UNDERSTAND THE SERIOUS RISKS WITH ABOVE GROUND POOLS BEFORE EVER ALLOWING ONE

 

1.   Is the pool in compliance with city or county code/ordinances, the HOA and/or Florida law?

 

2.   Are the legally required safety features installed and who will maintain them?

 

3.  Will the Landlord’s insurance cover the pool?

 

4. Has the Landlord’s insurance company been notified and is the pool permitted?

 

5.   Who is responsible for maintaining and repairing:
   1. The pool itself?
   2. The pump and filter?
   3. Electrical to the pump or accessories?
   4. The pool accessories?
   5. The pool liner?
   6. Is the Tenant responsible for removing the pool at the tenancy end and repairing or replacing grass?

 

7. Does the Landlord have the power in the lease to ask the Tenant to remove the pool for any reason?
8. If the pool is to be removed, how many days will the Tenant have to remove the pool?  

 

DO NOT TAKE ABOVE GROUND POOLS LIGHTLY. THERE ARE SERIOUS ISSUES INVOLVED WHICH MUST BE HANDLED AND PUT IN THE LEASE.

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

 

Unnecessary Surprises

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

 

Vacating Date

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

 

Personal Property

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

 

Damages to the Premises

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

 

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

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

 

Attorney’s Fees and Costs

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

 

The Release Language

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

 

Who Signs the Release and Who is Released?

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

 

Who Keeps the Original Release?

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

 

Transfer of Money

 

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

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

 

“Serving the Property Management Professional”

www.evict.com      www.evicttv.com      www.evictforms.com      info@evict.com

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

 

Unnecessary Surprises

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

 

Vacating Date

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

 

Personal Property

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

 

Damages to the Premises

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

 

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

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

 

Attorney’s Fees and Costs

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

 

The Release Language

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

 

Who Signs the Release and Who is Released?

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

 

Who Keeps the Original Release?

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

 

Transfer of Money

 

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

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

                                                     

                                                     LAW OFFICES OF HEIST, WEISSE & WOLK, PLLC

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If your ownership name is not exactly the same as the name that appears on your signage, this law must be complied with!!

 

Go to WWW.SUNBIZ.ORG  to check to see if you are registered.   If you are not, REGISTER ASAP!!

 

CRIMES

Chapter 865 

VIOLATIONS OF CERTAIN COMMERCIAL RESTRICTIONS

865.09 Fictitious name registration.—

 

(1) SHORT TITLE.—This section may be cited as the “Fictitious Name Act.”

(2) DEFINITIONS.—As used in this section:

(a) “Fictitious name” means any name under which a person transacts business in this state, other than the person’s legal name.

(b) “Business” means any enterprise or venture in which a person sells, buys, exchanges, barters, deals, or represents the dealing in any thing or article of value, or renders services for compensation.

(c) “Division” means the Division of Corporations of the Department of State.

(3) REGISTRATION.—A person may not engage in business under a fictitious name unless the person first registers the name with the division by filing a sworn statement listing:

(a) The name to be registered.

(b) The mailing address of the business.

(c) The name and address of each owner and, if a corporation, its federal employer’s identification number and Florida incorporation or registration number.

(d) Certification by the applicant that the intention to register such fictitious name has been advertised at least once in a newspaper as defined in chapter 50 in the county where the principal place of business of the applicant will be located.

(e) Any other information the division may deem necessary to adequately inform other governmental agencies and the public as to the persons so conducting business.

Such statement shall be accompanied by the applicable processing fees and any other taxes or penalties owed to the state.

(4) CHANGE OF OWNERSHIP.—If the ownership of a business registered under this section changes, the owner of record with the division shall file a cancellation and reregistration that meets the requirements set forth in subsection (3) within 30 days after the occurrence of such change.

(5) TERM.—A fictitious name registered under this section shall be valid for a period of 5 years and expires on December 31 of the 5th year.

(6) RENEWAL.—

(a) Renewal of a fictitious name registration shall occur on or after January 1 and on or before December 31 of the expiration year. Upon timely filing of a renewal statement, the effectiveness of the name registration is continued for 5 years as provided in subsection (5).

(b) In the last year of the registration, the division shall notify the owner or registrant of the expiration of the fictitious name. If the owner or registrant of the fictitious name has provided the department with an electronic mail address, such notice shall be by electronic transmission.

(c) If the owner of the name registration fails to file a renewal and pay the appropriate processing fees prior to December 31 of the year of expiration, the name registration expires. The division shall remove any expired or canceled name registration from its records and may purge such registrations. Failure to receive the statement of renewal required by paragraph (b) shall not constitute grounds for appeal of a registration’s expiration or removal from the division’s records.

