Many legal issues arise after there is damage or destruction of occupied premises. All situations should be dealt with on a case by case basis and you should get your attorney involved immediately. Often your compassionate accommodation of a resident will result in greater problems and liability to you and the property owner if not done properly.

RELEASING RESIDENTS FROM THE LEASE

It is imperative when releasing a resident from a lease that a proper release form is used which deals with the security deposit, prepaid rents, damages to the premises, date of vacating and abandoned property. We recommend the MUTUAL RELEASE.

TERMINATING THE TENANCY

 If your lease agreement has a clause which states that the lease may be terminated at the manager’s option upon the damage or destruction of the premises, you are probably safe to give a Seven Day Notice of Termination to the resident. If the lease fails to have a clause allowing such termination, we advise that you call your attorney immediately to see what options you may have. Check your lease carefully. Most leases only give the manager the option to terminate the tenancy if the premises are “destroyed”. This is a major problem as more often a property is not “destroyed” but is “damaged” to the point where you want the resident to vacate. Review and have your lease revised immediately.

TRANSFERRING A RESIDENT

It is not advisable to transfer a resident to another unit unless a Resident Transfer Addendum is signed by all parties. Failure to use such addendum can result in you having two units occupied by the resident and/or their belongings. If a resident is transferred, all items should be removed from the original premises before the resident is allowed to take possession of the new premises.

RENT REDUCTIONS AND CONCESSIONS

No rent reductions should be given or offered unless and until such time as you have consulted with your attorney and have written permission from the property owner. If the property is damaged and the resident is demanding a rent reduction or concession, please remember that if you and the resident cannot come to an agreement, a judge may eventually make the agreement for you with less than desirable results. Once an agreement is made, your attorney will write up a contract detailing all the terms. Nothing should be done verbally.

SECURITY DEPOSIT AND ADVANCE RENT

 

Once a resident has vacated the premises, you have 30 days to make the claim upon the security deposit. If you are not making any claim, you have 15 days to refund the entire security deposit and last month’s rent if applicable.  If you are refunding the security deposit or prepaid rents in an emergency fashion, it is imperative that you use the proper form. Call your attorney immediately.

MOLD AND MILDEW

 

There is an incredible increase in mold and mildew situations due to water intrusion and power outages. Over the next year, this will worsen as properties have suffered severe water intrusion and attorneys will be capitalizing on mold litigation.  If you have a proper Mold Addendum, you will be able to terminate the tenancy if there is mold or mildew present.

 

Call your attorney immediately if you receive complaints of mold or mildew and check each property carefully for mold and mildew.

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Pets can be a real nuisance and liability for the property manager or management. Beside the higher chances of damage to the premises, each year pet related injuries cost managers millions of dollars, some of which is not covered by insurance. Many insurance companies now simply disallow pets on the insured premises, and the manager must sign an agreement that pets are not allowed and if there is a pet related injury, the insurance company will not cover the claim. Most managers require the resident to sign a pet addendum or agreement which details the terms and conditions of the pet on the premises, and requires the resident to pay either a non-refundable pet fee or a pet deposit.

Ironically, the applicant for a rental is made to go through a vigorous application procedure under which the applicant’s credit, criminal background, and prior manager references are carefully checked, while the resident simply has to fill out a pet addendum and pay the required sum of money for a pet. The resident gets approved, the pet sums are paid, and the resident and his pet move into the premises. Three months into the rental, you inspect the property or have to repair a maintenance issue and you discover that the 25 pound Terrier on the application is indeed now a 40 pound Pit Bull Terrier. You were expecting this cute little dog and now are completely surprised to see this fierce and dangerous dog on the premises. Of course the resident assures you that the pet never bites, is great with children and is adorable, but you don’t agree, and if your insurance company found out, your coverage might be cut off FAST.

What Did the Manager Do Wrong?

 

The manager’s surprise is due solely to the fact that the pet was not shown to the manager prior to taking the resident’s pet fee or deposit and signing the pet addendum or agreement. Had the manager actually seen the pet at the application process, this never would be happening. This is purely an example of a problem that was completely avoidable if the manager simply interviewed not only the applicant, but was able to see the applicant’s pet BEFORE approval. Whose fault is it really that the resident now has a 40 pound Pit Bull? It is the property manager’s or the management’s fault. It is quite possible that the resident was telling the truth about her pet at the time of application. After all, a Pit Bull Terrier is a terrier and it could have gained 15 pounds in 3 months.

