UNCLAIMED SECURITY DEPOSIT FUND PROCEDURE

Your resident has vacated, you sent a partial or full refund of the security deposit by certified mail, and it is returned to you unclaimed. What do you do with the funds? Hold them forever? Disburse them to your owner or company? Florida law specifically deals with the procedure a property manager must take with these funds in Florida Statute 717, the Florida Disposition of Unclaimed Property Act.

What Type of Funds Will You Be Holding

Most commonly, you will be holding the security deposit or a partial security deposit. Other deposits may include but are not limited to the pet deposit, key deposit or a deposit the condominium association may have required.

Are These Funds Unclaimed?

Typically, you have sent out the Notice of Intention to Impose Claim on Security Deposit, and this has come back to you “unclaimed”. The refund check is still in the envelope. In other less common situations, there is evidence of receipt of the certified mail, as you have received back the return receipt “green card”, but for some unknown reason, the check is never cashed, and each month it shows up in your escrow account as an outstanding sum paid but not cashed. This can be an annoyance as time goes on, as this will inevitably occur in property management multiple times.

Due Diligence

Since you may not have a forwarding address, you have sent the funds to the “last known address,” which is indeed the home or apartment which the residents were renting. Since many vacating residents do not put in a forwarding order with the post office, it becomes difficult to discover a new address absent notification from the resident. This is where some investigation needs to begin, and this investigation can save you significant time and aggravation later. In the first place, you need to send it again by regular mail, unless it was sent back to you with notification that the resident had moved and no forwarding address is on file.

The “Certified Mail Conundrum”

It is quite possible that the certified mail did indeed get forwarded to the new address, was refused, unclaimed and still never made it back to you, or was in fact claimed, but the “green card” did not show that the mail had been forwarded. There is a strange aversion by many people to claiming certified mail which results in a large percentage of the certified mail never making it to the recipient. Many individuals feel that by accepting the certified mail, something ”bad” will occur to them, hence the certified mail is refused. In many other cases, the certified mail is indeed accepted, but the “green card” somehow never makes it back to the sender. There seems to be no reasonable explanation for this common occurrence, other than often the postal worker fails to remove the “green card” from the back of the envelope, and the recipient then has both the green card and the certified mail in his or her possession. We recommend that you first send the Notice of Intention to Impose Claim on Security Deposit and refund check by certified mail, but if this is returned to you, you follow this up with regular mail of a copy of the Notice of Intention to Impose Claim on Security Deposit and a replacement check; the original certified mail envelope should be left intact (unopened), and the check within that envelope can be voided on your check records. You are not required to send a refund check by certified mail. You are only required to send the Notice of Intention to Impose Claim in this fashion.

Locating the Resident

In the old days, you could simply find out the forwarding address from the post office if there was one on file. This is not possible anymore. Now comes the time to begin to dig into the file to see if the application gives any clues where the resident works or worked, emergency numbers, or any other names or addresses you can find which you can call or write to possibly gain a proper address. There is no prohibition on calling any of the numbers you may have in the application or writing to any addresses you may have, since you are now simply trying to return some money, and you are not engaged in any collection activities. You may glean some information by talking to neighbors of the former resident as to the new address. Remember, you have already sent the Notice of Intention to Impose Claim on Security Deposit out. You DON’T need to send it out again. You simply need to send back the money.

Cutting a New Check

If you have previously sent out the refund check and it has not been returned to you, you certainly do not want to cut a new check to the former resident unless you have stopped payment on the first check, and a significant amount of time has elapsed. We recommend waiting at least three months before taking any action. If you send a new check to the now located prior resident, and the resident somehow received or has been holding the original refund check, you could be in for an unpleasant surprise if both checks now are cashed.

Pulling Another Credit Report or Skip Tracing

If the resident originally gave you permission to pull a credit report in the application process, it is permissible to do this again in order to potentially find a new address. After some period of time, a new credit report will most likely contain information on the current resident address. Many companies offer reasonable skip tracing services as well, and the small amount of money spent could save time and money later.

You Have Exhausted All Your Resources But Cannot Locate the Former Resident. Now What?

If the refund is for more than $10.00, you are required to hold the funds in your escrow account for 5 years. Yes, you read that correctly. Florida law requires this extremely long time period to safeguard the funds from the time the funds were due to the resident and provides a means to dispose of these funds upon the end of the 5 years.