(7) EXEMPTIONS.—A business formed by an attorney actively licensed to practice law in this state, by a person actively licensed by the Department of Business and Professional Regulation or the Department of Health for the purpose of practicing his or her licensed profession, or by any corporation, partnership, or other commercial entity that is actively organized or registered with the Department of State is not required to register its name pursuant to this section, unless the name under which business is to be conducted differs from the name as licensed or registered.

(8) EFFECT OF REGISTRATION.—Notwithstanding the provisions of any other law, registration under this section is for public notice only, and gives rise to no presumption of the registrant’s rights to own or use the name registered, nor does it affect trademark, service mark, trade name, or corporate name rights previously acquired by others in the same or a similar name. Registration under this section does not reserve a fictitious name against future use.

(9) PENALTIES.—

(a) If a business fails to comply with this section, the business, its members, and those interested in doing such business may not maintain any action, suit, or proceeding in any court of this state until this section is complied with. An action, suit, or proceeding may not be maintained in any court of this state by any successor or assignee of such business on any right, claim, or demand arising out of the transaction of business by such business in this state until this section has been complied with.

(b) The failure of a business to comply with this section does not impair the validity of any contract, deed, mortgage, security interest, lien, or act of such business and does not prevent such business from defending any action, suit, or proceeding in any court of this state. However, a party aggrieved by a noncomplying business may be awarded reasonable attorney’s fees and court costs necessitated by the noncomplying business.

(c) Any person who fails to comply with this section commits a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

(10) POWERS OF DEPARTMENT.—The Department of State is granted the power reasonably necessary to enable it to administer this section efficiently, to perform the duties herein imposed upon it.

(11) FORMS.—Registration, cancellation, and renewal shall be made on forms prescribed by the Department of State, which may include the uniform business report, pursuant to s. 606.06, as a means of satisfying the requirement of this section.

(12) PROCESSING FEES.—The Department of State shall charge and collect nonrefundable processing fees as follows:

(a) For registration of a fictitious name, $50.

(b) For cancellation and reregistration of a fictitious name, $50.

(c) For renewal of a fictitious name, $50.

(d) For furnishing a certified copy of a fictitious name document, $30.

(e) For furnishing a certificate of status, $10.

(13) DEPOSIT OF FUNDS.—All funds required to be paid to the Department of State pursuant to this section shall be collected and deposited into the General Revenue Fund.

(14) PROHIBITION.—A fictitious name registered as provided in this section may not contain the words “Corporation” or “Incorporated,” or the abbreviations “Corp.” or “Inc.,” unless the person or business for which the name is registered is incorporated or has obtained a certificate of authority to transact business in this state pursuant to part I of chapter 607 or chapter 617.

(15) LEGAL DESIGNATION OF ENTITY.—Notwithstanding any other provision of law to the contrary, a fictitious name registered as provided in this section for a corporation, limited liability company, limited liability partnership, or limited partnership is not required to contain the designation of the type of legal entity in which the person or business is organized, including the terms “corporation,” “limited liability company,” “limited liability partnership,” “limited partnership,” or any abbreviation or derivative thereof.

 

“Serving the Property Management Professional”

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You send out a Notice of Intention to Impose a Claim on Security Deposit due to resident damages. The resident writes you a letter disputing the charges and calling you every name in the book. You write a letter back explaining your charges and tell the resident that if they don’t pay, you are going to send the account to collections, and it will affect their credit. Sounds reasonable, right? You just violated the Florida Consumer Collections Law. The penalty? Actual damages PLUS additional statutory damages of up to $1,000.00, together with court costs and reasonable attorney's fees incurred by the resident. This is serious business, and attorneys are out there just waiting for you to violate the law.

History of the Law -- Most managers are familiar with or have heard of the Fair Debt Collections Practices Act, the FDCPA. These are the Federal Laws that govern “debt collectors”. When you send a file to a collection agency, the agency must follow these laws or them and you could be subject to penalties if the FDCPA is violated. Since the FDCPA applies only to “debt collectors”, the manager usually does not have to worry about compliance to a great extent, as at least for now, a owner or a property manager is for the most part not considered a ”debt collector” under the FDCPA. A “debt collector” under the FDCPA is more closely defined as someone who collects delinquent debts of another. The purpose of the FDCPA was to create laws to curb abuses by debt collectors who sometimes threaten and harass debtors. As you can see, the FDCPA governs debt collectors, but what if you are collecting a debt that is due to you? If you are collecting rent, you are considered an “original creditor”, thus you are not a “debt collector” as defined by the FDCPA, but you are not off the hook yet. An original creditor is governed by Florida Statutes Consumer Collection Act Section 559.

