COPYING IDENTIFICATION

Many managers are reluctant to copy the resident’s identification due to a fear that this will trigger a Fair Housing violation. By not having a copy of the identification, the manager is at a distinct disadvantage when this identification is needed later in the tenancy or for collection purposes. Should the identification be copied? Is it legal? Let’s look at the risks and benefits of copying the ID and get some advice from our nation’s Fair Housing Experts.

The Application Process

Most managers have been advised that copying an applicant’s identification and keeping it with the file can open you up to a Fair Housing complaint. The theory behind this is the fact that you can gather up numerous applications, sit down and review them, look at the photos of the applicant and decide to discriminate against the applicant based on race, religion, color, nationality or anything else you may be able to determine by viewing the image of the applicant. Possibly, the applications are gathered and sent to a third party in your company who makes the ultimate decision as to accepting or rejecting the applicant. This person can easily sort through the applications and make decision based on what they see on the applications. In the event of a Fair Housing complaint, the investigator may and probably will want to see all your applicants’ files, and in the event there appears to be a pattern of discrimination against someone based upon a protected class that can be determined by the ID copies, you will have a lot of explaining to do. Is it illegal to make copies of the ID at the time of application? Nadeen Green, a nationally respected Fair Housing expert and Senior Counsel with For Rent Media Solutions says this:"If you feel a need to have a copy of the applicant’s photo prior to them being approved, (1) know the risk, (2) be consistent within the policy, and (3) be sure you can absolutely justify the decision making procedures and process as to why one person got an apartment and another did not. Otherwise there could easily be the illusion that decisions were based on factors about the people, with those factors being identified through the photos." Let’s look at what she is saying.

1. Know the risk. The risk is that you will be accused of discrimination, as you can often easily identify a person of a protected class by the photo on the ID. Will not having a copy of the photo ID keep you safe? Of course not, but having a copy certainly elevates this risk.

 

2. Consistency in your policy. If you are taking a copy of photo ID for the purposes of identification of the applicant, you must do this with all your applicants. Never pick and choose or make exceptions unless these exceptions are not based upon any discriminatory purpose. If you have a policy to copy photo ID, you will need to have a written policy for when a person does not have a photo ID. Note the emphasis on “written” when it comes to all your policies.

 

3. Justifying your application approval/rejection decision. All managers need to have a written Resident Selection Criteria and/or other written policy which must be followed for the application acceptance or rejection. Careful file notes should be kept with the full reasons for which a resident was denied.

Copying the ID at Lease Signing

While some managers may be hesitant to copy ID during the application process, it is crucial that ID is copied at the lease signing. This gives the manager another chance to look at the ID, compare it with the information provided, and have a firm way to identify the resident at a future date. A copied ID often is useful in a resident lock-out, pursuing a bad check, and dealing with identity theft or in an unauthorized resident matter. Both Doug Chasick of Call Source and Fair Housing Trainer Nan Cavarretta agree that copying ID at lease signing is both legal and recommended, but feel that copying during the application process is risky.

Your Decision?

When dealing with any potential fair housing issue, caution is key. If you have a good Resident Selection Criteria and detailed policy and procedures AND you follow them, documenting everything along the way, you will probably be safe copying the ID at application time. Short of that, we recommend you hold out until the lease signing. Finally, when it comes to copying the ID, no matter when you do it, as Doug Chasick of Call Source will tell you, "most copy machines at leasing offices don’t make good copies of photographs anyway!"

CONSTRUCTIVE AND RETALIATORY EVICTIONS

 

The vast majority of managers understand that a resident who vacates prior to the lease end date may be liable to some extent for future rent. Likewise, most managers have comfort that if they comply with all of the terms of the lease, then they will prevail if sued by the resident at a later date. While there is some truth to the above assumptions, it is definitely not the whole truth. Let’s see why a manager can get in to “hot water” if they fail to look past the obvious.