What Florida Law Requires

The Florida Disposition of Unclaimed Property Act requires you to exercise due diligence in attempting to locate the former resident. This means the use of “reasonable and prudent means under particular circumstances to locate apparent owners”. The exact requirements are listed in the Act and include using the Social Security number if you have one, using nationwide databases, mailing to the last know address unless you know for sure it is inaccurate, or engaging a licensed skip tracing company. You are required to send in a report to the State of Florida on the forms that they provide prior to May 1 of each year, or you could be subject to a penalty imposed upon you. You must send a final letter to the former resident no more than 120 days and no less than 60 days prior to filing the report with the State informing the resident that you are still in possession of the unclaimed refund. When you finally file the report, you must include the refund money with the report, and upon payment and delivery to the State, you will have no further liability to anyone and can remove the amount from your escrow account records.

The Moral of the Story?

A diligent property manager tries on a regular basis to keep updated information on his or her resident, including updated emergency numbers, addresses of emergency contacts, new phone numbers, new work numbers and addresses. By doing so, it will be easier to locate the resident and get the money OUT of your account!! When was the last time you updated your resident information?

 

UNAUTHORIZED OCCUPANT NOT CAUSING A PROBLEM

At any given moment, people who are not authorized occupants or residents on a lease are living in an apartment with the authorized resident. This is just a fact of life. Possibly the occupant is there on a temporary basis or just has decided to move in with the resident. Often the occupant is there for a long period of time, uses the amenities, makes repair requests, stops by the office and pays the rent and acts just like an authorized occupant or resident. The unauthorized person become familiar to staff, and many of the staff members have no idea the person is not in fact authorized.

The Resident And The Unauthorized Occupant

A resident who allows an unauthorized occupant to reside on the premises is in default of the lease and is blatantly disregarding the terms of the lease. That resident is no different than the resident who gets the unauthorized pet, parks improperly, causes a disturbance or does not pay rent. They are in default, pure and simple.

Why Do We Treat The Unauthorized Resident Lightly?

Usually if a property manager is not dealing with a HUD property or Low Income Housing Tax Credit Property, an unauthorized occupant is overlooked. If the resident is paying the rent, the property is kept up, there are not an excessive number of residents in a unit, occupancy is low, and parking is adequate, a property manager will overlook the unauthorized occupant.

The Huge Danger of Overlooking the Unauthorized Occupant

An unauthorized occupant is living on the premises without having gone through the normal credit or criminal background check. He or she may have an extensive criminal record, or even be a sexual offender or predator. The property manager has no idea of this and would have almost certainly turned this person does under normal application screening procedures. Nevertheless, the mystery person is now living on the premises.

The Unauthorized Occupant is Locked Out And Needs To Be Let In

One of our clients recently had a situation in which a woman that the maintenance tech recognized needed the maintenance tech to open the apartment in the early morning hours, as she had locked herself out. Since she was familiar looking to the maintenance tech, as she had lived on the property for quite some time, he opened up the apartment for her. She then decided to remove everything of value from the apartment. Later that day, the actual resident came home to find all his items of value taken, and the maintenance tech admitted he had let the woman in the night before. Problem? She was not an authorized occupant, and maintenance had no right letting her into the unit. Liability? What do you think?

A Recent Tragic Case Underscoring Potential Liability

Here is the scenario. This same scenario can apply to a resident renting in a condominium or single family home. An unauthorized occupant becomes familiar to the staff and has resided on the property for some time. The unauthorized occupant kills another resident in the apartment community. Is the apartment community liable? Over the next couple years, this exact case will be tried and a jury will decide. How would you decide?

 

Our Recommendations

We strongly urge that you take an unauthorized occupant seriously and consider it a serious lease default. If you wish to authorize this person, please read the article Authorizing the Unauthorized Occupant and take the steps to authorize the occupant if you so desire. Otherwise, serve your Seven Day Notice With Opportunity to Cure, refuse any rent payments, call your attorney, and evict everyone if the resident refuses to remove the unauthorized occupant. Remember that once you know there is or was an unauthorized occupant, make sure you follow up to confirm that the person is truly gone and not just being more careful about being caught.

 

TRUSS MARKING RULE

Do you own or manage buildings that consist of 3 units or greater? If so, new Fire Code rules will affect you. On December 13, 2009, new regulations were passed which require special signage to be affixed to buildings, and failure to comply could result in substantial fines. Compliance is easy. Just purchase your signs and affix them to the building. There are three different signs though, and you need to know which one you need and where to place them. The most important thing is to make sure you are in compliance, as your deadline was March 13, 2010, which is already past. The local Fire Marshals are just beginning their inspections, and you are now on notice! There is no grandfathering, and if you are not in compliance, it will be up to the local Fire Marshal to determine whether fines are imposed.