Florida Statutes and the Original Creditor-- Florida Statutes Section 559 governs not only debt collectors as does the FDCPA, but also governs the original creditor. This would be the owner or the property manager. This article will examine only one specific section of the Florida Consumer Collection Law and how it applies to the owner or property manager.

Security Deposit Disputes-- After a resident vacates the premises; the manager is required to send the resident the Notice of Intention to Impose Claim on Security Deposit according to Florida Statutes 83.49. The receipt of this required notice by the former resident is the single largest cause of disputes. Many residents simply disagree with the amount that the manager has claimed from the security deposit and make it clear to the owner or property manager in the form of a letter. This letter is a “dispute” by the resident.

Common Practice-- Upon the manager’s receipt of a dispute letter by the former resident, the manager may or may not respond to the resident in writing. A typical response by the manager is an explanation of why the manager charged the resident, and the letter tries to justify the amount charged. Although not required by law, and not recommended by us, sending a letter to the resident explaining or justifying the charges is not illegal in any way. Often the owner or property manager sends out a demand letter to the resident specifying the charges owed and telling the resident that if these amounts are not paid by a specific time or arrangements are not made, the debt will be sent to collections and potentially affect the resident’s credit. This is where the problem begins.

Threatening to send a debt to collections -- Threatening to send a debt to collections is NOT illegal. Threatening to send a “disputed” debt to collections is NOT illegal. Threatening to send a “disputed” debt to collections without telling the debtor that the debt will be sent as a “disputed” debt is completely illegal under Florida law. Unfortunately this happens all the time. The manager sends out the Notice of Intention to Impose Claim on Security Deposit, the former resident disputes, and the collection letters go out just like that. Violations of Florida Statutes occur every day, and more and more attorneys are keenly aware of the law regarding this.

The Penalties Sending the debtor a letter stating that they will be sent to collections or that their credit may be affected WITHOUT telling the debtor that the fact that the “debt is disputed” will be disclosed to the collection agency or credit reporting agency triggers a penalty of up to $1000.00 per occurrence, and in the event an attorney has sued the manager, the attorney will be entitled to an award of attorney’s fees and costs, which could far exceed the $1000.00. If an attorney thinks you may have done this to many debtors, the attorney may just decide to file a class action lawsuit against you, which could cost tens if not hundreds of thousands of dollars in defense, penalties and attorney’s fees of the attorney filing the lawsuit.

SAMPLE WORDING ON ANY CORRESPONDENCE AFTER YOU GET A DISPUTE

We are in receipt of your letter disputing the debt of $(INSERT AMOUNT). Our collection agency and anyone else inquiring about your creditworthiness shall be notified of your debt as a “disputed debt”.

Practical Considerations

Never forget to use the word “disputed debt” when telling the debtor that the debt will be sent to collections.

1. Never threaten to affect someone’s credit report.
    
2. Send your collection agency a certified letter informing them that the debt is “disputed”, and keep a record of this in the file.
    
3. If someone inquires about the debtor’s creditworthiness or delinquency, always disclose that the debt is disputed.
    
4. Try to settle disputes to avoid litigation.

 

FLORIDA CONSUMER COLLECTION PROHIBITED PRACTICES

559.72 Prohibited practices generally.--In collecting consumer debts, no person shall:

1. Simulate in any manner a law enforcement officer or a representative of any governmental agency;

 

2. Use or threaten force or violence;

 

3. Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor's reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6);

 

4. Communicate or threaten to communicate with a debtor's employer prior to obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection, but this shall not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained;

 

5. Disclose to a person other than the debtor or her or his family information affecting the debtor's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false;

 

6. Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made prior to such reasonable dispute having been asserted and written notice is received from the debtor that any part of the debt is disputed and if such dispute is reasonable, the person who made the original disclosure shall reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days;

 

7. Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family;

 

8. Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family;
9. Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate or assert the existence of some other legal right when such person knows that the right does not exist;

 

10. Use a communication which simulates in any manner legal or judicial process or which gives the appearance of being authorized, issued or approved by a government, governmental agency, or attorney at law, when it is not;

 

11. Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments which only attorneys are authorized to prepare;

 

12. Orally communicate with a debtor in such a manner as to give the false impression or appearance that such person is or is associated with an attorney;

 

13. Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor;

 

14. Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts;

 

15. Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents when requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt;

 

16. Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to "Deadbeat, Jane Doe" or "Deadbeat, John Doe";

 

17. Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor's time zone without the prior consent of the debtor;

 

18. Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within a reasonable period of time to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication; or        cause charges to be made to any debtor for communications by concealment of the true purpose of the communication, including collect telephone calls and telegram fees.

