Evictions are being contested at a record rate. Residents are hiring attorneys at a record rate. While many residents have no legal basis for contesting the eviction, they are still able to file an answer with the court and too often get a court hearing, which causes significant delays. Most of the time, the resident does not win in court, but the resulting delay causes significant financial harm to the manager. In many cases a resident will contest the eviction and actually have a legal basis for contesting the case.

 

Some successful defenses to an eviction action include but are not limited to:

1. Late charges on the Three Day Notice which are not considered “additional rent” in the lease.
2. Amounts other than rent on the Three Day Notice.
3. A pattern of late payments.
4. All adults not on the Three Day Notice.
5. Address discrepancies.
6. Notices or letters sent to the resident AFTER the Three Day Notice given.
7. Verbal agreements or conversations between manager and resident.
8. Accumulated late charges.
9. Deficiency or repairs needed on the property.
10. Failure to receive notice
11. “Hard times defense”
12. Denial of noncompliance

THE SOLUTION

While it is impossible to prevent a resident from contesting an eviction, it is possible to LIMIT the things for which the resident can contest. This is actually very easy, but takes a commitment on the part of the manager to do it correctly. Over 50% of all paperwork that comes into our office for eviction filing is wrong in one or more ways. This is unnecessary and inexcusable. It creates more work for the attorney and staff and often requires a re-do of the notice or notices. Redoing the notice results in delays and more money is lost by the manager unnecessarily. Following the Speedy Eviction Tips and using the Three Day Notice Checklist can cut down on mistakes substantially. Successful managers use checklists and procedures manuals. Haphazardly preparing and servicing notices is a recipe for disaster.

“SPEEDY EVICTION TIPS”

EXAMINE! - - Is the Certificate of Service filled out on your 3 day? Are all residents listed?

EXPLAIN! - - Explain any strange amounts that do not match up to your lease rent amount.

FAX OR EMAIL! - Send all pages of lease and 3 day notice. Don’t forget the back pages!

USE A FAX COVER SHEET IF NOT EMAILING – Use your attorney provided transmittal form or fax cover sheet

CONFIRM! - - Call and confirm that your attorney has received all pages. A fax machine or scanner can pull through more than one page at a time! A power outage can make it appear that your attorney has received a fax, but in actuality, it was in memory and now is gone forever!

SEND EARLY IN THE DAY!!!! - - Most of the time there is no charge to you if the case is pulled before it is filed with the Court

CALL IF YOU FIND RESIDENT’S PAYMENT IN THE MORNING!!!

“EVICTION CHECK-LIST”

 

1. ADDRESS: The address on the notice must be correct. a full and complete address is necessary, i.e., county, unit #, left or right side, upstairs or downstairs, street, road, drive, etc. Note: if notice/lease do not match completely, please confirm the proper address on the cover page.

 

2. DATES: The dating of the notice is crucial. i.e., three full business days, excluding Saturdays, Sundays, legal holidays and the day you serve it. Note: Please make sure the certificate of service is filled out completely prior to faxing the notice to our office.

 

3. AMOUNTS: Only the past due undisputed amount of rent should be on the notice. if there are any other charges on the notice they must be considered “additional rent” Note: if the amount on your notice does not match exact amount of one month rent per the lease please provide us with a breakdown of the total.

 

4. NAMES: All adult occupants should be listed on notice, i.e., those who are on the current lease but may have moved out and those who are not on the lease but have established tenancy. Also, correct spelling and the full names are necessary. Note: If the notice is inconsistent with the lease please give an explanation on cover page.

 

5. DOCUMENTS NEEDED TO BEGIN EVICTION: COVER PAGE Please review the information above, this will help us to speed your request. Include permission to file the eviction(s) and any information and explanations of discrepancies, etc. as stated above if necessary. LEASE Please fax all the pages of the lease, if there is no lease please provide the terms on cover page, (i.e., month to month, week to week, rental amount, the day rent is due, etc.) EXPIRED NOTICE i.e., Three day, non-renewal, etc. THREE DAY AMOUNT BREAKDOWN FORM. (Breakdown three day amount only)

REMEMBER! YOU CAN NEVER ALTER A NOTICE AFTER SERVICE

 

“Serving the Property Management Professional”

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

You go to the post office, pick up the mail and while thumbing through it see a letter from a personal injury attorney whose name you saw on a billboard. Of course you become nervous, and it is the first letter you open. Reading it, you determine that an attorney is representing one of your residents in a slip and fall on the rental property, and the attorney is demanding insurance information. What should you do?

Sooner or later you will be faced with the situation of an attorney for your current or past resident demanding insurance information from you. This is standard procedure for the personal injury attorney, and it should not worry you. It does not matter what the attorney is alleging, if anything, in his or her demand letter. The resident may be suing on a slip and fall, mold related claim or any possible injury she may claim has been sustained on the property you manage or managed. The key is to comply or make sure the property owner complies with the demand letter as required by Florida law.

The Law

Florida Statutes 627.4137 is called Disclosure of Certain Information Required” and sets out what the insurance company and the insured must disclose to an attorney who is representing an injured party. While you may feel this does not apply to you, the statute requires the “insured,” i.e., the owner of the property you are managing, or maybe even your company, to disclose certain information.