The Easy Solution

The easy solution that has been discovered by the savvy property manager and management in Florida is to have the resident fill out a pet application. The pet application deals with a number of issues, and the resident can be required to pay a fee for the pet application. The pet application is not to be confused or substituted for a properly executed pet addendum. This is the application for the pet. Like an application and approval is the prerequisite for a resident signing a lease, the pet application and approval is the prerequisite for the resident executing the pet addendum.

What Does the Pet Application Accomplish?

The pet application is the applicant’s request for permission to have the pet. The resident is not simply filling out a pet addendum and paying a fee; this is a permission based process. The pet application makes it clear that the fee for the pet application is an administrative fee and is NOT to compensate the owner for any pet damage which may occur. It is an application fee, pure and simple. The pet application makes it clear that the manager does not have to approve a pet, just like in most cases a manager does not have to approve a resident for residency. Information about the pet is provided, and most importantly, the applicant is required to bring the pet to the management office (or parking area) so the manager can observe the pet, take a photo and observe the demeanor of the pet. If the breed looks suspect, management can ask for further verification, just as with a resident. Finally, the applicant is asked about the pet’s history in an attempt to reduce liability for management. In the below sample, the pet application fee is refundable if the pet is not approved. You can modify this to make it non-refundable whether the pet is approved or not. This is up to you.

SAMPLE PET APPLICATION

This Pet Application is made as a part of the rental application for the property located at: _________________________________, Florida. I do hereby request that my pet be approved to reside with me during the term of my lease agreement. If my pet is a “Service Animal” or a “medically necessary pet” I will notify management in writing and this Pet Application will not be applicable.

NOTE: This is a Pet Application only and not approval for a pet unless approved by Management, a Pet Addendum is executed by all parties and all sums and fees are paid according to the Pet Addendum. In order for the pet to be permitted on the premises, the pet must be fully approved by Management, a Pet Addendum signed by Residents and Management and all fees paid including but not limited to an additional security deposit, pet deposit, pet fee or additional rent as required by Management.

I understand that Management is under no obligation to approve my pet for occupancy. The following pets will not be accepted under any circumstances: German Shepherds, Dobermans, Pit Bulls, Chows or Rotweillers, any mix of the aforementioned or any other breed or mixture thereof which Management decides to not approve.

In consideration of having a pet go through this application process, I agree to pay a Pet Application fee of $__________ to Management. I further understand that the Application Fee is strictly an administrative fee paid to Management and is not considered a security deposit or pet deposit. Management requires a photo of the pet for Management’s files, a copy of the pet’s vaccination information from the veterinarian and the pet must be brought to the parking area of the Management office for inspection by a representative of Management.

The Pet Application Fee will be refunded if Management does not approve the pet.

Breed: ___________________ Name: ___________________

Weight: ________________ lbs. Sex __M ___F Age: _______

Estimated Pet weight at maturity ______________ lbs.

I do hereby certify the following:

My pet is well trained, is not dangerous to others and does not have a propensity to be vicious. My pet has never bitten, clawed or caused harm to another person or other pet, and it does not bark excessively when I am home or not home. No other manager or person has ever complained about my pet or its behavior.

My pet is not pregnant and will not become pregnant while we are residing on the premises. If my pet becomes pregnant, I will be in violation of this agreement and the pet and any offspring must be immediately removed from the premises

I agree that there shall be no other pets, other then listed above on the premises without the express written approval of Management. Should I desire additional pets, I agree to apply to Management for approval, submit another Pet Application and obtain approval prior to pet occupancy.

In the event that my pet causes damage or destruction to persons or property, I agree that all costs of said damage or destruction shall come out of our Security Deposit and/or Pet Deposit. Should the Security Deposit or Pet Deposit be insufficient to cover the cost of any pet damage or destruction, then I agree to be financially responsible for damages above and beyond the amount of my security deposit.

If the pet becomes a nuisance or causes damage or destruction to the premises or otherwise violates the terms of this pet application, Management may terminate the pet’s right of occupancy and/or my lease agreement subjecting me to eviction.

I hereby agree to the terms and conditions of this Pet Application form this _____ day of __________________, 20____.