 

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The successful property manager should have a solid understanding of the collections process. Not complying with federal and state collection laws can and will subject the landlord to substantial penalties, as there is no shortage of consumer rights attorneys who are will sue landlords if given the chance. These laws must be followed carefully, as any mistake, even if unintentional, can have serious negative consequences. In addition, seasoned property managers also do not have unrealistic expectations about the prospects of actually collecting monies owed by former residents. Those managers are well aware of the lengthy steps needed to obtain a money judgment, and understand that collecting on a money judgment in many cases never happens.

 

Florida Consumer Collections Practices Act

Many landlords are familiar with or have at least heard of federal laws governing collections, such as the Fair Debt Collection Practices Act. All too often though, landlords are completely unfamiliar with the Florida Consumer Practices Act.

The purpose of the Act

The Florida Consumer Collections Practices Act is a detailed statute enacted by the Florida Legislature to limit a number of abuses in connection with the collection of debts by a collection agency or any business that frequently engages in the collection of debts. Another purpose of the Act was to protect an individual's right to privacy.

The Act and the Original Creditor

The Florida Consumer Collection Practices Act governs not only debt collectors but also original creditors. The landlord and management company would typically be considered the original creditor, unless the account is acquired during an ongoing tenancy. This Act will also apply against successor owners or management companies.

Penalties

The Act imposes administrative, civil and even criminal penalties on an entity or person that is in violation of its provisions. For example, a collection agency that fails to register properly with the office of Financial Regulation of the Financial Services Commission could face criminal charges.

Civil Penalties

The most common type of penalty imposed by the Act is civil liability. A person who violates the Act is liable for actual damages, court costs and attorney's fees incurred by the plaintiff. The judge has discretion to award punitive damages. A plaintiff may recover statutory damages of up to $1,000.00 for every violation of the Act.

Practices Prohibited by the Florida Consumer Collections Practices Act

The Act lists 19 different types of prohibited practices. Probably the most common violation occurs with respect to willfully engaging in conduct that can reasonably be expected to harass the debtor or any member of the debtor's family. This language is somewhat vague. The more frequent the conduct, the more likely courts will determine a violation has occurred. Courts will also examine the contact to determine if there is evidence that the purpose of the communication was to insult or injure. If such a finding is made, the more likely it is that a court will deem the communication to be a violation of the Act. On the other hand, when the debt collector merely makes phone calls to inform and remind the debtor of the debt and to determine the reasons for nonpayment, courts will most likely allow such communications.

Full list of prohibited practices under the Act

Florida Statute 559.72 Prohibited practices generally. “In collecting consumer debts, no person shall: "ƒ(1) Simulate in any manner a law enforcement officer or a representative of any governmental agency. "ƒ(2) Use or threaten force or violence. "ƒ(3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor's reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6). "ƒ(4) Communicate or threaten to communicate with a debtor's employer before obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection. However, this does not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained. "ƒ(5) Disclose to a person other than the debtor or her or his family information affecting the debtor's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false. "ƒ(6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made before such dispute has been asserted and written notice is received from the debtor that any part of the debt is disputed, and if such dispute is reasonable, the person who made the original disclosure must reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days. "ƒ(7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family. "ƒ(8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family. "ƒ(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist. "ƒ(10) Use a communication that simulates in any manner legal or judicial process or that gives the appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law, when it is not. "ƒ(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare. "ƒ(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney. "ƒ(13) Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor. "ƒ(14) Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts. "ƒ(15) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents if requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt. "ƒ(16) Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to "Deadbeat, Jane Doe" or "Deadbeat, John Doe." "ƒ(17) Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor's time zone without the prior consent of the debtor. "ƒ(a) The person may presume that the time a telephone call is received conforms to the local time zone assigned to the area code of the number called, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(b) If, such as with toll-free numbers, an area code is not assigned to a specific geographic area, the person may presume that the time a telephone call is received conforms to the local time zone of the debtor's last known place of residence, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within 30 days to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication. "ƒ(19) Cause a debtor to be charged for communications by concealing the true purpose of the communication, including collect telephone calls and telegram fees.

Interplay between security deposit disputes and disputed debts

When a resident vacates, the landlord is required to send the resident the Notice of Intention to Impose Claim on the Security Deposit. The required notice is the largest cause of disputes between the resident and property manager. If the resident disagrees with the amount that the landlord is claiming is owed, including but not limited to amounts claimed against the security deposit, and so notifies the landlord in writing, then for purposes of the Act, the debt is disputed by the resident.