Although you most likely are not the “insured”, you are the agent of the insured, and need to communicate with the owner of the property and make sure that either you or the owner complies with the law and provides the information to the lawyer. It may be as simple as making a phone call to the owner’s insurance agency or faxing them the demand letter received from the attorney, and the information will begin to flow. If it does not, follow up.

The Resident is a Fraud!

You might be flabbergasted or angered at the allegations the resident’s personal injury attorney makes in his demand letter. You may know for a fact that the resident is committing a fraud or has completely made up a story about getting injured on the property. None of this matters. What matters is that you get the information to the attorney, or at a minimum, make sure the owner of the property complies with the law.

What Does the Letter Demand?

The letter you received from the attorney most likely quotes all or part of Florida Statute 627.4137 and demands the name of the insurer, the name of each insured, the limits of liability coverage, a statement of any policy or coverage defense and a copy of the policy. Most of this information may not be readily available to you or the property owner, but the owner’s insurance company will have everything. Usually all it takes is a call to the insurance agent, and they will get the ball rolling. The information must be provided to the attorney within 30 days of receipt of the demand. Additionally, the statute requires that the insured disclose the names of all known insurers. The owner may have insurance with one company and umbrella insurance with another. All this must be disclosed. Read the letter carefully to see if the attorney is demanding insurance information from you, the owner or both.

The Purpose of the Insurance Information Demand

The insurance information demand and the law requiring the disclosure of information allows the attorney to deal directly with the insurance company if one exists. Hiding this information from an attorney or ignoring the demand will result in greater problems for the property owner, as the attorney may directly file a lawsuit against the owner, rather than dealing with and possibly settling with the insurance company.

Notification to the Insurance Company

Besides complying with the law under the statute, it is crucial that the owner’s insurance company is notified whenever an attorney is indicating that he or she will make a claim.

Many insurance carriers will try to refuse coverage of a claim if it is not reported to the insurance company within a certain amount of time as required under the policy. Once you receive the letter from the attorney, you are fully put on notice that there is some sort of claim, and this needs to be reported.

If the claim is against you or your company, make sure you notify your insurance company immediately. If the claim is against the owner of the property you manage, take swift action to notify the owner, and most importantly, be able to prove you did.

Notification of the property owner

In these days of email communication and faxes, it is easy to fall into the trap of just scanning the letter and emailing the owner. Is the owner now on notice? We recommend you not only email the insurance information demand letter to the owner, but also send it to him by certified and regular mail following up with a phone call. The last thing you want is to be accused by an owner of not notifying him of a possible claim, having his insurance company deny the claim for failure to notify according to the policy rules, and have the property owner try to say that you were at fault.

It is bad enough that many owners who receive the insurance information demand letter do not take the matter seriously, but to be accused of not notifying the owner is an avoidable problem. Questions? Call your attorney if you receive the insurance information demand letter.

 

“Serving the Property Management Professional”

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

 

Your resident moves out, and you discover massive damage that has been going on for months. Your A/C blower motor burns out because the filter never has been cleaned. You find serious pet related damage to the carpeting, walls and doors. There is a severe mold problem in the bathroom caused by the resident. Could this damage have been avoided? If you are managing a single family home, can a property owner hold your company liable?

Common Practice

Most property managers and management inspect the rental premises once a year. While the pest control professional may be in the unit more often than that, typically a condition inspection is only done once a year. In many situations, as long as the resident is paying the rent, no complaints are coming from the unit and everything appears fine on the outside, no inspections are ever done.

The Law and Inspections

Florida law places no obligations on a manager to make any inspections of a unit. While the law places many obligations of maintaining the premises on the manager, most of maintenance will be at the request of the resident in response to a problem. Nothing in FS 475, which governs real estate licensees, places any requirements upon a property manager to inspect or otherwise preserve or protect the managed property.

What Can Happen Inside A Unit?

The short answer is "just about anything". You can have unauthorized occupants, unauthorized pets, unsanitary conditions, damage to the walls, damage to carpets, pest infestation, severe mold issues, water intrusion problems, plumbing problems, indoor drug cultivation, clogged air filters, severe smoke related damage or just about anything that can happen, which could result in the need for an expensive repair or replacement. A common item that is usually ignored by the resident is the A/C filter, which eventually gets clogged up to the point where the blower motor is strained and eventually fails. Could any of the aforementioned problems been avoided? Possibly not completely, but most likely they could have been minimized by an inspection that was done earlier rather than later, or done more often than not.

Apartments

An apartment manager should be diligent about inspections. Units should be thoroughly inspected once every three months. Any problem should be dealt with immediately. If there are maintenance issues, they should be handled even if the resident has not put in a work order. If a problem is caused by the resident, the manager should serve the resident with the appropriate notice. That notice usually being the Seven Day Notice of Noncompliance with Opportunity to Cure. Inspections are crucial to catching a problem early and taking action. In the event of unauthorized occupants or pets, a resident often claims that the occupants or pets were there for a long time, that you had knowledge of this, and therefore that the pets or occupants are now allowed, since you have waived your rights to do anything about it. This is actually a compelling defense which can catch a manager off guard if the premises are not reinspected after the notice of noncompliance is given.