The Aldridge-Benge Firefighter Safety Act

The Act which was signed into law on December 13 by Governor Crist is in honor of 2 Orange County Florida firefighters, Todd Aldridge and Mark Benge, who were killed when the roof of a burning gift shop collapsed. The purpose of the law is to alert firefighters to the construction type of a structure they may enter in the event of a fire or other emergency operations they may be conducting requiring entry into the building, so they can better prepare for the hazards involved. The State of Florida Fire Marshal’s Office implemented Rule 69-A-60.0081 under the authority of Florida Statutes Section 633.027.

The Type of Construction the Rule Covers

The construction type that is at issue is known as “light frame”, which means construction in which repetitive wood such as beams or trusses are used, or light gauge steel is used, for either roofs, floors or walls. This pretty much covers almost all the construction in Florida with the exception of a concrete building with concrete floors and a heavy gauge steel roofing system. Trusses are prone to failure in a fire, and once one truss fails, the load is shifted to the other remaining trusses, which in turn can cause a catastrophic failure and collapse. Compounding the problem are heavy items which are often placed on floors and roofs, such as air conditioning units, which further contribute to potential roof and/or floor failure.

Are all Structures Covered?

The Rule covers all “commercial structures” of 3 units or more. From a triplex to large multifamily buildings, the Rule would apply. Although you may not look at a triplex as a “commercial” structure, for the purposes of the Rule, it will be considered commercial and covered. In addition to the typical structures where your residents may live, the Rule also possibly covers your clubhouses, maintenance shops, laundry rooms, fitness centers and any other structure which may be on the multifamily property. Interestingly, townhouses are not considered multi-unit residential structures, so they do not need to comply with the rules.

What Are These “Signs”

The signs required, or “approved symbols” as referred to in the Rule, must be a Maltese Cross which measures 8 inches horizontally and 8 inches vertically of a bright red reflective color. The signs may be as simple as a vinyl stick-on sign, or a more substantial, aluminum or composite type of sign. If the structure has light frame truss roofs, it must be marked with the letter “R”. If the building is constructed with a light frame truss floor system, it must be marked with the letter “F”, and if both light frame truss floors and roof are present, the building should be marked with the letters “RF”.

Where Do You Obtain the Signs?

Many sign makers and supply companies for the multifamily housing industry are providing these signs. They are not cost prohibitive, and most companies have them in stock or can have them made in an extremely short period of time. One such company, Giglio Signs, can assist you, keep the signs in stock and have been providing the signs to hundreds of properties throughout Florida.

Placement of the Signs

As is often the case, some laws or rules create more questions than answers, so the following explanation should be a starting point only and not relied on completely. According to the rule, the “symbol” must be placed within 24 inches of the left of the main entry door of the unit and must be placed no less than 4 feet from the bottom of the symbol to the grade, walking surface or finished floor, and no more than 6 feet from grade to the top of the symbol. Does the rule mean the edge of the symbol or the middle of the symbol? We don’t know. The Fire Marshal can get very picky at times, so we urge you to measure carefully and not try to be too close to the upper or lower limits. You can be sure that they will have their measuring tape with them. Remember that we are talking about the symbol, not the actual sign to which the symbol may be affixed, and this will affect the measurements. The symbol itself must be permanently attached to the structure on a contrasting background, or be mounted on a contrasting base material which is permanently attached to the structure. If you are unsure of the placement of the signs or whether your signs are in compliance, we recommend that you call your local Fire Marshal and have them come out to the property to meet and advise you.

Some Final Notes

Due to the importance of compliance with the new Rule and the possibility of serious multiple fines for noncompliance, we urge you to take this matter seriously. If you have not done so already, purchase your signs and call the local Fire Marshal. Many of the local Fire Marshals are overwhelmed right now with these calls, and some are not sure of the sign placement in unique circumstances. Once you have them come to the property, try to retain some kind of proof that you were told where to place the sign by the Fire Marshal and that you complied. It would be unfortunate indeed if you followed the direction of a person from the Fire Marshal’s office who came out to the property, only to have one next year state that you did not comply. See if you can get something from the Fire Marshal in writing once the signs are affixed to the building stating that you are in compliance. When shopping for the signs, you are going to find a wide range of quality and materials used. There is no prohibition on a simple stick on vinyl sign, but will the sign last, or will it be peeled off by a resident or guest? Look around and see what is available, and finally, once you have the signs affixed to the premises, make sure your maintenance staff routinely checks on the signs to see if they are damaged or missing. The local Fire Marshal will not have sympathy for you if you fail to make sure the signs stay on the premises, so keep spare signs handy, and affix them to the premises in a fashion where they are not easily removed or vandalized. Get into compliance now. Not only is it the law, but it can help save a life.