 

___________________________ Applicant

____________________________Applicant

____________________________Management

_____PET IS HEREBY APPROVED ___/____/____

 

______________________________ Management

 

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Many leases have a clause stating that the Tenant must give the Landlord a certain number of days’ notice in writing that they are vacating at the end of the lease.

 

If the Tenant fails to give this notice and vacates, the Landlord tries to charge the Tenant a specific amount for failure to give this notice. Florida law allows this, but if it is not done properly, the Landlord can find themselves in serious trouble and NOT be able to charge the penalty.

A careful reading and understanding of the law is crucial if the Landlord insists on charging the Tenant an amount for failure to give notice. Unfortunately, the law is a bit tricky, as it requires the Landlord to give the Tenant notice that they will be charging the Tenant for failure to give notice. This may seem like a tongue twister, but it simply is a requirement of the Landlord to “remind” the Tenant that the Tenant must give notice so the Tenant is not “surprised”.

TO LEGALLY CHARGE THE TENANT A PENALTY, THE LAW MUST BE FOLLOWED AND THE LANDLORD MUST HAVE GIVEN THE PROPER NOTICE TO THE TENANT IN THE NOTICE “WINDOW” PERIOD

83.575 Termination of tenancy with specific duration.--

1. A rental agreement with a specific duration may contain a provision requiring the Tenant to notify the Landlord before vacating the premises at the end of the rental agreement; however, a rental agreement may not require more than 60 days' notice before vacating the premises.
2. A rental agreement with a specific duration may provide that if a Tenant fails to give the required notice before vacating the premises at the end of the rental agreement, the Tenant may be liable for liquidated damages as specified in the rental agreement if the Landlord provides written notice to the Tenant specifying the Tenant's obligations under the notification provision contained in the lease and the date the rental agreement is terminated. The Landlord must provide such written notice to the Tenant within 15 days before the start of the notification period contained in the lease. The written notice shall list all fees, penalties, and other charges applicable to the Tenant under this subsection.

 

3. If the Tenant remains on the premises with the permission of the Landlord after the rental agreement has terminated and fails to give notice required under s. 83.57 the Tenant is liable to the Landlord for an additional 1 month's rent.

How it works: In order to enforce a clause in your lease that requires a Tenant to give you notice prior to lease end, you must do the following:

Give the Tenant a notice WITHIN 15 days of the beginning of the notice period you are requiring from the Tenant.

Example: Your lease requires 30 days notice from the Tenant. You must “remind” the Tenant of this by giving the Tenant notice of this sometime within days 30 and 45 prior to the lease ending.

Your Notice Must State the Following:

1. That 30 days’ written notice from the Tenant is required if the Tenant is leaving at lease end, and 2. Failure of the Tenant to give you notice will result in a charge of $_____________

NOTE: The amount can be no more than one month’s rent, and the lease must support this charge.

If you give the Tenant notice too far in advance, you will not be able to enforce the notice requirement. It is a STRICT 15 DAY WINDOW.

Common mistakes: The Landlord gives the Tenant too much notice. Many Landlords feel that since the lease states the notice requirement, this is enough or the Landlord will give the notice 60 days in advance and the lease only requires 30 days’ notice. Remember the notice to the Tenant must be given in a specific “window”, no more and no less.

Below is a sample notice:

SAMPLE RENEWAL OFFER WORDING

THIS SHOULD BE SENT OUT BETWEEN 1 AND 15 DAYS PRIOR TO THE BEGINNING OF THE TENANT’S NOTICE PERIOD AS DESIGNATED IN THE LEASE

According to your lease agreement, your lease shall expire on _________________. Landlord would like to give you some options.

Please mark off the appropriate selection below or your lease shall terminate on the above date and you must vacate at that time.

Option 1…We will vacate the premises on the above date.

Option 2…We wish to sign a new one year lease agreement at a rental rate of $______ per month.

Please return this to Landlord no later than 30 days prior to your lease end or your lease shall be deemed terminated at the end of the lease agreement, and you shall owe Landlord the “failure to give notice fee” in the amount of $__________ as per your lease agreement in addition to any amount due from you at that time according to the lease and/or Florida Law.