 

The Constructive Eviction Scenario

 

Larry appeared to be the ideal prospect. His application was approved, and he paid all of his deposits and moved in. After being in the unit for only three days you received his first work order. The washing machine was leaking. Soon after, you fixed the problem. However, two weeks later, the pipe below the washing machine bursts, and the kitchen and living room is flooded. Your maintenance staff responds and the pipe is fixed. Soon after, you start receiving repeated calls from Larry that his carpet has a strong foul odor. Larry then sends in another work order stating that the apartment home has a bed bug issue. Your exterminator confirms the existence of bed bugs inside the unit. Larry has nine months left on his lease and had already written to you two weeks earlier that he is withholding the rent until the manager remedies the situation. You figure that it will cost a substantial amount of money to fix the apartment, and you cannot bear to think about dealing with Larry for nine more months. The next day you receive keys from Larry and a note which says, “I HAVE VACATED”. “Good riddance”, you say to yourself. You plan to sue Larry for breaking his lease and will hold him responsible for future rent until the property is leased. Good news? Nope! The manager is now vulnerable to a constructive eviction claim by the resident.

 

What is a Constructive Eviction?

 

Did you know that you can end up illegally evicting one of your residents who voluntarily vacated the premises even if you never posted any notices on their door and never requested that your attorney file an eviction action in court. Florida Courts will allow a resident to break their lease and move out of the premises if the judge rules that a constructive eviction took place. A constructive eviction may occur if the manager has neglected the leased premises to the point where it is unsafe or unfit for use by the resident for the purposes for which they were leased. There is also Florida Statute 83.63 below:

 

“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 the resident's 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).

 

A judge may rule that a resident is constructively evicted if the manager turned off the utilities or was cited for health or housing code violations, such as mold or roach infestation. In one court case, the manager was unable to remedy excessive noise disturbances by other residents. The judge ruled that there was a constructive eviction. Although threats of a future eviction usually would not constitute a constructive eviction, a court allowed a resident to assert a constructive eviction defense when the resident reasonably believed that the manager was about to lock out the resident after refusing the rent and threatening the resident with an eviction. The manager may also be liable for a partial constructive eviction if part of the premises is unusable.

 

You should also keep in mind that residents can sue for damages for the fair market value of the apartment for the period that the unit was not habitable. If they prevail, you would have to pay their attorney’s fees and court costs, or the residents can elect to remain on the premises by sending a notice to withhold rent as specified in Florida Statute 83.56 (1).

 

FS 83.56(1) If the manager materially fails to comply with s. 83.51(1) or material provisions of the rental agreement within 7 days after delivery of written notice by the resident specifying the noncompliance and indicating the intention of the resident to terminate the rental agreement by reason thereof, the resident may terminate the rental agreement. If the failure to comply with FS 83.51(1) or material provisions of the rental agreement is due to causes beyond the control of the manager and the manager has made and continues to make every reasonable effort to correct the failure to comply, the rental agreement may be terminated or altered by the parties, as follows:

 

1. If the manager's failure to comply renders the dwelling unit untenantable and the resident vacates, the resident shall not be liable for rent during the period the dwelling unit remains uninhabitable.

 

2. If the manager's failure to comply does not render the dwelling unit untenantable and the resident remains in occupancy, the rent for the period of noncompliance shall be reduced by an amount in proportion to the loss of rental value caused by the noncompliance.

 

The Retaliatory Eviction Scenario

 

Before Moe leased a unit, your residents all thought that you were a strong property manager. Well those days are over! Ever since Moe discovered that other residents along with himself had faulty air conditioning and heating units, he has created havoc for the property management office.

 

Moe started a resident association at your apartment community. They have meetings every Monday night. As a result, work orders have increased by over 80%! The manager is beside herself that she has incurred all of those maintenance costs. Every day it seems like you are receiving complaints from residents covering all aspects of the apartment community. You definitely feel that this unwanted attention brought on by Moe will cause your residents to decide not to renew their leases.

 

You want to resolve this situation. You feel that the only way to do this is for Moe to live somewhere else where he can be another property manager’s nightmare. What can you do? Moe has paid his rent on time. He lives very quietly; in fact, you have never issued to him a Seven Day Notice to Cure. Then your idea hits like a bolt of lightning!

 

Moe’s lease expires in two months. The manager’s lease stated that renewal is at the discretion of the manager. Moe is sent a letter stating that he will not be allowed to renew his lease. Moe walks in to your office and tells you he would like to renew at the market rate. Moe does not vacate as of the lease expiration date. You have your attorney file a holdover eviction action. Now you just had a phone call with your attorney, in which it is revealed that Moe has hired an attorney. He also tells you that you may very well end up losing the eviction action and that you will likely have to pony up money to Moe’s lawyer as well to cover legal fees and costs. You wish that you had understood the term “retaliatory eviction”.