Managing Homes

This single family/duplex/triplex home manager has an even greater reason to inspect often. Besides having more items to inspect in most cases, the owner of the property can and sometimes does attempt to hold the property manager liable for the damage caused by the resident. If the manager has not inspected often enough, a good argument can be made that the manager failed in her duty to protect the premises. The argument is as follows: the owner’s attorney proves to the judge that had the manager inspected sooner, the damage could have been avoided or minimized. Since this did not occur, the manager should be held liable for the resulting damage. Many judges are apt to accept this reasoning. This scenario may also result in the manager getting reported to FREC, who due to its lack of experience in property management related issues, may feel the manager was negligent in his or her duties.

Inspections After Seven Day Notices

As we all know, just because a Seven Day Notice of Noncompliance with Opportunity to Cure has been served on the resident, this does not mean the resident will cure. You must perform an inspection after the notice expires to see if the desired results have been achieved. Many property managers serve notices, assume the noncompliance has been rectified, and then continue to accept rent from the resident, who unbeknownst to the manager is still in noncompliance and possibly will try to claim that he is now allowed to continue in the noncompliance because you kept taking rent for months after citing the noncompliance.

Inspections and Fair Housing

All residents need to be treated similarly when it comes to inspections. What about situations in which there seems to be ongoing problems? A resident may have children who have caused damages to the premises or are tearing up the yard. Will excessive inspections be looked upon as discriminatory or harassing?

If the inspection is justified, it will not be considered excessive or discriminatory or harassing. Fair housing laws do not absolve residents of the responsibility to maintain the manager’s property.

To avoid the risk of having an inspection become fodder for a fair housing claim, develop a policy and follow it. If you must deviate from your inspection schedule, document the reasons for doing so. For example, if your policy is to inspect every three months, but you want to do an inspection in some intervening month because pest control reported a problem, fine. Do the “extra” inspection, and make notes to your file why you are doing it.

 

“Serving the Property Management Professional”

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

A property manager will often inherit leases from the prior management company. These leases are usually store bought leases, a lease out of a self-help guide or something the manager printed out from an internet site. The manager files an eviction a month later only to realize that the lease required all notices to be sent by certified mail. Surprise! The manager now has to start over again. Can this have been avoided? Yes, but it takes some work and knowledge of what to look for. An odd notice service clause is just one of many things to look for when inheriting a lease agreement. Many leases are from other states or written by Florida attorneys who do not concentrate in landlord/tenant law. The first thing a manager should do upon inheriting a lease is to sit down and examine the lease line by line. While no one likes to read a lease agreement, this is a necessity, not an option. The clauses in a lease agreement often conflict with Florida law or can impose additional burdensome obligations.

Who are the residents? Confirm who the residents are in the property. While the lease may list one party, a completely different party may be living on the premises and paying rent. They may indeed be your residents. An eviction cannot be filed unless the names of the residents are known.

Notice serving: Under the Landlord/Tenant Act, the usual default notices, such as the Three Day Notice and Seven Day Notices, do not need to be served by certified mail or any form of mailing for that matter. The only notice which must be sent certified mail is the Notice of Intention to Impose Claim on Security Deposit as per Florida Statutes 83.49. Some leases have clauses requiring the mailing of notices by regular or certified mail. A typical manager is accustomed to serving a notice by posting on the premises or hand delivery as allowed by Florida law and does not think to mail a notice. An eviction is filed, only to have the case dismissed, and if there is an attorney representing the resident, a substantial attorney’s fee award may be given to the resident. How did this silly mailing requirement even get in the lease in the first place? Most likely because it seemed like a good idea to the lease drafter. Many attorneys feel that certified mail is the proper way to get an important notice to an individual, but the experienced manager knows that this is probably the worst way, as we have no control over when or even if the resident picks the notice up. Look at the inherited lease carefully before serving any notices.

How long to cure a default? A common clause in many leases deals with the amount of time the resident has to cure a default. Often there is a spot for the manager to fill in the number of days. While sometimes the section is left completely blank, other time’s bizarre numbers of days are inserted in the default section. We routinely see 7 to 30 days as being the amount of time given the resident to cure a default. What does this mean? The resident may have 7 to 30 days to pay rent, and the manager cannot give the resident a traditional Three Day Notice. The default clause is often buried in the inherited lease and can be missed.

Arbitration or Mediation Clauses: Florida law does not require arbitration or mediation in landlord/tenant law cases, but a clause inserted in a lease could trigger these procedures. While this might not be such a bad thing for a security deposit dispute, does this mean that potentially you will have to go to arbitration or mediation for an eviction case? These potentially dangerous clauses are sometimes found in the store bought, out of state or even Florida attorney prepared lease!

Security Deposit Timing Procedures: Many old leases state that the manager has 15 days to make a claim on a security deposit but we all know that the law now says we have 30 days. So, what is it, 15 days per the lease contract or 30 days per present law? We recommend that if the lease references the old statute and requires the claim letter to be sent in 15 days, make the claim in 15 days. A clause like this is easy to overlook.

Abandoned Property: Prior to the Florida law change, a manager was required to follow Florida Statutes 715 when dealing with a resident’s abandoned personal property. This statute requires that the resident be sent a notice and property held by the manager for a specific period of time before disposition. Disposition procedures under this statute depends upon the value of the property. This burdensome procedure can be avoided if the lease has certain specific wording regarding the non-liability of the manager as it pertains to abandoned property. Without this specific wording, the manager must follow the abandoned property procedures as outlined in Florida Statutes 715. A manager can easily run afoul of the law if the inherited lease does not have the abandoned property wording provided in Florida Statute 83.67.