This offer by Landlord may be withdrawn at any time and for any reason by Landlord prior to Landlord and Tenant(s) written acceptance of this offer by signature of Landlord below and Tenant(s) below and Landlord fully executing a Lease Renewal or new lease if Tenant(s) choose Option 2.”

IF YOU DID NOT GIVE THE TENANT THE WRITTEN NOTICE IN THE “NOTICE WINDOW” PERIOD TELLING THE TENANT THAT THE TENANT HAD TO GIVE NOTICE AND TELLING THE TENANT THE PENALTY FOR FAILURE TO GIVE NOTICE, YOU ARE NOT ALLOWED TO CHARGE ANY PENALTY.

 

 

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In the current economic situation, managers are beginning to get desperate for the rent. Any rent. Residents are in financial hardships and rather than choosing not to pay rent at all, many will tender a partial payment of rent with possibly a promise to pay the rest at a later date. Many managers faced with this scenario will accept the partial payment and may or may not receive the rest of the rent at a later date. Other residents will pay partial rent for reasons that have nothing to do with their ability to pay, but rather due to some complaint they have concerning the premises that has not been rectified by the manager. This form of self-help on the part of the resident manifests itself in the resident sending the manager a partial payment, possibly accompanied by a letter indicating why the payment is partial and demanding some sort of repair. In either case, the manager is forced to make a choice to accept the partial rent or return the rent.

The Financial Hardship

Most commonly, the partial rent payment tender is due to a financial hardship the resident is suffering. The resident feels that by paying some rent to the manager, the manager will be appeased enough to hold off on filing an eviction action. This partial payment may or may not be accompanied by an explanation and a promise to pay the rest of the money at a future set date. Is it legal to accept a partial payment? Absolutely. Can you simply accept the partial payment and then give the resident a Three Day Notice for nonpayment of the balance? Yes, in most counties. The more important question is whether you should accept a partial payment due to other ramifications with the potential to cause future legal problems.

The “Lone” Partial Payment

There are usually two types of partial payments given in the financial hardship setting. One is the payment accompanied by a letter promising the rest of the money at a later fixed date, and the other is what we call the “lone” partial payment, which is simply the check or money order in the envelope for less than the full amount of rent. If you accept the lone partial payment, you can and should serve the resident with a Three Day Notice for the balance of the rent in most counties. If the balance is not received by the expiration date, you can then file an eviction against the resident.

The Partial Payment and “Letter”

If the partial payment is tendered to you and is accompanied by a letter in which the resident states when the next payment will be made to you on the balance, it is a bit more risky to accept the payment. While no real contract between you and the resident is created by such a letter or promise to pay, an inference can be made that by accepting the partial payment, you are accepting it under the terms laid out by the resident. In other words, by taking the money, you have agreed to the payment arrangements. Unless you are agreeing to the proposed payment arrangement, we do not recommend accepting the partial payment by the resident in this situation.

The Law and the Partial Payment

Florida law does not address the legal ramifications of accepting a partial payment and then giving a Three Day Notice to the resident and filing an eviction. Most Florida judges have no problem whatsoever with you accepting a partial, serving the notice and proceeding as usual. Some, and fortunately very few, judges feel that by accepting a partial payment form the resident, you waive your right to file an eviction in the month that the payment was made. Always check with your attorney to see if the judge or judges in your county have this view on partial payments. You would not want to be in a position where accepting a partial payment could result in tying your hands for the rest of the month.

The Waiver Issue

One of the big issues in Florida law is the “waiver issue”. Simply put, this means that by engaging in a course of action contrary to the terms of your lease, you have created a new payment method, and that you have possibly waived your rights to enforce the lease as it is written. Your course of conduct in allowing partial payments may be used by the resident to show that since partial payments were made a few times, this has now become a permissible way to make payment, and you as the manager are “stuck” with is. The waiver argument can be compelling in court, and judges are often unsympathetic to the manager who does not enforce the lease terms on multiple occasions and then suddenly decides that partial payments will not be accepted. The manager may have “waived their rights” and are then “estopped” from enforcing the lease terms. Many leases have clauses which clearly provide that the manager’s deviation from the lease terms will not create a waiver, but these clauses can become meaningless if the resident can show that the manager has a pattern of not enforcing the lease.

Should You Accept Partial Payments at All?