Although not a recommended practice, it is perfectly legal for a property manager to respond in writing to the resident and explain in more detail why the charges were incurred. It is even legal for a property manager to threaten to send a resident's disputed debt to collections. The trap for the property manager is to threaten to send the account to collections without notifying the resident that the debt will be reported as a disputed debt, when the resident has previously given written notice of a reasonable dispute. Many property managers make this mistake. Also, when sending a resident to collections, the collection agency should be informed that the debt is disputed. A smart approach would be to send the collection agency a certified letter and place a copy in the resident's file.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law which regulates the collection practices of collection agencies and collection attorneys and any other individuals or entities that are considered debt collectors. Unlike The Florida Collection Practices Act, The Fair Debt Collection Practices Act does not regulate the collection activities of the original creditor, assuming the original creditor uses its own name when collecting the debt.

Purpose of the Fair Debt Collection Practices Act

The United States Congress intended to curb deceptive and abusive activities by debt collectors. The original version of the law was intended to protect consumers, not business entities. The Federal Trade Commission has the power to administratively enforce the Act. Congress actually wrote into the Act that abusive debt collection practices contribute to personal bankruptcies, marital instability and loss of jobs.

Penalties

A violation of the Fair Debt Collection Practices Act may result in a penalty of $1000.00 per violation, and there can also be liability for the reasonable attorney's fees of the plaintiff, an amount which often is substantial.

Required warning

The Fair Debt Collection Practices Act requires the debt collector to inform the debtor that it is attempting to collect a debt and that any information gathered can be used in furtherance of collection. The warning must be given when the debtor is first contacted. All future correspondence must state that the communication is from a debt collector.

Requirement of a validation notice

After a collection agency initially contacts the debtor, the debtor must receive within five days of the initial communication, a detailed written notice. The Act spells out all the required information that must be contained in the validation letter. Essentially, the validation letter advises the debtor of the nature and amount of the debt, the identity of the original creditor, which would be the landlord, along with the right to dispute and request documentation supporting the debt.

Prohibited conduct under the Act

The following are some but not all of the prohibitions under the Act: false representation that the communication is from an attorney, false representation that the consumer committed a crime, false representation as to the amount or legal status of the debt, threatening to deposit a postdated check, and communicating by post card.

In-House Collections

Often it is tempting for the property manager to take on the role of the collector. More often than not, this activity will turn out to be counterproductive. The apartment manager may want to avoid paying a fee to the collections agency. In reality, the collections process is very time consuming. Moreover, costs are incurred, and the apartment manager likely will not have the most advanced skip tracing software.

What makes in-house collecting even more dangerous is that that the property manager, although an original creditor, still must comply with the Florida Collections Practices Act. One mistake by the property manager can lead to expensive litigation.

Collection Agencies

There are many collection agencies that will attempt to collect debts owed from former residents to apartment communities. It is important that the property manager select an agency with a good reputation. One benefit of using a collection agency is that the property manager will not incur costs and time tracking down the former resident.

A good collection agency will have sophisticated software and skip tracing programs that will locate the former resident. The reputable collection agency will then vigorously pursue the collection of the debt and will make sure to comply with federal and state collection laws.

Reporting to collection agencies

The property manager must be very careful in reporting to collection agencies as to what amount the resident owes. In addition, the property manager should retain the proper back up, as the former resident could sue years later. Also, collection agencies will report the information provided to them by the property manager to consumer reporting agencies. If that information is erroneous, then the landlord could be subject to a lawsuit by the former resident. In addition, the landlord could be sued by the collection agency, if it is held liable for attempting to collect the inaccurate debt.

It is recommended to wait until the resident has had a chance to dispute the debt before sending the account to collections. Usually this means waiting at least 15 days after the resident received the Notice of Intention to Impose Claim on the Security Deposit. If not, then it is much easier for the manager to mistakenly not alert the collections company that the debt is a disputed debt. Also, one common error that property managers make is that they accelerate the rent owed under the lease when they should only be reporting the rent owed as it comes due.

 

“Serving the Property Management Professional”

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Managers often feel that they can sue and immediately collect the money owed by a former resident, who in this article we will refer to as the “debtor”. Unfortunately, this is often legally impossible, or if legally possible, so difficult as to be completely unrealistic. Florida has a reputation as a “debtor” state. This reputation is based mostly on Florida’s generous “homestead exemption”, which often fully exempts a person’s home and real estate that are his residence from collection efforts. However, even for those debtors that don’t own a home, there are numerous other protections.

The initial question is how much time and effort is the manager willing to expend to pursue someone who may currently have nothing to satisfy a judgment. The debtor may be what is often called “judgment proof”, which means that although the debtor may have property, it may not be reachable to satisfy a judgment. The debtor may someday need to satisfy the judgment, particularly if he wishes to buy a home, but how much time and money will the manager expend now for a mere future possibility?