 

TRANSIENT RENTALS AND SALES TAX

 

Some apartment communities engage in seasonal rentals. Some managers who concentrate primarily on annuals will encounter situations when they are asked to rent one or more units seasonally. Before taking on seasonal rentals, the property manager must understand and follow all the laws set forth by the Florida Department of Revenue, or they could be in for some trouble. Recently, the Department of Revenue, hereinafter DOR, has increased its auditing and has been catching quite a few property managers by surprise. Most of the property managers who were in noncompliance did not fail to collect the taxes intentionally, but simply failed to know the law and made a mistake.

 

This article will address only a small part of the requirements regarding the taxes in seasonal rentals, and we will concentrate on the “non-rent” items which are taxable. Most property managers, if asked, will know that the “rent” is taxable on a seasonal rental, but the DOR goes a bit farther, and there are big traps for the unwary. If you find after reading this article that you have not been properly collecting the taxes, we recommend you contact your accountant right away and see what the best approach would be to avoid bigger problems, if and when you are audited. If you are audited and found to be in noncompliance, you will be subject to the back taxes, interest and penalties. Often the penalties and interest will be waived by the DOR if the mistake was unintentional, but the back taxes could be substantial.

 

What Constitutes a “Transient” Rental?

 

The words seasonal or transient mean the same for the purposes of tax collection. If the rental term is for a period of 6 months or less, the tax must be collected. This would include a verbal month to month tenancy, so it is crucial that you never allow a resident to reside on premises month to month from day one, unless you expect to collect the taxes. Under this scenario, the tax liability is only for the first 6 months and stops after that.

 

What Taxes Need to be Collected?

 

Unfortunately, the typical 6% “state sales tax” is just the beginning. There is also a discretionary sales surtax in many counties, the amount varying by county, and the Local Option Tourist Development Tax, commonly referred to as the Tourist Tax, this amount also varying by county. Some taxes are paid directly to the State of Florida and in some cases paid locally. You need to know your county and know the law that applies. Many counties differ, so make no assumptions.

 

What is Taxable?

 

Here is the issue. It is not simply the base rent that is taxable. According to the DOR, the TOTAL amount charged to the seasonal renter is taxable. Many seasonal rental agreements state the rent amount and also have a cleaning charge. This cleaning charge is taxable and it is the most commonly overlooked tax by the property manager. While the cleaning charge is the most commonly overlooked and incorrectly untaxed charge, it is only the beginning of the items which must be taxed.

 

The List

 

The following are some of the charges the DOR has stated are taxable, but it is not an all inclusive list. You may have other charges which also could be considered by the DOR as taxable. If in doubt, err on the safe side and charge the tax.

 

1. The Base Rent: This is the most obvious charge and is not the problem.

 

2. Electricity: In many but not all seasonal rentals, the electric is included in the rent, especially in weekly rentals. Sometimes though, the resident does pay the electric in full or an amount over and above a particular set amount by the manager. Any amount paid by the resident for electricity is taxable.

 

3. Cleaning: This is the real problem area. Many property managers are not aware that this is taxable and simply add the cleaning charge to the bill. The DOR is fully aware of the lack of knowledge of the property managers, and this is the most common tax that has not been collected.

 

4. Parking: Some condominiums that allow seasonal rentals charge additional vehicle fees or parking fees, and these are taxable.

 

5. Miscellaneous charges: Garbage Pick-up, Life Guard, Security, Furniture rental, Club House use. If these amounts are extra, and the resident must pay for them, the amounts are taxable.

 

Other potentially taxable amounts:

 

1. Application fee: If an application fee is required, this fee may also be subject to the tax.

 

2. Condo Approval Fee: The law is unclear, and this may be taxable.

 

Phone and Long Distance Charges:

 

Phone and long distance charges that the resident incurs are not additionally taxable to the resident, most likely because the DOR and all the other taxing authorities have already handled that on the phone bills.

 

Exceptions to the Tax:

 

Most, but not all seasonal rentals, are subject to taxation. There are some exceptions carved out but not frequently encountered. A seasonal rental to a full time college student is exempt from taxation. Rentals to federal employees are exempted out as well, if they are performing work related duties. This would be encountered in such hurricane related situations when FEMA employees needed a place to rent on a short term basis. Military personnel and diplomats are also exempt, and in the case of military personnel, they must be traveling under military orders. It is the responsibility of the lessor to obtain all the necessary documentation from the resident before any exemption should be given. If in doubt, check with your accountant or attorney.

 

Are You In Compliance?