General lease clauses: Is the rent on the lease the same as what the resident is paying? Are there other agreements out there? Is the lease old and expired? Are there blanks in important sections of the lease? Take your time and examine every clause thoroughly.

The Expired Lease: You inherited an expired lease. Can you force the resident to sign a new one? No, but you can give the resident a Notice of Non-Renewal as a way to either make them leave or sign a new lease. If they refuse to leave or sign, you simply evict them. How many days’ notice do you need to give to non-renew the resident? Who knows? You must look at the lease!!

“Serving the Property Management Professional”

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

You have not received rent for the month, go out to the property to serve your Three Day Notice, and the next door neighbor informs you that the resident is in county jail. The property is full of belongings, and the resident’s car is parked in the driveway. Can you evict? Should you post the Three Day Notice on the door? Do you want your resident to come out of jail and find he has been evicted and everything he owns is gone? This situation will occur if you manage property long enough and you need to know how to deal with it properly to avoid liability and/or a serious dispute.

Where Is the Resident?

You may or may not know if in fact the resident is incarcerated. If you were lucky enough to have your property on the news the night before when they did the grow house bust at your rental home, you can be fairly sure that the resident is in the county jail. In other situations, you were simply told the resident was in jail by a neighbor or someone you may have contacted on your emergency number list. To confirm the resident is in jail, you need to call the county jail system and ask for inmate information. This is public record in most cases, and you will be able to find out if the resident is in jail and where, as some counties have more than one location for their jails. If you are unsuccessful, look up the arrest report from the sheriff’s department website and give them a call if necessary.

Do You Need to Locate the Resident?

There is nothing in Florida law that provides you must hunt down a resident in order to serve a Three Day Notice. The law states that you can serve the resident in person or post the notice on the premises in the resident’s absence. In an incarceration situation, clearly the resident is absent; therefore, you could legally post the notice on the door and thus satisfy the requirements of Florida law as far as notice goes. The question then is, “should you locate the resident?” We feel that you should make an attempt.

Why Bother Locating the Resident?

If you post a Three day Notice on the door of the home, you will eventually file an eviction, and at the end of the eviction, you will remove all the resident‘s personal belongings to the street, where the neighbors and passers-by will rummage through everything and take anything of value. Personal items will be taken as well, some with sentimental value. Your resident may get out of jail only to find out that his key no longer works in the door. Your resident then contacts you, only to find out that he has been evicted and everything he owns is now gone. What can happen? The resident can go ballistic and cause you great harm, or decide to destroy or damage your property or the home. A surprised, evicted resident is an extremely dangerous and volatile person. While you may have done everything according to the law, this will not matter with the recently released resident.

You Have Tried to Locate the Resident But Cannot

At this point you need to jump into action, review the file, and begin calling your emergency numbers, contact numbers and employers. Do not give any information, other than you are the manager and just need to contact the resident. Do not tell anyone you know or heard the resident is in jail. Simply work hard to track the resident’s information down. If you cannot locate the resident or get any information that will help you, serve your notice to the property; knock first, and if there is no response, serve the Three Day Notice by posting on the premises. If you do not receive the rent, file an eviction as you would with any other resident.

You Locate the Resident

Now that you have located the resident and know what jail he is in, you can serve your Three Day Notice to him in jail or have a process server do this. Better yet, you can possibly avoid an eviction altogether! Many incarcerated residents do not want to deal with an eviction and would just rather surrender possession to you, if they feel they will be incarcerated for some time. If you are able to call the resident in jail or have the resident call you collect, the resident may tell you to give access to a friend or relative. While this is great, you must get something in writing from the resident under which he is giving possession to you, who is allowed access to the unit, and when you will have possession. We recommend getting the following form signed by the resident while he is in jail. You must be sure that the resident did in fact sign the form, and make sure that no other people are living in the rental unit. You can often make an appointment with the jail’s social worker and visit the resident directly in jail.

ACKNOWLEDGMENT OF VACATING AND DIRECTION AS TO DISPOSITION OF PERSONAL PROPERTY FROM INCARCERATED RESIDENT

 

I _________________ hereby agree that I have completely vacated the premises located at_________________________________________. 

I agree that any personal property that is left behind in the unit or on the premises may be disposed of by Management and/or Owner without notice, and I agree to hold Management, the owners of the premises and any agents or employees harmless for such disposal of personal property.

I agree that this document and my vacating shall have no effect upon any financial obligations under the lease or Florida law unless otherwise agreed to in writing by Management. I agree that my Notice of Intention to Impose Claim on Security Deposit if any shall be sent to the address of my former unit, and I am responsible for putting a forwarding order in with the US Postal Service.

ADD IN SIGNATURE LINE FOR RESIDENT AND 2 LINES FOR WITNESSES 

 

Can You Take Possession of the Unit by “Abandonment”?

Under Florida law, there is a presumption that a unit is considered “abandoned” if it is vacant for one half of the payment period (usually this is 15 days on a monthly payment period), the rent is unpaid, and, the resident has not given you anything in writing telling you that he would be back at some later time. While it may appear that an incommunicado, incarcerated resident would qualify as having abandoned the unit, we do not recommend that you take this route. If you are unable to get possession from the resident in writing by the above form or through an eviction, taking the “abandonment” route is just too dangerous.