Locating and Serving the Debtor

Before we get to the protections afforded debtors in Florida, we should discuss some practical obstacles to suing a former resident. The first hurdle that a manager faces is locating the debtor, and this can be a big hurdle with some former residents, who will seemingly disappear. If the debtor is located, the next hurdle is serving the debtor. A manager cannot obtain a money judgment against a debtor unless he has obtained “personal service” on that debtor. This means that the debtor has to be served with the lawsuit paperwork (“the summons and complaint”) personally. This is unlike an eviction action. Managers may recall that in an eviction action, the summons and complaint can be posted on the resident’s door if he wasn’t home. This type of notice to the resident is only valid to regain possession of the rental. It cannot be used to obtain a money judgment.

After the manager files the lawsuit, usually in the county where the rental was located, the sheriff must serve the debtor with the summons/complaint. If the debtor has moved to another county, the summons and complaint is forwarded to that county’s sheriff. If the debtor has moved to another state, the summons and complaint must be forwarded to that jurisdiction for personal service. While the sheriffs in Florida and other states will do their jobs, they will not make extraordinary efforts to personally serve the debtor. The manager may have to hire a private process server, which will be an additional expense.

Risk of a Counterclaim

Once the debtor is properly served, a manager with a valid claim may find that the debtor files a counterclaim. The counterclaim may be valid, but all too often it is jumble of anything that the debtor can dream up. Former residents/debtors, who never criticized maintenance, complained about repairs, or brought an issue to the manager’s attention, now file a counterclaim for shoddy maintenance, damaged personal property, lack of repairs and issues like mold, roaches, rats and anything else that comes to their minds. The debtor will bring his family and friends to testify for him. The manager must now assemble his records and request maintenance and repair personnel accompany him to court to testify. There is always a risk that the manager will not have adequate records or that repair personnel will not be available to testify. If the debtor has an attorney, the manager’s financial risk multiplies, since the prevailing party will be entitled to court costs and attorney’s fees.

Locating the Assets

If the debtor can be located and served, and a counterclaim is avoided or overcome, obtaining the judgment is only half the battle. The next hurdle is locating any assets. Florida law has procedures to assist in locating assets. The debtor can be required to list his assets or can be examined to locate assets. However, the process can be a time consuming exercise in futility, as the manager seeks to drag the information out of an uncooperative and perhaps deceptive debtor.

Collection Costs

Finally, the manager locates assets and wants to collect on the judgment. A point to consider is that legal actions to aid in collection, such as levy, execution or garnishment, come with their own set of filing fees to be paid by the manager.

Exemptions

Even after locating the assets, filing the appropriate collection action and paying the filing fees, the manager may not be able to obtain the assets because they are exempt. Federal and Florida law establish what are known as “exemptions” to protect certain property of debtors from creditors, such as the previously referenced homestead exemption.

There are a host of federal or Florida exemptions for particular items of income that flow from government programs, some as obscure as the benefits for surviving spouses of lighthouse personnel. Some of the more common federal and Florida government programs which are exempt include: unemployment compensation, social security, public assistance, veterans and disability income benefits, retirement benefits, and medical savings, college and funeral accounts. Additionally, some large industries have prevailed upon the legislature to exempt their products, such as life insurance proceeds and the cash surrender value of life insurance and annuities. The Florida legislature has exempted alimony, child support and separate maintenance payments, $1,000 equity in a motor vehicle at used car prices, and property held jointly in the name of husband and wife, when only one spouse is the debtor. Finally, Florida exempts $1,000 of a debtor’s personal property, including cash or bank accounts. A thousand dollars can cover a lot of property when it is valued as used property. Note that these exemptions are per person. So $2,000 total could be claimed by two former residents/debtors still living together.

If the debtor is employed, than Florida law provides a process called “garnishment” by which his wages may be taken. However, exemptions apply here too. The wages of a head of a family are completely exempt. “Head of a family” is much broader than a working parent. Any person providing more than half the support for a child or other dependent qualifies as the head of a family. If the debtor isn’t the head of a family, only a percentage of his after tax wages can still be taken (“garnished”).

The Debtor’s Business

If the debtor is operating a business other than a sole proprietorship, a judgment against the debtor may not lead to successful collection against the business. If the debtor has followed the proper procedures, such entities as corporations, partnerships, limited partnerships, limited liability companies and others, are considered separate and distinct entities from the debtor. A judgment against the debtor is not usually collectible against the debtor’s separate business entity. Legal ownership may even have been placed in a relative or friend’s name, although the debtor may be running the business.

Bankruptcy

Of course, the last resort of a debtor is declaring bankruptcy. A bankruptcy filing and discharge will prevent collection of the debt, so even the future possibility of collecting on a judgment is lost.

Collection Abuse Laws

A final word is that the manager should be aware that there are laws that address certain abuses in debt collection. While these laws mainly deal with professional debt collectors, it is worth noting that Florida’s Consumer Collection Practices Act has provisions that are applicable to anyone attempting to collect a debt. The penalties and potential attorney’s fee liability for violating this statute can quickly match or exceed the amount being sought.