In a financial hardship situation, this is purely a business decision. Refuse them, and possibly you will get nothing, the resident will skip out on you, or you will have to evict. Accept them, and live with the consequences.

The “Non-Financial Hardship” Partial Rent Payment

While non-financial hardship partial rent payments are often financial hardship cases in disguise, there are many times when a resident feels that for some reason he should not have to pay the full amount of rent. There may be completely legitimate reasons, and the reasons can be many. The resident has a huge water bill and feels that there is a leak. The a/c has been out for days. The electric bill is excessive, possibly due to an a/c problem. A toilet is broken. A stove is broken. The list can be endless.

Can a Resident Withhold Rent?

The short answer is yes, under limited circumstances. This article will not address how, why and the mechanics of a proper resident rent withholding, but rather what to do when the resident simply takes it upon himself to deduct an amount from the rent.

The Resident Has Been Making Complaints

Although every situation is unique, you may deal with the resident making complaints about an alleged problem that is not addressed for whatever reason, and when the rent check arrives, it is a partial payment of rent. In a situation such as this, your acceptance of a partial rent can be governed by the aforementioned information in this article, but the chance that the rest of the rent will be paid later in the month is diminished greatly, as the resident feels that the value of the rental has been diminished and has taken matters into his own hands. We recommend that you do not accept this partial rent payment, and you address the resident’s issues immediately, asking your attorney for an opinion as to whether the resident has a right to withhold rent, or that allowing a reduced rent is the proper route to take. Remember that if you allow a resident to pay you a partial rent payment just one time because she is not satisfied with something in the unit, you open yourself up to the resident continuing to make partial rent payments in the months that follow under similar pretenses.

The Resident Gives You Complaint Letter Along With The Partial Payment

Along with the partial rent payment, the resident provides you with a letter stating why the rent is only being partially paid and outlines the complaints the resident may have, or even attaches bills for out of pocket expenses the resident may have incurred in repairing something. This is probably the most dangerous time to ever accept a partial rent payment. By accepting the partial payment along with the resident’s letter, a good argument can be made that you have agreed to accept the amount paid by the resident as full settlement of the outstanding rent balance. By accepting the money, you are arguably accepting it in accordance with the resident’s terms, and you have also potentially opened the door to the resident doing future repairs. In such cases we recommend that you not accept the partial rent payment and return it immediately. Again, if there are items that need to be addressed, they certainly should be to avoid later problems or litigation.

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When a lease is signed by two or more residents, what happens at the end of the lease when one resident gives notice to the manager that he or she will be vacating, and in fact does subsequently vacate? What if no notice is provided by one of the original residents, but it appears that a particular resident has clearly abandoned the premises some time during the original lease period? In either case, is the departing resident still responsible for lease obligations beyond the original lease term? Is the manager able to enter into a new lease with the remaining resident(s) and/or replacement resident(s)? What happens to the security deposit?

The Landlord/Tenant Act neither contains any specific provisions governing a change in parties after the original lease period, nor does the statute specifically indicate that the security deposit “stays with the property”.

If a month-to-month tenancy is created after the lease expiration date, a good argument can be made that all the original residents are still financially responsible for the ongoing tenancy. However, some judges may not hold this view, particularly if the departing resident gave written notice of vacating, and in fact vacated, prior to the original lease expiring. If a new lease is entered into with the remaining resident(s) and/or possibly even additional resident(s), then a change of parties from the original lease has occurred, and this is not a true “renewal” lease. If one of the original residents has apparently vacated for good but never provided any notice, we advise managers to be very careful before adding new parties to a subsequent lease. The manager should be very clear that the original resident is gone for good and that none of that resident’s personal property is still on the premises.

At the point where the manager contemplates a new lease involving a change of parties from the original lease, we recommend that a new security deposit be collected from the resident(s) on the new lease, and that an accounting take place on the original security deposit consistent with Florida Statute 83.49, with any refund check made payable to all original residents. If no new lease has been signed, but one or more of the departing resident(s) from the original lease demand a return of the security deposit, we recommend trying to collect a new deposit from the remaining resident(s) and making the accounting as described above. If the remaining resident(s) are unwilling or unable to put up a new deposit, then we recommend non-renewing the existing month-to-month tenancy, and to then make an accounting for the deposit by following the provisions of Florida Statute 83.49 with regard to all residents on the original lease.