Conclusion

It is not every day that you must deal with an incarcerated resident. While this is a good thing, it underscores that you most likely do not have much experience in handling such a situation. In these odd types of situations, we always recommend that you call your attorney for advice before you take any action. There is just no reason to go it alone.

 

“Serving the Property Management Professional”

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

A major repair must be made to the property you are managing, and this repair requires authorization from the property owner, as it exceeds the amount you can spend according to your management agreement. The air conditioning has ceased to work, and the inside temperature is exceeding 100 degrees. You try to contact the property owner, but there is no answer on the phone number you call. Do you go ahead, take a chance and get the repair done? You are not sure if your resident has vacated and want to avoid a potential wasted eviction action, so you try to contact the resident. His phone number is disconnected, he no longer works at the job he had at application, and the emergency number is out of service. Do you file the eviction or take a chance and take possession? The problem in both of these scenarios is that you simply cannot communicate because the information you have is insufficient.

Initial Information

The Resident: Typically through the application process, the manager will ask for the resident‘s phone number and an emergency contact. After a few months, there is a good chance that the resident has defaulted on his cell phone contract and/or has acquired a different phone number. The emergency contact was a friend who has moved and who also has a new number which you do not know. The property manager may have a work number for the resident, but when this number is called, the resident no longer works at that job, and no one there wants to give out any information. This is the reality of residents in Florida. We are a transient population here in Florida, and information and addresses change fast and furiously.

The Manager: When a property is managed by a local property manager, that manager will get the manager’s information at the time the Property Management Agreement is entered into. This information is often the out-of-state manager’s address, home phone number and nothing more. If the manager is not home, the property manager simply does not have any ability to make contact and communicate.

Email: Most residents and managers have email addresses. A few years ago this may not have been the case, but the reality today is that most individuals have email addresses, and many check them on a frequent basis. With multiple residents you will have multiple email addresses, and often you will have work and personal email addresses. The same will apply to the manager. Never assume that if a resident or manager is elderly that they are not computer savvy or do not have email. Often people give an incorrect email address by accident. We recommend that you send a confirmatory email after the resident moves in or after the property owner has signed a management agreement, just to be sure you have not been given incorrect information.

Home and Cell Phone Numbers: While a land line in the past has been the main contact number for most managers and residents, many are now opting to do away with the cost of the land line for cell phones or phone service provided by the local cable company. The property manager may be the last person to find out that the manager or resident no longer has a land line. Cell numbers of all the residents should be acquired at the time of move-in, or in the case of the manager, at the time the property management agreement is signed. The key is to get all the numbers, not simply one person as a contact. The more numbers you have, the greater chance you will be able to make contact.

Work Numbers: Acquiring the work numbers of both the manager and the resident is crucial. In the event you are having difficulty with all other numbers you may have, the work number may provide you with the information needed to track down the party. Most of the time we see the work number of the resident on an application, but in our experience, the property manager often does not have the owner’s work number. In the event the manager or resident is on vacation, you may be able to get information by simply calling and listening to a recording the party has left, or if you must speak to a co-worker, you may find the party. Be extremely careful never to use this method to transmit private information or imply that you are attempting collect rent. When calling a work number, how you identify yourself and the fact that the person you are calling may have caller ID could result in an accusation by the resident that you spoke to a co-worker about the resident’s rent obligation. A desperate resident will make up a story that you called and harassed her boss or spoke to a co-worker about private information.

Fax numbers: A large number of residents and managers have separate fax numbers due to home offices. Make sure that if you acquire a work fax number, care is taken that other employees of the fax recipient will not be viewing private information, and that express written authorization is obtained to transmit private information.

Keeping the information up to date

All information can and does change. Your information may have been accurate at the time it was acquired, but after a few months or sometimes years, this information is useless. It is crucial that the property manager has a system in place to regularly check this information for accuracy; we recommend at least every six months. Sending out requests for information in the owner’s statement or periodically to the resident may achieve the desired results, but if not, property managers need to affirmatively take the time to go through their records and update everything. Updated information will reduce liability, decrease evictions and make property management easier.

 

“Serving the Property Management Professional”

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

It’s that time of year again. A tropical storm will cause mischief somewhere and damage someone’s rental premises. The havoc will interrupt the resident’s possession of the premises as well as the manager’s income. Here are some important repair matters to keep in mind:

Damaged and uninhabitable. If rental premises are damaged in a way that renders them uninhabitable, the resident is not liable for rent for the period that the premises are uninhabitable. The owner is not obligated to pay for a hotel or move the resident to another unit (unless the lease specifically says he should).

Repairs should be completed as quickly as is reasonable. This is often difficult in a post-hurricane period, given the great demand on services. Documentation is key to show that you are making best efforts to get the premises repaired.

Damaged but still habitable. If the premises are damaged but not destroyed, it is wise to work out some "credit" to the rent until repairs are done. How much of a credit depends on the facts of the particular situation. Alternatively, a wise manager will have a clause in the lease that allows the manager the right to terminate the tenancy in the event the premises are “damaged”.

The resident cannot refuse to pay rent. However, some compromise should be reached. If you served a three day notice while significant repairs were ongoing, and then filed an eviction, it is very likely that a judge would consider the damage to be a "diminution" in value. That's enough to mess up an otherwise good eviction case.