 

If you are not, get into compliance immediately. Make sure your lease or reservation agreement states that the amounts are taxable, and if you already have leases for next season, take a look at them and make it clear to the residents that they must pay sales tax. If they refuse to pay, refer them to the law. If the lease or reservation agreement did not properly address the fact that the seasonal resident would be liable for the sales tax and the resident refuses to pay, you may be put in a position in which you or the owner must pay the amount due. In any event, make sure you do a self-audit immediately of your files and those of the agents you may be in charge of in your office. We highly recommend you download the DOR publication called SAKES AND USE TAX GUIDE FOR TRANSIENT RENTALS and contact your CPA for guidance.

 

 

 

TRANSFERRING THE PROBLEM RESIDENT ON SITE

Who is this “Problem Resident”? -- The problem resident is fairly easy to spot. He is complaining about his neighbors, every new neighbor that moves in, constantly has repair issues in his unit, has his door kicked down in the middle of the night by an ex-girlfriend, seems to be hypersensitive to every little noise he hears, is never satisfied with anything, thinks his carpet smells, thinks there is mold in his apartment, does not like the location of his unit, is being stalked by former friends. Have you met him yet? Well, he wants to move to another unit on-site.

Should you move the “Problem Resident”? -- A natural response by a leasing agent or property manager is to try to accommodate a resident and not have a vacancy. Some of the resident’s claims may be legitimate, but how many are really caused by the resident or due to something the resident has created in his life? Will moving the resident to another unit really solve anything, or will the problems just continue or possibly escalate?

Examine the resident’s complaints – An experienced property manager will take each and every complaint and objectively examine whether an on-site move is really the solution to the problem. Let’s look at some of these complaints. Noise from neighbors: you may have a unit in a very quiet building with no children and assume that this would make him happy. Suppose a family with children move in. Where will you be now? Stalking or damage to the premises due to an ex-girlfriend: do you really think that the ex-girlfriend will not be able to find him once you move him to another building? How many times have we seen knock down drag out relationships get patched up again, only to deteriorate into a problem once again? Odor of the carpet or mold: can you detect any odor in the carpet, or is this guy just imagining an odor? Have you seen any mold? Do you really believe that once he is in the new unit, he will be happy, and everything will be just perfect?

If the resident is moving to a larger or smaller unit, and the request to move is not coupled with a myriad of other complaints, this is really a different issue, and usually there is no problem involved. Possibly the family size has changed, or the resident needs an additional bedroom for a home office. Not all moves on-site are suspect or should be avoided.

The Decision – Careful thought needs to go into relocating a resident on-site. Our experience has shown that in most cases, the problem follows the resident and will follow the resident his entire life. A geographical relocation on the premises usually will do nothing other than cause you a further headache and make it appear that you are giving this resident some sort of special treatment, which could even end up as an issue in a Fair Housing case against you by another resident.

The Mechanics of the Move – A typical property manager simply makes an addendum or new lease with the resident and sets a moving date. Unfortunately, huge problem can arise when moving a resident, including but not limited to dealing with damage left behind, the incomplete move, monies owed on the first unit, the list goes on and on.

 

 

 

TERMINATION OF A LEASE IF POSSESSION CANNOT BE GRANTED

Did you ever sign a lease with a resident for a unit that was currently occupied and the current resident had given notice to vacate? Of course. Most of the time the resident vacates as planned, you turn the unit, and the new resident moves in. What happens if the current resident decides not to move out as they had told you, and the new resident is in the parking lot with a truck ready to move in? You give the bad news that you have no other units available, and the would-be new resident drives away, STRAIGHT TO THE COURTHOUSE!

Common Practice It is common practice among property managers to attempt to rent a unit out once the current resident has given notice of vacating, you have given notice to the resident to vacate and/or the lease is expiring. This is not illegal in any way, and the property manager or owner often will sign a lease with the new resident, stating the occupancy date which will be some time after the current resident has vacated. In most cases, the current resident vacates according to plan, the property manager turns the unit, and the new resident moves in on the beginning date of the new lease. Often the property manager has the new lease starting a week after the current lease expires, so as to provide time for the necessary cleaning or other work to be done on the unit to make it rent ready for the new resident.

The Problem Many residents fail to move out on the date that they said they would vacate. The resident could have had a change in circumstances, is building a home which is not ready as expected, or the resident’s new residence may have fell through or is not ready for some reason or another. Can you just kick the resident out, as you have a new resident moving in? Of course not. Your only option is to wait for them to leave or file an eviction, which will most likely take 20 to 30 days. The property manager is now faced with a dilemma; in most cases, the resident will move out within a short period of time, but you have a new resident who has a fully executed lease who now cannot move into the unit. Another problem may not be related to the current resident at all. The current resident may vacate the unit as planned, but you find out that serious work must be performed on the unit to make it rent ready, or something serious like a rewiring job or replumbing job must be performed before a new resident can move in. In the situation of the current resident failing to move out, the current resident is in breach of the lease by not moving, but YOU are now in breach of the lease with the new resident, as YOU cannot provide the unit to the new resident according to the terms of the lease. In the situation where major work needs to be done, the current resident is out, but YOU are still in breach of the agreement with the new resident.