 

What Is a Retaliatory Eviction?

 

Since 1983, the Florida Statutes have protected residents from being evicted for retaliatory reasons. Thus, retaliatory evictions are illegal in Florida! The Statute is below: 83.64 Retaliatory conduct.-- (1) It is unlawful for a manager to discriminatorily increase a resident's rent or decrease services to a resident, or to bring or threaten to bring an action for possession or other civil action, primarily because the manager is retaliating against the resident. In order for the resident to raise the defense of retaliatory conduct, the resident must have acted in good faith. Examples of conduct for which the manager may not retaliate include, but are not limited to, situations where: (a) The resident has complained to a governmental agency charged with responsibility for enforcement of a building, housing, or health code of a suspected violation applicable to the premises; (b) The resident has organized, encouraged, or participated in a residents' organization; (c) The resident has complained to the manager pursuant to s. 83.56(1); or (d) The resident is a service-member who has terminated a rental agreement pursuant to s. 83.682. (2) Evidence of retaliatory conduct may be raised by the resident as a defense in any action brought against him or her for possession. (3) In any event, this section does not apply if the manager proves that the eviction is for good cause. Examples of good cause include, but are not limited to, good faith actions for nonpayment of rent, violation of the rental agreement or of reasonable rules, or violation of the terms of this chapter. (4) "Discrimination" under this section means that a resident is being treated differently as to the rent charged, the services rendered, or the action being taken by the manager, which shall be a prerequisite to a finding of retaliatory conduct.

 

As you can see, there is much conduct on the part of the resident that is protected. The statute prohibits the manager from retaliating against a wide range of resident related activities, including but not limited to: residents that make written complaints regarding the manager’s noncompliance with the lease, residents that make complaints to government agencies to report building or health code violations, or members of the military who terminate their lease in accordance with Section 83.682.

 

Section 83.64(1) (b), shown above, will protect Moe from being evicted due his activities related to the resident’s group that he founded. In fact, the statute specifically makes even the THREAT of eviction unlawful.

 

Acts That Will Get the Manager in to “Hot Water”.

 

The Florida retaliation statute prohibits the manager from treating the resident who takes part in the conduct above, differently than other residents with regards to services provided, rent charged or other actions on the part of the manager. The manager may not retaliate by cutting or reducing services such as utilities, raising the rent, threaten to or file eviction or other civil lawsuits.

 

What Were They Thinking?

 

Courts will attempt to get inside the heads of managers to see if they were acting in a retaliatory manner. In the case of Moe, the manager will need to convince the court that the eviction was not primarily related to Moe’s resident association activities. You should not feel that the manager is powerless over a resident who complains. The key question to ask is this: what was the real reason behind the manager’s action? To change the facts of our above example, if the manager’s primary reason for evicting Moe was related to a history of paying the rent late, then there would likely not be a violation of the statute. Why? Because the main reason for the eviction was NOT related to Moe’s resident group activities.

 

A Final Word of Caution

A common trait shared by many managers who are successfully sued by residents due to constructive or retaliatory eviction related conduct is one that you have probably already figured out. They are managers who fail to maintain the premises in accordance with their lease and Florida law. If one decides to become a manager, then there are many responsibilities the go along with that title. Those responsibilities should be taken very seriously! If not, then only bad things will be in store for them, including being tagged with large money judgments against them obtained by residents and their attorneys.

 

CONCESSION PAYBACK AND THE EARLY TERMINATION AGREEMENT

 

Approximately 30% of apartment communities are utilizing the new Early Termination Addendum which gives the resident a choice of “damages” upon breaking the lease before the natural end of the lease. If the resident chooses Option 1, the resident will owe a fixed amount, usually one or two months’ rent to the apartment community, in addition to any past or current rent owed and physical premises damages which may be attributable to the resident. Most residents, when they are given the explanation of the choices, choose Option 1, as it is in their best interest, since the apartment they vacate may stay vacant for quite some time, making Option 2 a much more risky venture. A large amount of confusion occurs when the resident has been given a rent concession, chooses Option 1 and then breaks the lease. An equal amount of confusion has to do with the “notice” requirements imposed upon the resident in Option 1.