Suing and collecting on a judgment are not for the faint of heart, those unwilling to traverse the red tape, or anyone seeking a quick resolution. The practical obstacles of locating and serving the debtor are often enough to justify turning the account over to a reputable collection agency. While a persistent manager may eventually reach the promised land of a recovery on a debt, it may be best left to established collection agencies or attorneys specializing in this area. Note that an added advantage of a collection agency is that, unlike a private manager, a qualified collection agency is able to report the debt to credit reporting agencies, like Experian, TransUnion or Equifax. However, collection agencies and collection attorneys will often retain a significant percentage of any monies collected as part of their agreements with managers, in addition to flat fees often charged for collection efforts, even if no money is collected.

 

“Serving the Property Management Professional”

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If our office could collect just a small portion of the lost rents and damages suffered by the managers we represent, we probably could close the doors in a year’s time and live happily ever after in a mansion on a tropical island. The truth is, the money that residents owe when they break a lease, get evicted and/or damage the premises is very difficult, if not impossible, to collect. Every day we get calls from upset managers asking us if we can collect the money owed to them, or if we will file a lawsuit to collect the money. Our usual answer? No. The reasons behind this are many. Most residents who could not care less about abiding by the terms of their lease will not pay you the money they end up owing you. Many are just uncollectible or owe so many people money; you are just not high on their list.

Florida is a “Debtor State”

While Florida is considerably manager friendly when it comes to evicting the resident, the collection laws favor the debtor. It is ironic that residents can be removed in 20-40 days if they fail to pay their rent in the 3 business day time period of the Three Day Notice, but cannot be forced to pay money they may owe. The days of “debtors’ prisons” are long gone.

A debtor in Florida enjoys several significant protections. For example, if the debtor is the head of a household, his wages cannot be garnished (there is a very limited exception for some consumer transactions). Some forms of income can never be garnished, such as disability income or welfare payments. Also, the debtor can protect up to $1000.00 of personal property from seizure for collection (and that’s $1000.00 per person in the household, regardless of age). The process of garnishing wages in the event the debtor is not under an exemption is often cost prohibitive.

Some Collection Alternatives

1. Collection agencies: There are many collection agencies which will vigorously attempt to collect money for you by sending out threatening letters and calling the resident. Additionally, they often have the capability of finding the resident through sophisticated skip tracing and hounding them. Sadly, you are probably just one of many creditors that the debtor has. We recommend that you send the accounts to a reputable (and we stress reputable) collection agency, but be absolutely certain that you can prove the amount owed possibly years later, when an attorney for the resident challenges you. If you are challenged and you cannot prove that the resident owed you the money you stated was owed, you could end up in a nasty lawsuit in which you will end up paying the resident and his or her attorney a lot of money, not to mention your attorney who you will have to hire to defend you.

2. Small Claims Court: Small Claims Court is the place where many smaller lawsuits are filed against residents. You need to file in the county in which the property is located or where the former resident resides. If you can find the resident and have him served with the lawsuit, you can end up in court where the resident may not show up and you will get Judgment against the resident, the resident will show up and you will possibly successfully mediate the dispute, or you could lose the case entirely or in part. Worse yet, an attorney could jump in and represent the resident, and if you lose your case even in part, you may very likely have to pay the resident’s attorney’s fees. These fee awards can easily reach thousands of dollars. For those clients who are retired or have a lot of time on their hands, we tell them that they could go to court, fill out the paperwork and file a case against their former resident. Many of these cases end up with the manager getting some or all of their money. Many more cases result in the manager getting a Final Judgment which is suitable for framing. Getting a judgment is only the very first step in the process.

Should You Use An Attorney?

In most cases hiring an attorney and paying good money to go after bad money is not wise. There are some attorneys to whom we refer clients, such as Troy Lotane of Vance Lotane and Bookhardt who file a large number of cases in Small Claims Court. Their firm has indeed been very successful at collecting, but they review each case carefully and evaluate the collectability of the debtor before they will help you make an informed decision whether or not to file suit. There are over 90,000 lawyers in Florida. Will many be happy to take your money so you can sue someone out of “principle”? Yes, but our firm is not one of them.

The Resident Has a Business! We Can Collect!

People who own businesses are no easier to collect from than that nice resident who just has no money or got themselves into a bind. In fact, it is often harder to collect from a business owner. Their business is in a corporate name, and they are used to people not paying them. This equates to them feeling it is okay not to pay you.

The Resident Completely Trashed the Apartment - I Want To Sue!