The Liability If the new resident cannot move in according to the starting date of the lease, the property manager has breached the agreement and could be held liable for the damages the new resident suffers due to the breach. This could include storage costs, the higher rent the resident may have to pay finding another place, hotel bills, moving bills, and any other possible expense that could arise out of the new resident now not being able to move in as planned. The resident may even go as far as suing for infliction of emotional distress or claim some bizarre theory of damages.

The Solution A simple clause in the lease agreement is all that is required to give the property manager and owner protection in the event the unit is not ready for the new resident as planned. This clause can provide that the lease may be considered null and void or terminated in the event that possession cannot be granted to the resident on the expected move in date, or provide that the move in date can be extended to a fixed date not to exceed a particular amount of days. Since nothing is certain in the world of property management, a clause such as this will prove extremely helpful and is really a necessity, if the property manager intends to enter into a lease with a new resident while a current unit is occupied. We recommend that this wording is placed in the same paragraph as the start and end date of the lease term.

Sample Lease Wording

IF FOR ANY REASON WHATSOEVER MANAGER CANNOT DELIVER POSSESSION OF THE PREMISES TO RESIDENT BY THE BEGINNING DATE, THE BEGINNING DATE MAY BE EXTENDED UP TO ____ DAYS OR LEASE VOIDED AT MANAGER'S OPTION WITHOUT MANAGEMENT OR PROPERTY MANAGER BEING LIABLE FOR ANY EXPENSES OR DAMAGES CAUSED TO OR INCURRED BY RESIDENT BY SUCH DELAY OR TERMINATION.

 

TERMINATING FOR NONCOMPLIANCES

It would be difficult to find a property manager who has not served Three Day Notices for non-payment of rent and Seven Day Notices to Cure for resident noncompliances. The residents usually pay the rent, or in the case of noncompliances, they cure the noncompliance or move right out. Most property managers are well versed in notice serving and have filed evictions on their residents when the notices just did not do the trick. Many property managers have even experienced going to court on contested non-payment of rent cases. The result? Usually the resident is evicted, or the case gets settled. Now ask yourself: How many times have I actually gone to court on a contested eviction on a Seven Day lease noncompliance case and had to prove the noncompliance in court? Very few property managers have experienced going to court on contested noncompliance cases and do not realize how hard these cases can be to win. Proper preparation, hard core proof and good convincing witnesses are necessary to win these cases. Are you ready to prove your case to a judge who will really put YOU to the test?

Winning and Losing the Seven Day Noncompliance Case

Since most property managers have never experienced going to court on a contested noncompliance case, you will just have to trust us here. We have handled many of these cases, and we have LOST many of these cases. You don’t want to lose a case in court. Besides the pain of losing with the resident now getting to stay and smirk at you for the next six months, if that resident retained an attorney, you may be on the hook for attorney’s fees. Recently two cases we lost resulted in around $2000.00 each having to be paid to the resident’s attorney, for which the property manager thought she had a great case, really wanted to get the resident out and insisted that the eviction be filed against our advice.

Is Your Attorney a Wimp?

Once of the most frustrating things for the manager’s attorney is to try to convince a property manager who thinks he has a great case that there is a high chance of losing in court. The property manager needs to understand that the manager’s attorney may make his or her living filing your evictions and has every incentive in the world to file your eviction, BUT also wants to protect you from losing the case and having to suffer the consequences. The manager’s attorney has probably filed hundreds, thousands or in our case, tens of thousands of evictions, winning the vast majority of the evictions, as most are for non-payment of rent. Trust the experience of your attorney. Your attorney is on your side, feels your frustration, but is also under the legal and ethical duty to warn you of the dangers of losing and guide you in the right approach. Your attorney is not a wimp or lazy. Your attorney has the experience to know what is best for you. There have been situations where an unsuccessful Seven Day Noncompliance case has not only been lost in court, but took on a new life when a Fair Housing Discrimination case was filed against the property later!

The Judicial Attitude in the Seven Day Noncompliance Case

When you go to court on a typical residential resident eviction, the resident usually did not pay the rent, did not properly withhold rent or did not post all the money into the court registry. Judges handle thousands of these cases each year, and some of them have no tolerance for listening to the resident’s sad story of losing a job, car breaking down or the myriad other excuses. Most cases for non-payment of rent result in an eviction.