 

Concession Chargebacks

 

Most concession addendums or clauses have some form of chargeback provision in the event the resident defaults on the lease agreement by vacating before the end of the lease, either voluntarily or through an eviction. One would assume that if the resident chooses Option 1, receives a rent concession and then breaks a lease, the concession payback can be charged in addition to the Liquidated Damages amount provided for in Option 1. This is INCORRECT. If the resident chooses Option 1, the liquidated damages amount is fixed to the one or two months’ rent that have inserted in Option 1. YOU CANNOT also charge the resident a concession payback. Now you may be wondering why this is the case. The law is not clear on its face regarding this, BUT the legislative history of the law will show that the legislative intent of the bill passing process dealt with this. In attempting to get the Early Termination Law passed, early drafts and versions of the bill before it was enacted into law INCLUDED a concession chargeback. Through negotiations with the legislators and the Governor, it became clear that the Governor wanted concession chargebacks removed from the bill, or else he was going to veto the bill. The concession chargeback language was removed from the bill, and therefore it is fairly clear now that the liquidated damages are limited exclusively to the one or two months’ rent in Option 1. While this does not seem fair for a resident to receive a generous concession, break a lease and then only be required to pay liquidated damages, the manager must understand that providing rent concessions are done at the risk of the apartment community. Give the gift, but don’t expect anything in return.

 

Requiring Notice From the Resident

 

Under the Early Termination Law, the resident can be required to give notice to the manager of up to 60 days in addition to being charged liquidated damages of up to 60 days’ rent. It would appear to the average reader that this means you can ask a resident to give you notice, charge the resident through the notice period and then ALSO charge the resident up to 60 days additional rent as a liquidated damages. For example: a resident walks into your office, pays the rent and gives you 60 days’ notice. The resident then leaves after 30 days. What does the resident owe you if they chose Option 1? The resident only owes you the 2 months’ liquidated damages. Now suppose the resident gives you 60 days notice and stays and pays for the 60 days and then vacates. What does the resident owe you? The exact same thing: 2 months’ rent as liquidated damages. As you can see, the notice requirement of Option 1 is really quite hollow. You want them to give you notice, BUT if they do not, the penalty is exactly the same. We caution you to never charge the resident through the notice period PLUS the liquidated damages, because that is how all the lawsuits and the need for the law change begin in the first place. If the resident gives you 60 days’ notice and lives there for 60 days, great. If they give you 60 days’ notice and pack up and leave or do not give you notice at all, you can STILL only charge the liquidated damages amount. If you have any doubts as to what you can charge the resident, call your attorney ASAP.

 

COMPUTER DISASTER PREPAREDNESS

Every property management company should have a plan to deal with man-made or natural disasters. Having a business continuity plan in place is crucial for any business, and especially important in property management. Property managers are asset managers who manage many millions of dollars in assets for other people with little regulation or legal requirements. The property owner hands over an asset which is of substantial value to a property manager who is not required to have any experience or property management knowledge. This property manager then places residents in this valuable asset, collects rent, remits funds and deals with repairs. It is somewhat scary how unregulated property management really is. A mutual fund manager or any type of money manager has to undergo vigorous training, education, bonding and licensing, but a property manager does not even need a license to manage property. The only time a license is necessary is if the manager is engaged in leasing, and even then, a real estate broker’s or sales person’s license suffices. Needless to say, the responsibility is huge, and potential liability is great for a property manager and the broker of the property management company. All property managers should immediately begin planning for a natural or manmade disaster, and there is something they can and must do immediately to reduce their liability, protect their business, and protect the information concerning the asset that they manage. This first step is protection of computer data.

The Typical Property Manager

The typical property manager does engage in some sort of data protection, be it an external back up hard drive, tape drive, CD or DVD burner, or some sort of simple means to copy data from a computer to something else for later use. Some managers take the tape or CD home, some place it in a safe in the office or simply on a shelf. In most instances, if there is data loss on a server or a desktop, the property manager has a back up available and can be up and running quickly with little to no downtime. Is that back up recent? Probably not. Most property managers who engage in some sort of backing up only do so once a week if that. Since backing up often requires the computer file not to be in use at the time of back up, you would most likely need to be the last person working in the office in order to back up that important data file in your property management or accounting software.