When repairs are completed, you will be on solid footing to demand the full rent.

Destruction of premises. If the rental premises are destroyed, the owner might wish to terminate the lease rather than do repairs. Unfortunately, the option to do this is limited. Florida statutes does not entitle the manager to terminate the tenancy under these conditions. The resident can do so, but not the manager.

The manager can terminate the tenancy due to destruction only if the lease says he can. This language is usually found in a paragraph titled “Casualty” or “Maintenance”.

If the lease does not contain language that permits the manager to terminate the tenancy, yet repairs are out of the question, the owner may want to "invite" the resident to terminate the tenancy. The manager would suggest to the resident that the resident could give notice to vacate and be released from the lease.

Data and documentation Sure, everyone knows to take photos of damage after the hurricane, but do you have photos of what the place looks like now? It is sometimes hard to fully appreciate an “after” picture without having a “before”. You should record and document the condition of the rental premises now, before the winds blow.

 

“Serving the Property Management Professional”

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

In these tough economic times, property managers have a vested interest in working together during the application approval process. As occupancy rates decrease, and the pool of applicants with strong credit histories shrinks, creative leasing tools must be utilized by property managers. One such tool is allowing the applicant to obtain a guarantor in order to pass the lease approval process. It is usually cut and dry that the guarantor of an initial lease term can be held responsible for the rent during the term of the lease. However, as you will see, the law may not be on the side of the manager who is attempting to enforce a guarantee agreement for any lease extension or renewal term.

What are Guarantee Agreements?

The typical guarantee agreement involves somebody who agrees to be responsible for the financial obligations of a resident, including the rent as provided under the lease. This person is known as the guarantor. The guarantor is usually not listed on the lease as the resident or occupant of the apartment. Often, but not always, the guarantor is a close relative such as a parent or uncle. If the resident fails to pay rent, the manager has recourse against the guarantor and can recover money damages owed to the manager by the resident.

Are Guarantee Agreements Enforceable?

Florida courts enforce guarantee agreements if the document is worded correctly. While the promise of one person to meet the financial obligations of another is allowed in Florida, the agreement must be in writing according to Sec 725.01 of the Florida Statutes. Therefore, never believe that an oral guarantee agreement will be enforced by a judge, because it will not!

How Should the Guarantee Agreement be Worded?

Be very specific. Courts attempt to look at what the intentions of the parties were at the time of entering in to the contract or agreement. Since it is usually the manager that has drafted the agreement, any ambiguity in regards to the terms of the guarantee will be construed against the manager. What does that mean? If the terms of the agreement are vague enough that there could be multiple meanings, then the resident will “get the benefit of the doubt,” and the court will likely enforce the resident’s belief as to the meaning of the disputed term. Among other things, you should list the names of the parties, reference the lease that the guarantee applies to, and of course the guarantee agreement should spell out in detailed fashion the obligations for which the guarantor will be responsible.

The Lease Renewal Scenario

Bob moved to your apartment community ten years ago from Kansas in order to attend college. Bob, like most college students, was short on cash at the time. Based on his situation, he was advised that he needed to obtain a guarantor in order to have his rental application approved. Lucky for Bob, Uncle Jeb agreed to be the guarantor. As it turns out, Bob was timely in making all of his rental payments for the first nine years and ten months of his tenancy. Bob failed to make his final two rent payments and hopped on a plane for Jakarta, Indonesia, never to be heard from again! You decide to go after Uncle Jeb for the balance of the rent owed by Bob. Uncle Jeb is upset and does not believe that he should be held responsible for nine renewal terms, and claims he should have been notified of each renewal transaction. Your regional manager receives an email from Uncle Jeb’s attorney threatening legal action.

Is Uncle Jeb Responsible Under the Guarantee Agreement for the Lease Renewal Term?

The answer to the above question will depend on how the guarantee agreement was worded. Under Florida law, a guarantee for a lease can be continuing, but it must expressly state that it is intended to cover future transactions for the guarantor to be liable for extensions and renewals. The terms should contemplate a future course of dealing during an indefinite period. If the above conditions are met, the manager would not have a legal duty to notify the guarantor of each transaction between the manager and resident, provided that the particular transactions fall within the description of the terms of the guarantee agreement. Therefore, if there is no mention of the lease renewal in the guarantee agreement, then Uncle Jeb would not have liability in the above fact pattern, because the agreement did not expressly state that he would be responsible for the renewal terms.”

Is Uncle Jeb Financially Responsible if the Lease Guarantee Agreement Specifies That it Applies to Lease Renewals?

As a general rule, if the renewal period mirrors the lease term in every manner, then the guarantee would be enforceable against the guarantor, if the agreement specified that the agreement applied to renewal terms. However, if the renewal lease contains different provisions other than the original lease term, a court may not enforce the guarantee agreement. For example, if the rent has been increased during the renewal term, the court may possibly hold that the lease is not a true “renewal lease”, because not all of the terms were “renewed”. Instead the court may treat the “renewal” lease as a new lease, thereby extinguishing the obligations of the guarantor. The court may refuse to enforce the guarantee agreement in that situation, on the premise that the guarantor never intended to be liable for the higher rent amount. It is possible that a court may enforce the guarantee, if the terms expressly state that the guarantor will remain responsible for any changes, renewals or amendments to the lease that would increase the guarantor’s risk, such as rental increases.