 

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

 

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

 

Resident vacated – collection

 

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

 

Resident vacated – notice of claim

 

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

 

Resident in possession – 3-Day Notice

 

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

 

Resident in possession - the demand letter.

 

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

 

Resident in possession - the NSF statutory notice

 

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

 

Criminal penalties

 

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

 

NSF service charges

 

If the lease provides for NSF service charges, then those charges will be applicable.  Florida law frowns upon imposing penalties upon residents.  Landlords are cautioned that service charges should approximate recovery of the economic loss caused by the NSF check for additional administration, loss of the use of the funds, etc.  Many leases follow the NSF statutory service charges, on the premise that these charges are a legislative indication of reasonable service charges.

 

The statutory service charges are:

$25 if the check is $50 or less,

$30 if the check is $51 to $300,

$40 if the check exceeds $300

 

OR

 

5% of the face value of the check, whichever is greater.

 

Bank fees

 

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

 

The landlord’s checks bounce

 

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

 

Keep the lease up to date

 

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

 

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Once the manager has sent the resident a Notice of Non-Renewal, that resident’s file should be tagged for special identification The manager will want to avoid taking any action which would jeopardize his right to retake possession of the rental unit or to double rent in the case of a hold-over resident.

The following discussion has to be placed in the context of modern communications: distribution list emails, mass mailings, computer-generated statements. A manager is often sending documents without verifying the specific recipients.

The Superseding Agreement:

If the resident is unwilling or unable to move, he will be looking for any opportunity to extend his tenancy. Many residents will use an inappropriately sent letter or notice as evidence to bolster their position that there was an oral agreement. This correspondence superseded the Non-Renewal Notice and permitted him to renew his lease or to remain month-to-month. Even a complete fabrication can be convincing to a judge if there are documents of the manager that seem to support the fabrication. In fairness to the residents who operate in good faith, inconsistent documents of the manager can create enough confusion that the resident assumes he can stay.

Renewal Notice Sent in Error:

If the manager has sent the resident emails, letters or notices implying, suggesting or offering renewal, then the manager must immediately notify the resident of the error. I do mean “immediately”. I suggest that an email (with a delivery and read receipt if available in the email system) be sent to the resident. A follow-up letter or even the printed email should be immediately posted on the resident’s door and mailed to the resident via certified mail. The renewal information was sent in error and is withdrawn. The manager wants to notify the resident before the resident can seize the information as a renewal offer and accept it.

The focus is not the legal arguments with regard to contract formation. The important point is to avoid providing the resident with an opportunity to make these arguments in court.

Helpful Reminders:

After the manager has served the Non-Renewal Notice, the manager gives the resident additional non-renewal reminders or warnings at the manager’s own risk. While these reminders are sent under the pretext of helping the resident, they are usually sent for the benefit of the manager. Any contradictions or deviations from the original Non-Renewal Notice can result in voiding the original Non-Renewal Notice. The most common mistake is a contradictory vacating date or an incorrect calculation of the time remaining until the vacating date.

Seven Day Notices After the Non-renewal Notice:

Our firm generally advises against serving Seven Day Cure and Seven Day Termination Notices after a Non-Renewal Notice.

While the manager may still serve a Seven Day Notice of Noncompliance with Opportunity to Cure (a Seven Day Cure Notice), one has to question both the effectiveness of the notice and the wisdom of antagonizing a resident that has been non-renewed. Additionally, serving such a notice, when there are less than seven days until the vacating date, creates the confusion that we are trying to avoid. (Similarly, serving a Three Day notice that expires outside the vacating date is a bad idea). Serving a Seven Day Notice of Noncompliance Without Opportunity to Cure (a Seven Day Termination Notice) actually can worsen the manager’s ability to remove the resident. What would have been a straightforward holdover eviction becomes a complicated Seven Day termination eviction with all the attendant burden of proof problems that the manager must bear.

That being said, there are times when the health and safety of the staff or other residents requires a Seven Day Cure or Seven Day Termination Notice. This is a matter for the manager to discuss with his attorney.