The Problems

What happens if your office burns to the ground, is swept away in a flood or a thief decides he want to take all your computers, your safe and your server? None of this happens in Florida, right? Well, many property managers have insurance for their equipment. Computers can be easily replaced, and you will probably end up with better equipment than you did before the incident. The problem though is your data. Your financial data, move in and move out inspections, photos, file notes and everything pertaining to the relationship between the resident, owner and you may have disappeared or been destroyed. Sure, you can reconstruct all the financial records to a large extent, as your bank certainly has the information, but at what cost in time and money? How can you replace the file notes? What about all your digital photos of the properties you manage? They may all be gone.

The Simple Solution

Off-site back up, also known as remote data storage, is the simplest and most economical solution to these problems and the first step in a disaster recovery plan. Hundreds of companies exist now that provide safe, inexpensive storage of all your data in a remote safe location. Your computer is simply hooked up to them through the internet, and they keep all the data that you send them safe, secure and accessible to you when you need it.

What To Back Up?

Have your technical support person help you with deciding what information should be backed up. Most programs are useless when backed up, plus take a load of space in the back up, but data, scans of your file, photos, property inspection reports, emails and anything you can think of that you would need to refer back to should be backed up. You should have a plan for safekeeping of your program files, because many programs can only be installed once in one computer to avoid piracy problems. Convincing your software company that your office burned down and you need to reinstall the programs is possible, but can take hours on the phone.

How Often Do You Back Up?

Your first back up will be your largest, and then you back up changed and new files on a regular basis. Our office backs up data every single night. Since the nightly back ups are new and changed files, each nightly back up is fairly quick. It is set to back up at a specific time, and nothing is necessary on our end to accomplish the back up. The back up occurs when the office is closed, and no one is using any of the databases or computers.

Making Sure You Are Really Backing Up

It is easy to assume that you are backing up each night and that the information is going to the offsite data storage company. After all, you set it up, tested it, and it worked. The problem is that often there are network, internet, software or hardware problems which could result in your back up never occurring. Installing a firewall, changing a setting or installing that new anti-virus software could result in your back up not working. Some companies email you a report each morning showing that your back up was successful, but many do not. Remember that you only need to retrieve backed up data when you really NEED it. That is when you might find out that you have not really been backing up for weeks or months. Always confirm that your off-site back ups are in fact occurring as you expect. When restoring data, always call your technical support person if you have any doubts. You may have a corrupted data base and then restore another corrupted database, or ruin files in the restoration process.

Should You Discontinue Your Usual In-House Back ups?

We don’t. We back up to an external hard drive connected to the network on a regular basis just to have that one additional back up. This back up is done once a week on the weekends. Paranoia is a good thing when it comes to data!!

Let Your Owners Know How You Safeguard Data!

One of the selling points of a property management company is to have a disaster recovery plan which includes off-site data back up. Your owners know the risks of operating a business in Florida, and data loss will be one less thing that you and they have to worry about. Let your owners know that you have joined the ranks of the successful professional property management companies who ALWAYS back up their data off-site.

COMMON NOTICE MISTAKES

 

Most leases have various clauses designed to protect the manager when he contacts the resident. The clauses allow the manager multiple ways to contact the residents, indicate whom he can contact if there is more than one resident, etc. In any given notice required by Florida law, if the statute dictates the method to contact the resident, the statute is controlling over the lease. Further, since the purpose of some notices is to warn the resident that the failure to comply with the notice will result in the loss of her home, the judges often strictly interpret the statutes. Very little deviation, if any, is permitted. Finally, the court system’s resources –judges, staff, and equipment – are increasingly strained to cope with the growing case loads. The fact that you have successfully filed notices, which your attorney feels are marginal, may mean nothing more than your cases have been hidden in the volume of cases flowing through the system. It is risky to trust your eviction to luck.

 

Now we turn our attention to missing the obvious on Three Day, Seven Day and Nonrenewal Notices.

 

All Residents Should be Named

 

Names – all adult residents should be named. This is obvious, universal, fail-safe advice. Just as obvious is that the resident’s name is both his first and last names, not just his last name, i.e., “Mr. Last Name”. If you want to know who “all the residents” are, check to see who signed the lease. Two bad notices with one resident named on each are not a substitute for one good notice with all the names. Spell the names correctly on the notice.