The main point is that courts really prefer to err on the side of caution if the terms of a guarantee agreement are ambiguous and are reluctant to hold the guarantor liable.

What Do We Recommend?

Our firm’s recommendation is both very practical and very simple!

You should update each guarantee agreement for each renewal or lease extension period. Have the guarantor sign again, so that it is clear as to exactly what his financial obligations are to you.

If you really are banking on the guarantor to pay you, it would be risky to leave it in the hands of the courts, when you have the ability to firm up your guarantee agreement by updating it each renewal or lease extension period.

 

“Serving the Property Management Professional”

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

Most property managers of single family homes, condominiums or other rental units will at some point in their career cross paths with an owner that has a property go into foreclosure. Such a situation may cause the tenant, the owner and the property manager significant stress.  However, understanding what legal rights the tenant will have in a foreclosure situation should alleviate this stress in most cases for all involved.    

Legal History

Prior to 2009, laws in many states allowed tenants of foreclosed homes to be immediately evicted when the foreclosing bank or purchaser at auction acquired title to a foreclosed home.  This resulted in many ugly situations. First, as the United States economy entered a recession, more and more tenants of foreclosed homes were evicted. The nastiest part to all of this was that many tenants were shocked to learn that the house was in foreclosure and did not even think eviction was a possibility, sometimes arriving home from work to find the locks changed and all their personal property removed to the street, even when they had paid the rent!   In response to this, Congress passed the Protecting Tenants at Foreclosure Act in 2009, which law created notice requirements to the tenant if the foreclosure was finalized.   However, this federal law expired on December 31, 2014, despite legislative attempts to permanently extend the law, and for a time, there was no law taking the place of the federal law, and a return to the prior legal landscape had seemingly occurred.  

 

Effective June 2, 2015, a new Florida law went into effect dealing with termination of a rental agreement upon foreclosure, offering limited protections to the tenant under foreclosure in the form of a 30-day notice requirement from the new titleholder.  However, this Florida law was subsequently repealed when the original federal law was reinstated in June of 2018.         

Tenant Protections under the Current Law

The Protecting Tenants at Foreclosure Act requires the foreclosing bank or purchaser at auction to honor the existing lease upon obtaining title, or in the case of a purchaser at auction actually planning to move into the property, to provide the tenant with at least 90 days’ written notice.   The purchaser at auction will often be the lending bank or an investor not looking to move in, so the tenant’s full remaining lease interest would need to be honored in those cases, or if the lease has expired or is set to expire in less than 90 days, the bank or investor would need to provide at least 90 days’ notice.   

In order for the tenant to qualify for these rights, the lease must be an arms-length transaction between the tenant and the owner.   Also, the rental rate under the lease must not be substantially below market value, and the tenant cannot be a child, spouse or parent of the owner.   

Can the Tenant Break the Lease?  

The tenant will often be served with the foreclosure lawsuit and other subsequent court documents filed in the foreclosure proceeding and may be spooked.  However, as long as the owner remains the titleholder, the tenant needs to pay rent and honor the lease.  The owner in foreclosure can evict the tenant for defaulting on the lease terms.   Unlike the “old days”, the tenant’s tenancy interest continues to be protected by law.   Therefore, the tenant does not have a right to stop paying rent or terminate the lease early simply by virtue of the foreclosure action being filed.           

What Must the Prior Owner Do?  

Upon title changing under a foreclosure action, the prior owner (or its managing agent) must turn over all security deposit and advance rent to the new titleholder with an accurate accounting.    The foreclosing bank may sometimes indicate no interest in receiving deposit or other escrow money.  After title changes, if the bank clearly disclaims in writing its interest in the security deposit or other escrow money, that money should be returned to the tenant, not the prior owner.    The foreclosing bank may often present the tenant with a cash for keys offer after acquiring title, but the tenant is not obligated to take the bank up on its offer.      

An owner under foreclosure pressure may sometimes turn the deed over to the lender prior to a foreclosure being finalized, and in that situation, the bank would acquire the property subject to the existing tenancy interest.   Similarly, if a “short sale” occurs prior to a foreclosure action being finalized, the new titleholder will acquire the property subject to the existing lease interest, as would be the case with any ‘normal” sale.  

 

“Serving the Property Management Professional”

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

Many companies, including our law firm, purchase goods through the internet or by phone from out of state companies. In our case, it may be computer equipment, video recording equipment, office supplies, electronics, marketing materials, evict.com T-Shirts, paper or the myriad items a firm of our size uses throughout the year in conducting business. These purchases are usually delivered by UPS, FedEx, the USPS and other common carriers. The reason for these purchases is simple. We try to save money so we can pass these savings along to our clients, make more money, and not have to raise our rates. When we can buy locally and support Florida businesses, we do, but money is money, and if a product is less expensive and equivalent in value, we will buy from an out of state company. We are not alone. Millions of Floridians, individuals and businesses buy products through the internet.

