend or even herself. You then call the number and identify yourself as a property manager with XYZ Property Management Company. The fake manager is ready for the call and proceeds to say wonderful things about your applicant. This trick is played on property managers all the time. If the applicant gives a private property owner as her current manager, take the time to check the public records and see who in fact owns the place where the applicant is living. Really confirm to whom you are talking, even if it means calling the number given on the application from someone else’s cell phone and asking innocuous questions, such as, “Do you have any rentals available?”, or “Do you accept pets?” If the call is placed to a fake manager, you will fake them out and trick them at his or her own game, as the response will most likely be, “Rentals? We have no rentals, you have the wrong number.” Property managers who fail to verify current or prior managers are sure to have problems.

The “foreclosure story” is extremely common right now. The applicants either tell you that the owner of the home where they were living was foreclosed upon, and they had to move, or the applicants actually owned a home which was foreclosed upon. In both cases, you then really will have a tough time verifying their rental history, or you will believe them that they were former homeowners. It is amazing how the “foreclosure story” is easily sold to a property manager. For some reason, property managers feel sympathetic or sorry for applicants when they hear the “foreclosure story”. Use the public records to your advantage, and dig around. If you can’t figure out how to do it, ask your attorney, because your attorney will know how to do it. Again, don’t let your guard down.

Taking a Good Faith or Holding Deposit

Most applications provide for some sort of good faith or holding deposit to be paid by the applicant, such deposit to be refunded if the applicant is not approved or to be applied to the security deposit if approved. Many applicants simply change their minds and want their money back. Whether or not you should return the money is the stuff of an entirely different article, but ALWAYS make sure that if you return the deposit money to the applicant, whether their payment was by check or money order, that the payment has in fact cleared the bank. Many people do not realize that a stop payment order can be placed on money orders, similar to a check and applicants who are told they will forfeit money will often quickly stop payment on a check or even a money order. In the meantime, you may have a change of heart and end up sending them a check which they take and cash, only for you to find out the payment they gave you has been dishonored. Have we seen it? You bet.

How Long Will it Take to Approve an Applicant?

You need to set a time frame in which to approve or deny an applicant. Just as you do not want them to keep you hanging when deciding to sign a lease, you cannot keep applicants hanging too long, or they can change their minds. Applicants can change their minds at any time before they are in fact approved. Some applications even give applicants 72 hours to change their minds, and while this is not the law but simply something that is placed in an application, it is nonetheless legally binding. If you are dealing with a condo or homeowners association situation when association approval is required, you need to make this real clear to applicants that there may be delays, and set some timeframes.

Once Approved, When is the Lease Signed?

Your application and your Application Approval Letter should clearly give a deadline to the applicant as to lease signing. Whether this period is 3 days or 2 weeks, it depends on your own policy, but you do not want a situation when an applicant is approved and then continues to stall coming in to sign the lease agreement, while you are turning away prospective renters for the unit. The Application Approval Letter should clearly indicate that the applicant is approved and provide a firm deadline for lease signing. After that, it is fair game for you to rent the unit to someone else if the approved applicant has failed to execute a lease. Up until the time the approved applicant or resident takes possession, keep close track of inquiries for the unit, as you may need to be able to prove your were damaged in the event the approved applicant fails to take possession. Do not assume just because the applicant is approved and/or the lease is signed, the deal will actually happen.

Application Security

The applications you are presumably holding in your office in a filing cabinet represent a virtual treasure trove of information that can be used by someone who wishes to engage in identity theft or use the information to obtain credit cards in the applicant’s name. It is absolutely crucial that you guard these applications and create a plan and procedure under which you will keep them out of the reach of any unauthorized persons, including other staff members. While we all like advertising, having your company’s name on the front page of the newspaper because 50 people had their identities stolen, or credit card fraud was committed due to applications taken out of your insecure or unlocked filing cabinet, is not effective advertising in our opinion.

Are You all Set?

Take a look at your application and your procedures and see if there is any room for improvement. Remember that this is the beginning of a long relationship, and you want to get it correct from the start. If you have a question about your application, feel free to give us a call.