 

There are a few counties that permit some notices to name only one resident in multiple resident leases. Some counties require that some notices add a catch-all phrase such as “and all other occupants” to the names, if only one resident is named in multiple resident leases. Before deviating from the safe harbor of naming all residents, you should consult with your eviction attorney. It is foolish for you to guess or base your notices on your experience in another county. Even if one name sufficed in the past in a county, there is the risk that a new judge or visiting judge may decide that strict statutory compliance requires all residents to be named.

 

Include the Full Address.

 

Address – include the full address under the resident name(s). The statutes require it. The full street name includes the right directional (north, south, east, west) and the right ending (court, road, lane, etc.). To miss this obvious point is to obtain a judgment and writ, only to find that the deputy will refuse to serve the writ because the address is wrong.

 

The statute provides that the county should be listed on the notice. While most judges will overlook omitting the county, do you want to be the manager who discovers the hard way that some judges are meticulous and require strict compliance?

 

Despite the obvious, managers will argue that it is unnecessary to include the complete address, because both the manager and the resident know where the rental is located, because the manager didn’t mail the notice so the address wasn’t needed, because the manager included only the apartment complex name under the resident name and there is only one “XYZ Apartments”, etc. All are fine arguments, but they are legally insufficient.

 

Date the Day That You Are Serving.

 

Date – date the notice the day that you are serving the notice. Watch out for the word processing software auto-entering the date. It can be confusing to both you and the resident to have different dates for preparation of the notice and for the delivery of the notice. Worse, since it is the delivery date that begins the time period for compliance, counting from a notice date which is different from the delivery date will often result in an invalid notice.

 

Include Your Name, Address and Telephone Number

 

Manager’s or agent’s name, address and telephone number – print these at the end of the body of the notice. Your firm belief that the resident already knows this information is not a good defense to failing to comply with the statute. If the manager’s or agent’s address has changed from the one listed on the lease, follow the notice of new address procedure in the lease. Although it is obvious that the new address is on the notice, there may not be a legally sufficient notification of a change of address.

 

Complete the Certificate of Service Completely

 

Certificate of service – complete it correctly and thoroughly. It is not obvious to a judge that the delivery date is a typo. If it’s wrong, it’s wrong. Just because the date is on the top of the notice does not mean the judge will assume that you served it the day it is dated. Your signature on the body of the notice does not substitute for your signature on the certificate. If the date or signature is missing, the notice is flawed.

 

Altering a Notice

 

Never alter a notice after you have delivered it, even if it is an obvious typo. If it is later used in an eviction, it is a misrepresentation to the judge that the notice submitted to the court is the same as the one given to the resident.

 

Three Day Notice Demand Date Counted Correctly

 

Three Day Notice demand date - the days are correctly counted. Do not include the day of delivery as one of the three days. Did you remember the holidays this month? If you were going to hand deliver the Three Day Notice, but mailed it instead, the demand day is wrong, unless five days were added for mailing. If you printed it out yesterday, but got busy and did not deliver it until today, the expiration date will often be short, making the notice invalid.

 

Three Day Notice Demand Amount is Only Rent

 

Three Day Notice demand amount – rent, rent and only rent. The Three Day Notice says “the sum of _____ FOR RENT”, so it’s obvious that you can include only rent and amounts that are defined as additional rent under the written lease. Before you complete the Three Day Notice check the file. Is there some justification to consider late charges, utility charges, pest control charges and anything else included in the Three Day Notice as “additional rent”? If the charge is created under the utility addendum, did the resident sign the addendum? Is it in the file?

 

This is so obvious that I almost did not include it. Did you add the amounts for the Three Day Notice correctly? Checking your addition will not hurt.

 

Three Day Notice Late Charges

 

Three Day Notice late charges – calculate as of the notice date. Assuming that late charges are “additional rent”, they cannot be included unless the rent is late as of the delivery date of the Notice (not as of the expiration date). If there are daily late charges, then calculate them through the delivery date of the Notice (not through the expiration date).

 

Non-Renewal Notice

 

Non-renewal notice – adequate notice of non-renewal is required. If the lease requires X days’ notification to the resident of non-renewal, then “almost X” is not enough. If you mailed the Non-renewal Notice, then you were required to add five days to the notification time. The fact that the resident obviously already knew of the non-renewal does not relieve you of the obligation to comply with the lease and the statutes. If the date is an obvious typo, it is still wrong.