Now we come to the Seven Day Noncompliance eviction. This is far different than the non-payment case. Here the property manager has accused the resident of doing or not doing something that is spelled out in the lease or Florida Law. Notices have been given, these notices must be correct, and now the property manager is put to the test and has to prove the case. Judges do not take these cases lightly and really make the property manager prove the case. Often it seems that the judge is far more sympathetic to the resident, but really it is a proof issue. It is much easier to prove someone has not paid the rent. They either paid it or they did not, and the burden of proof of prior payment is on the resident. Proving a noncompliance is the manager’s burden and can be a real challenge.

How Do We Prove the Case in Court?

Before we even get to court, the property manager must have prepared and served a PROPER Seven Day Notice, be it a Seven Day Notice of Termination or a Seven Day Notice to Cure followed by the Seven Day Notice of Termination. We strongly recommend that you have your attorney prepare these notices for you. We prepare all our clients’ Seven Day Notices for no charge, as we really want them done the way we feel they would be most effective and successful in court.

Now, proving the noncompliances can be a real challenge. We need witnesses, documentation, solid proof, logs, file notes, notices, photos, videotapes, police reports, incident reports, and anything else to help the judge believe that the noncompliance is occurring or has occurred.

Does the Noncompliance Have to be Severe?

Remember that you are asking a judge to kick someone out of their home. Often there are children involved. The noncompliance needs to be substantial, and you need to trust your attorney to help you decide if it is indeed substantial enough to sway a judge your way. It is ironic how when the market is strong and the property has a waiting list, there seems to be so many more residents in noncompliance. Hmm, a coincidence?

I have Petitions and Statements Signed by 5 Residents!

Nice try, but no cigar. The complainers or witnesses MUST appear in court. This even includes the police officer who responded and wrote up the police report. How do we get them into court? We need to subpoena them, but often they just do not show up for court, and the case falls apart. We have had situations where many residents have complained about one resident. Every day they wrote letters and called the office complaining about the noise that the resident was creating. We end up in court, one complaining resident shows up and tells the judge that the problem has stopped. Bang. We lose the case. Never be certain that the complaining residents will actually come to court. Often they are afraid, were threatened or get cold feet at the last minute and do not want to be involved.

What Does Your Attorney Need to Win These Cases?

The proof that you need is wholly dependent on the type of noncompliance involved and is extremely case specific. Let’s go through some of the most common noncompliances and list some of the evidence we may need to potentially prove our case in court.

Unauthorized Occupants – Seems easy, you see the person there all the time. When you go to court, the resident says they are just visiting. You need to now prove that they are no visiting. Proof you may need includes and is not limited to:

1. Multiple photos of the unauthorized occupant’s car morning and night with date and time records;

2. An admission by the resident to you that the unauthorized person is living there;

3. Proof that the unauthorized person is receiving mail;

4. Unannounced visits to the unit with a witness;

5. Police report that the unauthorized person gives the address as his or her address;

6. FDLE sexual predator or offender registration with your address listed;

7 .A lease clause that is clear as to how long someone can stay.

Unauthorized Pets – First you need to make sure the prior manager did not authorize the pet or the pet has not been there for a long time, which can cause a waiver.

1. Pictures of the pet, date and time stamped;

2. Witnesses who have seen the pet;

3. Pictures of the resident walking the pet;

4. Maintenance who will testify to pet food or pet bowls in the unit;

5. Recording of barking when you go to the door, if a dog that is;

6. Picture of the pet damage;

7. Picture of the pet coming to the window;

8. Hard proof after the Seven Day Notice of Noncompliance with Opportunity to Cure has expired.

Noise Disturbances – These case are tough, as usually there is no police involvement, and the complaints come from other residents who may just be angry at each other, or a group of residents have it out for one resident. Are we really dealing with a resident versus resident war?

1. Records of multiple resident complaints;

2. Police reports;

3. Resident witnesses who will appear in court;

4. Witnesses who are employees of the manager;

5. Multiple provable disturbances;

6. Courtesy officer who will appear in court.

Unsanitary Unit – Is the unit really unsanitary or just an extremely cluttered mess? Many times we deal with accumulators who throw nothing out and have piles of newspapers, clothes and books throughout a rental unit, with only a small path in which to walk. Is this unsanitary or just strange?