Sales Tax

You may have noticed that most out of state purchases do not include sales tax. Unless a company has an agreement with the Department of Revenue (DOR) or otherwise operates and is registered in Florida, the out of state company does not charge you Florida sales tax or sales tax from its respective state, as it is not required to do so. This amounts to a nice savings indeed. An apartment community may purchase thousands of dollars in supplies or equipment from an out of state company. There may be a great deal on patio furniture or fitness room equipment from a company you found on the internet and you may be able to save a substantial amount of money. You may even attend a trade show where a national supplier who does not have a location in Florida is exhibiting, and one of its selling points is that if you purchase from it, not only are you getting a significantly reduced price, but since the items are coming from its North Carolina location, there is no sales tax, and you will thus save another 6% or more. What a great deal! If you can avoid legally paying a tax, why not? Do not the Florida coffers get enough from us already? Not so fast! You may be doing something completely illegal by not paying the taxes, even though you were not charged the taxes, and NOW, the DOR is beginning to crack down.

Do You Have to Pay Taxes on These Internet or Out of State Purchases?

The purchaser of goods from Florida or any other state MUST pay tax on these purchases, and this means YOU. The tax is not called a sales tax, but rather is called a “use” tax. This use tax is a minimum of 6% and may be more in certain counties or municipalities that have an additional “local option tax” or “discretionary sales surtax”. In fact, 59 of Florida’s 67 counties have a sales tax that exceeds 6%. Here are some examples below.

1. Mountain View Apartments in Collier County purchases a $20,000 set of patio furniture from Fred’s Patio World in South Carolina. There is a shipping charge but no sales tax. Result: Mountain View Apartments now owes the DOR a 6% use tax totalling $1200 and MUST report the purchase and pay the use tax.

 

2. XYZ Property Management Company in Orange County needs a new computer router and while looking on Amazon.com finds a great deal on a Linksys router for $600 from Computer World in Chicago. The purchase is made online, and the only extra charge is shipping. Result: XYZ Property management Company now owes the DOR a 7% use tax totalling $42 and MUST report the purchase and pay the use tax.

Why is This Use Tax Just Appearing Now?

The use tax has been in place for years, but most business and individuals are completely unaware of it. Until recently, the DOR did not vigorously pursue the collection or this tax, but the party is OVER. Thousands of businesses like yours and ours were recently sent letters offering Tax Amnesty (which expired on September 30) whereby if you went back 3 years and calculated all that you spent on these out of state purchases and “came clean” on the taxes, there would be no penalty, and only half of the interest on the unpaid amounts were due. Did you throw that letter out when it came in? The Florida DOR collected millions of dollars in use tax in 2010, and they are sure to continue to enforce the tax laws now more than ever. State and county governments are doing everything possible to collect the taxes that already are on the books. For years, state governments have been losing out on billions of dollars due to the massive increase in internet and out of state purchases, and they are not taking it anymore. That company you may be buying products from may receive subpoenas or requests for information from the Florida DOR, and through that information, they WILL find you out. You can run, but you cannot hide.

Are ALL Out of State Purchases Subject to the Use Tax?

The short answer is NO, but MOST are. Let’s say you purchased a Dell computer online. If you look at the bill, you will see that Dell charges you a sales tax, even though you bought it online and it was shipped from Nevada. You see, Dell is registered with Florida or otherwise does actual business in Florida through the use of stores or distribution centers. Therefore, Dell goes ahead and collects and remits the sales tax at the time of sale, and you now owe no further sales tax or use tax. Many other large companies are in this position, so now you need to begin to look at your invoices carefully to see if you have in fact paid the sales tax, as you certainly would not want to pay a use tax that is now not owed. Some, but very few indeed, out of state companies charge you the sales tax that is due in their state when you make a purchase. If that sales tax is less than 6%, you will need to pay the difference in the sales tax paid and the minimum Florida 6% (more in some counties) tax to the DOR. Example the supply costs $100, you paid the 4% Michigan sales tax at the time of purchase, and you now owe at least 2% use tax to the DOR.

How to Begin Paying the Use Tax

There is no better time to start properly paying the taxes that you legitimately owe right now. To do it right, you will need to go back 3 years and look at all your internet or out of state purchases and determine whether you were charged sales tax or not. If you were not, you simply obtain the forms from the DOR, complete them, calculate your interest and penalties, and pay the tax. Once done, they must be paid each quarter and you can rest assured that once you begin paying the use taxes, the DOR will be on top of you to collect them in the future, so do not forget to file or have your accountant file for you.

Is this Something to Worry About?

We feel that paying use taxes is your legal obligation under Florida law, whether we or you like it or not. Evading taxes can result in substantial fines, interest and penalties. If you have made significant purchases and realize you owe use taxes, you may be able to get the interest reduced or penalties waived by the DOR, so we highly recommend you contact your accountant and discuss this issue getting professional tax guidance. The collection efforts of the DOR are not going to stop, but rather they will be on the rise. The DOR has provided online interest calculators if you want to try to do this yourself, and you can register with the DOR online and pay online, with the taxes, penalties and interest, if any due, automatically deducted from the bank account you provide them. If you do not wish to file online, simply download the Out of State Purchase Return, which is form DR-15 MO, fill it out and send it in.

Our necessary disclaimer!

We are not tax professionals or CPA’s, but ignorance is not always bliss when it comes to tax obligations. We highly recommend you speak to your company’s accountant right away, copy this article and send it to your corporate attorney, CFO or broker. Our firm used Noack Mitchell & Company Certified Public Accountants, whose phone number is (239) 936-6144, found on the web at www.noackmitchellcpa.com.

“Serving the Property Management Professional”

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