 

Missing the obvious can hurt you. Do not assume that everybody will know what you mean. Take time to think, and review your notice before you send it. There are enough factors that you cannot control in an eviction. Missing the obvious is something that you can control. Why make the process any harder than it has to be?

COMMON APPLICANT SCREENING MISTAKES

Every property manager has the task of screening applicants. The property manager wants to find good residents who will pay rent on time, not disturb the neighbors, and take good care of the property. The flip side of that is the property manager wants to weed out applicants who will fail to pay rent, have keg parties, or choose to remodel the unit. The decision will be easier if you avoid these mistakes.

“The screening criteria are in my noggin, not on paper.”

Every property management team should have a clear, written screening policy. All staff who deal with the leasing process should be aware of the policy and have her own copy at her desk. Management must train staff, so they are aware of and follow the policy consistently with all applicants.

“I never tell the screening criteria to anyone.”

A property manager’s best tool to prevent potential fair housing complaints is a paper that tells prospective residents about the criteria that will be used in evaluating the application. It does not have to be a copy of the policy itself. Rather, it can be an inviting document that lets a prospect know about the rental property.

“Once denied, I never talk to the applicant again.”

If a property manager declines an application, or puts extra monetary conditions on acceptance, an “adverse action” letter must be sent to the person. That adverse action letter, if completed properly, tells the applicant everything he is entitled to know. It allows the property manager to communicate the decision to the applicant honestly and quickly.

If the applicant demands to more information or explanation, he should diplomatically be referred to the adverse action letter and the paper he initially received about the criteria that would be used. Details not contained within the adverse action notice should not be volunteered.

“I rely on my gut reaction in choosing a resident.”

While experience is invaluable, it is important to make sure one’s experience is not influenced by biases that could be discriminatory. Every manager has had the experience of the resident who “looked” okay and then turned out to be a bad resident. That, as well as fair housing complaints, can be avoided by having a written screening policy. Working on assumptions and experience alone just doesn’t cut it.

“I choose the best applicant from a pool.” Where there are several people competing for the same unit, it is best to treat them on a first-come, first-serve basis. When you reach a qualified applicant who meets your screening criteria, stop screening and offer the unit to that applicant.

Property managers should date and time stamp applications so there is no confusion about who was first. If an application is not complete (for example, when a resident needs to bring in a paycheck stub), date and time stamp it when it is complete.

COLLECTIONS AND THE RESIDENT DEBT DISPUTE

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 they 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

1. Never forget to use the word “disputed debt” when telling the debtor that the debt will be sent to collections.
    
2. Never threaten to affect someone’s credit report.
    
3. Send your collection agency a certified letter informing them that the debt is “disputed”, and keep a record of this in the file.
    
4. If someone inquires about the debtor’s creditworthiness or delinquency, always disclose that the debt is disputed.
    
5. 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.

 

 

Collections and the Property Manager
by Brian P. Wolk, Attorney at Law

 

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 post dated 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.

 

COLLECTING ON A JUDGMENT

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 an 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. An 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.

CHRONIC LATE RENT PAYMENTS

It is inevitable that you will have a chronic late payer. Every excuse in the book is given by the resident for the tardy payment, but the payment always comes, sometimes with the late fees, sometimes without. You may inherit a later payer from a self-managed property or a prior management company. Is a resident always allowed to pay late? Can you evict a late payer? Is there any way to tell a resident to shape up or ship out, or will you be destined to always accept late payments?

Is a Resident Allowed To Pay Late?

The short answer is “yes”. There is nothing in Florida law that allows you to evict residents because they pay late. You can evict a resident if she does not pay at all, but paying late is not prohibited. Regardless of what your lease may provide, if a resident wishes to pay late, she may. There is a built in grace period under Florida law of three days, not including Saturdays, Sundays or legal holidays. If a resident fails to pay the rent according to the due date of your lease, you must serve the resident with a Three Day Notice which gives the resident the opportunity to pay you within that period of three days. This is in essence a “grace period”. Without serving the resident that Three Day Notice, there is nothing you can do to terminate the tenancy for nonpayment of rent. No provision in your lease can override the fact that a resident is entitled by law to receive a Three Day Notice from you, and is allowed by law to pay you the rent if the notice has not yet expired.

We Want To Get The Chronic Late Payer Out!