1. Pictures of unit;

 

2. Pictures of kitchen, bath and anything “unsanitary”;

 

3. Pictures of exposed and rotting food;

 

4. Pest control personnel who will come to court;

 

5. Infestation of vermin;

 

6. Strong odor;

 

7. Maintenance staff that must come to court;

 

8. Other staff that will come to court.

Emotions and the Seven Day Noncompliance case

We see situations where property managers get angry at a resident and “just want them out”. This is the worst possible situation because the anger and frustration of the property manager is now running the show. That unauthorized occupant who was not a problem for three months all of a sudden becomes a big problem, because he came into your office and was belligerent. That person with the unauthorized pet was left alone until it defecated in front of the office or got loose and scared another resident. Never let your emotions dictate your actions when deciding to terminate a resident. Follow the law, get your attorney involved early, and be cautious

TERMINATING A LEASE DUE TO PREMISES DAMAGE

THE PROBLEM

Most leases have a clause as follows: “In the event the premises are condemned by a governmental authority of destroyed due to fire, flood or other acts of god, this lease shall terminate as of the date of the condemnation or destruction”. Many leases go on to say that in the event of destruction or condemnation, the resident’s rent will be abated until such time as the premises are ready for the resident to reoccupy. These clauses look good on the surface and definitely serve an important purpose, but there is a serious flaw. What happens if the premises are “damaged” rather than destroyed? Do you have to house the resident? Do you have to make a repair while the resident is living in the unit? Can you make the resident leave permanently? Should you put the resident in another unit? All these questions can be answered and the problems solved easily, if and only if the lease has proper wording. Fires, hurricanes and floods will happen. It is not a matter of if they will happen but when. Are you ready?

FLORIDA LAW AND DAMAGE OR DESTRUCTION OF THE PREMISES

Florida law somewhat addresses the issue of damage or destruction as follows: FS 83.63 Casualty damage: ”If the premises are damaged or destroyed other than by the wrongful or negligent acts of the resident so that the enjoyment of the premises is substantially impaired, the resident may terminate the rental agreement and immediately vacate the premises. The resident may vacate the part of the premises rendered unusable by the casualty, in which case his liability for rent shall be reduced by the fair rental value of that part of the premises damaged or destroyed. If the rental agreement is terminated, the manager shall comply with s. 83.49(3). Unfortunately, that does not do the manager much good. As you can see, this addresses the resident’s rights in the event of damage or destruction, rather than the manager’s rights.

THE PROPERTY IS SUBSTANTIALLY DAMAGED – CAN WE TERMINATE THE LEASE? -- Unfortunately, Florida law is not clear on this, so we must look to the lease. If we do not have a clause in the lease which allows for the termination of the lease at the manager’s option in the event of damage to the premises, the manager may be stuck having to make a repair while the resident is in the unit, and this may be unpractical or downright dangerous to the resident or other persons, creating a high liability for manager. For example, the resident has a fire and of course blames it on the proverbial “defective stove”. Since the premises may not be actually “destroyed”, the manager may be under a legal obligation to repair the kitchen while the resident is in place or be prohibited for removing the resident due to the fire. The same thing can happen in the event of a flood or worse yet, in the event of a serious mold situation. If we have a proper lease clause, this problem can be solved. Examine the lease clause that follows:

If for any reason the premises are condemned by any governmental authority, or damaged through fire, flood, mold, act of God, nature or accident, this lease shall cease and shall terminate at MANAGER'S option as of the date of such condemnation or destruction, and RESIDENT hereby waives all claims against MANAGER for any damages suffered by such condemnation or destruction

As you can see, this clause enables the manager to have the option to terminate the tenancy and force the resident to vacate the premises.

THE PROPERTY IS DESTROYED – CAN WE TERMINATE THE LEASE? - It is fairly clear that this clause will enable the manager to terminate the lease in the event the premises are destroyed. Will the part of the clause attempting to relieve the manager of liability hold up in court? That is a big unknown, but what we do know is most likely we will be able to deal with the immediate problem of removing the resident from the unit.

WHERE DOES THE RESIDENT GO? - Based on experience and horror stories, we urge the manager never to put the resident into another unit, the corporate unit or the model unit if one is available. We have seen situations where the resident fails to vacate the original unit and the model or corporate unit, fails to pay rent, holds both units hostage or tries to make you pay for damaged personal belongings, and will not vacate until you do so. If you ever have the need to put up the resident, our first recommendation is to place them in a hotel for one or two days, making it clear to them and the hotel that this is only for a fixed short period of time. If you decide to put the resident in another unit on-site, we strongly recommend that you use a TEMPORARY HOUSING ADDENDUM which clearly states that the housing is temporary, lays out all the terms, and has a fixed date when the resident must vacate. Never should you put a resident in another unit without a TEMPORARY HOUSING ADDENDUM.

HOW DO WE TERMINATE THE LEASE? - The resident will need to be given a lease termination notice and most likely a Seven Day Notice of Termination. We urge you to immediately contact your attorney when dealing with these types of situations, and get the attorney involved early on.