Think about this. Is a person who goes out of their way to destroy the rental property someone who is going to pay you or show up in court? These people are the last to ever dream of paying their debt to you or anyone else. Clearly, these are people you should just forget about. It always strikes us as funny when the property manager goes through great pains to take pictures and videos of a completely trashed unit. These residents don’t pay. It they did, they never would have trashed the unit in the first place.

Is All Hope Lost?

There are one or two good responsible people in Florida who may actually pay what they owe you. There may be a co-signer involved, which can increase the likelihood of payment, or the resident’s situation may change, and they decide that they have the means to pay. Our recommendation is to give your attorney a call and at least get an opinion. Often an out of state owner of the property does not understand what the laws are in Florida, as they may come from a creditor- friendly state. Your lawyer can give you a quick written evaluation, and possibly your owner will want to then back down or will still want to proceed. Some people are indeed collectable and worth pursuing. Most are not. Sometimes a simple $50.00 letter from your attorney can result in payment. There are many laws governing the collection of debts by collection agencies, lawyers and the original creditor, which may be you! Do you know these laws? Are you ready to take a gamble when you can end up the loser? Do you feel prepared to take on the role of a “collector”? Do you know that you can actually be considered a “debt collector” under Federal law? If your answers to some or all of these questions are “no”, take a deep breath and spend your energies trying to keep your rental property rented with good residents.

 

“Serving the Property Management Professional”

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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 you 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.

“Serving the Property Management Professional”

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Managers and leasing teams invest their time and effort in guiding an applicant through the application process. They may even turn other applicants away or hold the rental for him. After a successful application process (completed application, credit check, and criminal background) the applicant informs you that he won’t be renting. He wants his application deposit back. Under what circumstances can you keep it?

Any Actual Damages?

At the outset please note we advise that the application deposit be returned unless the manager can show actual damages, that is a financial loss, such as holding the unit while turning away other qualified applicants. An apartment community with an inventory of similar apartments may have difficulty showing this type of financial loss. 

Penalties and Forfeitures are Disfavored.

Our analysis begins with the recognition that Florida law in general does not look favorably upon contract penalties or forfeitures. Penalties and forfeitures are not enforceable in numerous areas of Florida law, either by express statutory prohibition or by judicial interpretation relying on such concepts as unconscionable provisions.

The Documents.

With that caution in mind we turn to an examination of the application and any other documents relied upon for the right to retain the deposit. The wording both to avoid the forfeiture and to authorize forfeiture must be clear and unambiguous: the grace period, the time and method of the manager’s application acceptance, the time and method of the applicant’s cancellation, the amount of forfeiture, etc. The burden of proof will be on the manager. Not only will the lack of strict compliance, but also the inability to prove strict compliance, with the terms of the forfeiture be fatal. If the amount to be retained on the application form is left blank, or other sections of the application addressing deposit forfeiture are left blank, this is often a fatal error.

The Oral Contradiction.

Even a clearly written, unambiguous document can be contradicted by the oral misrepresentations of the manager’s representatives. The applicant will often state that the leasing staff assured him that his application deposit would be returned without mentioning any conditions. A good counter to this claim is a leasing checklist, checked-off and signed by the leasing agent, which includes the disclosure of the application deposit policy. A separate applicant signature line or initial space is often placed next to the forfeiture language for emphasis.

Is There An Agreement to Lease?

Has the applicant, who has not reviewed the leasing documents before signing the application, entered into any agreement to rent, regardless of a signed deposit forfeiture? The point of the transaction is the rental of a unit. A rental is not accomplished when the application is accepted, but only when the applicant signs the lease. An accepted applicant who in good faith rejects certain lease provisions or any other leasing document provisions (community rules and regulations) has never agreed to rent, but only agreed to enter into negotiations to rent. Rather it is the manager who by refusing to negotiate the lease terms is refusing to rent. The application deposit should be returned.

Is the Application Deposit a Security Deposit?

Is the application deposit a security deposit under the Chapter 83, The Florida Residential Landlord Tenant Act? Neither the statutes themselves nor the case law answers this question directly. We can postulate that at the application stage we don’t have a rental agreement yet. Without a rental agreement, we don’t have a landlord/tenant relationship. Without a landlord/tenant relationship, Chapter 83 doesn’t apply. Further, FS 83.43(7) defines a rental agreement as providing for the use and occupancy of premises. FS 83.49 addresses money deposited on a rental agreement. A good argument can be made that with no lease agreement, the deposit is not subject to the bank deposit and notice of claim requirements of FS 83.49.

The Risk of Litigation.

As you can see from this article the pitfalls in keeping an application deposit are many. For this reason we advise our clients that the application deposit should be returned unless the client can show actual monetary loss. The time, effort and expense to defend a small claims case will outweigh any income derived from tenuous application deposit forfeiture, not to mention the potential for a class action claim.