My usual response to this request is to tell the manager to be glad to have a resident who pays, albeit somewhat late. Times are tough right now, and anything a manager can do to keep a resident is advisable. However, there will be times when the manager does not want the uncertainty of getting the rent late, or is tired of having to serve a Three Day Notice on the resident every single month, and wants the resident out. If the resident pays the rent within the Three Day Notice timeframe, no matter how angry or frustrated the manager is, the resident can stay and pay as long as the notice has not expired. The manager’s only recourse is to non-renew the resident at the end of the lease, or if the lease is currently month to month, non-renew the month to month tenancy.

The Resident Does Not Pay Within The Three Day Notice Period

This is a different story. If the resident does not pay within the Three Day Notice time frame, Florida law allows the manager to terminate the tenancy. This sounds easy enough. The resident is given a Three Day Notice and fails to pay within the time frame allotted. The manager then files an eviction, and the resident is evicted from the premises. It would seem perfectly legal. The resident is chronically late, the manager has had it, the resident does not pay and therefore is evicted. If the resident is in “new territory” by finally failing to pay within the three-day notice period, the manager will have a strong case. However, it is often not that simple. The fact that the resident has paid rent late so many times actually put the resident in better standing in court, if the manager has accepted rent after the expiration date of prior Three Day Notices. The manager could also have problems in court if the Three Day Notice that finally “snares the resident” is delivered earlier in the month than normal.

The Resident Beats An Eviction Because He Has Always Paid Late?

While some judges are extremely strict and will evict a resident if the resident fails to pay within the Three Day Notice period no matter what the resident’s excuse may be or the resident’s past payment history, be it prompt or tardy, if a resident can prove to a judge that he has been paying the rent late, after the expiration of the Three Day Notice, and the manager has been accepting the rent late, the resident may be able to prevail in court. This seems to go against logic. A resident who pays the rent late is certainly not a good resident. That resident has blatantly violated the lease terms and caused extra work and worry for the manager. The issue here is waiver. The manager, by accepting the rent late time and time again has potentially waived his rights to enforce the terms of the lease. By his own actions, the manager has modified the terms of the lease.

What is Waiver?

If you know that a resident has a pet in violation of your no pet policy, but you do absolutely nothing about it for months, you will have possibly “waived” your rights. The same would apply if there were unauthorized occupants in the unit and the manager did nothing. Any noncompliance that the manager ignores or “tolerates” for some time can result in the manager waiving his rights. The exact same waiver can occur with late rent payment. The manager thinks his case is better because the resident looks “bad” in court, but actually it will be the manager who will be at a disadvantage in court.

Can “Waiver” Be Overcome?

If the resident has been chronically late, does this mean you can never evict or must tolerate this late payment forever? Probably not, but you must notify the resident that late payments, although accepted in the past, will not be tolerated in the future, and the resident can be subject to eviction if the payments are not made within the Three Day Notice time period. Essentially it is a “shape up or ship out” type of notification. We recommend this type of notification is done in writing, by regular mail and certified mail, and at least 30 days before the next monthly rent payment is due.

Sample Wording

 

LATE RENT PAYMENT POLICY, WARNING AND NOTIFICATION

DATE ________________

TO __________________________
ADDRESS ____________________

Dear Resident:

According to our records, you have not been paying your rent according to the due date which is ________________ (insert date).

While we may have accepted these late payments in the past, this letter shall serve as notification that in the event you do not pay according to the stated due date on your lease, you may be subject to receiving a Statutory Three Day Notice. If the rent is not paid within that notice period, we may opt to refuse your late rent and file for eviction ANY time thereafter. In the event we file an eviction, we may elect not to stop the eviction, or if we decide to do so, you will incur additional attorney’s fees, late fees and costs.

It is imperative that you pay your rent according to the lease terms from this point on.

Please feel free to contact us should you have any questions.

Very truly yours _______________________

Name of apartment community, management company etc.

Will This “Shape Up Or Ship Out” Letter Work?

There is a good chance that this type of letter can overcome a waiver defense by a resident. There is no solid guarantee, but it is better than nothing. Remember that in order for the resident to raise a defense of waiver, the resident first must know that he has this defense, and in most cases must place the rent into the court registry. This minimizes the risk you have, but if you are managing property for others, you will often be inheriting residents with inconsistent and late rent payments.