Notices After the Vacate Date:

Serving a Three Day Notice, a Seven Day Cure Notice or a Seven Day Termination Notice to a holdover resident after the vacating date may be fatal to the non-renewal. A manager would only have the right to serve these notices if the tenancy was continuing. This means that the manager waived the non-renewal demand. Sending the resident a billing statement or account balance notice charging rent beyond the vacating date or other monthly services (pest control, valet waste) gives rise to the same argument that the tenancy is continuing. Accounting notices may be more easily explained and excused than the statutory notices. A court can easily reason that a manager should be more careful about the statutory notices.

Consult the Attorney:

As a final thought, it is always advisable for the manager to consult his attorney as soon as he discovers that he has mistakenly sent a notice, letter, or other communication to the resident that may jeopardize his Non-Renewal Notice.  

“Serving the Property Management Professional”

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One of the biggest mistakes a manager makes often occurs at the time the resident moves into the unit, and this mistake has major ramifications when the resident moves out. The condition of a rental unit must be documented when a resident moves in. This is crucial, as when the resident moves out and there are damages found in the unit, the manager needs to prove that the damages were not pre-existing and were indeed caused by the resident. Residents routinely say, “It was like that when I moved in”, and often, “I left it better than when I moved in”. Every manager has heard these comments made by the resident. When the resident makes these allegations, the manager must be able to prove that the damages did not exist at the time the resident moved in to prevail. How does the manager do this? A really thorough manager will have taken pictures and maybe even a video tape of the unit prior to or at the time of move in. While this may seem excessive to some managers, it is indeed the best approach, but unfortunately, we all know this is only done by a small percentage of managers. The usual method of documenting the move in condition is the Move In Inspection Form or Condition Report, and for this article we will call it the Condition Report. A thorough manager will have a detailed Condition Report which lists just about anything inside and outside of the unit that the resident could be responsible for or potentially damage. Now here is the big question: who completes the Condition Report? The manager or the resident?

The Resident Completes the Condition Report?

Probably 50% of all managers, especially those who manage multifamily housing units, give the resident the Condition Report and ask them to take the report, write down anything that is wrong with the unit, and get the report back to the manager. The manager then tells the resident that if they don’t get the Condition Report back to the manager, it will be assumed that there is no pre-existing damage to the unit. Sounds reasonable enough right? Wrong. It is not only the lazy way to get the unit inspected, but it can have grave legal consequences.

What Will the Typical Resident Do With the Condition Report?

1. The Picky Resident Some residents will take the condition report and go over the unit with a fine tooth comb, marking down every possible little thing wrong with the unit. When you receive it back, you would think the unit was in terrible condition, and your receipt of the Condition Report from the resident has put you on legal notice of deficiencies. All you wanted the resident to do was mark down any cosmetic issues, but NOW you have a report from the resident which you requested that makes your unit look awful.

 

2. The Wish List Resident Some units are not perfect, but are legally sufficient to rent out. The carpet may not be perfect, and there may be cosmetic issues in the unit. No big deal to the manager, but the “wish list” resident uses the Condition Report to not only tell you about the damages in great detail, but expects you to deal with everything on the list. The resident’s assumption is that you are giving them the Condition Report to fill out, so YOU will know what to fix or change. You have no intention whatsoever to replace the carpet or the countertop, but now the resident feels you should, and by filling out the Condition Report has made the request. Now the resident has an expectation that you are going to have the carpet cleaned again, replace the carpet or give them a new counter top.

 

3. The Sloppy Resident Possibly the carpet has a couple small stains, the walls have a few scuff marks, and there is a chip in the countertop and some deep knife grooves when the last resident used the counter top to chop vegetables with his Ginsu Knives. This is how the “sloppy resident” writes it up on the Condition Report. “Carpeting Stained”, “Marks on walls”, “Chipped Countertops” “Damaged Countertops”. This sounds reasonable to the resident and is in fact true. Now, let us suppose when this resident moves out that there are severely stained carpets, the walls have been marked up so badly that they must be repainted, and that the resident has completely destroyed the countertops. You want to charge the resident for the damage. The manager then goes ahead and charges the resident on the Notice of Intention to Impose Claim on Security Deposit. The departed resident NOW responds back and says, “It was like that when I moved in! Just look at my Condition Report! I told you about these problems a year ago!” The manager is dumbfounded, because while it was true that there was some damage to the carpets, walls and the countertop when the resident moved in, it certainly wasn’t THAT bad. The resident takes the manager to court, the resident shows the judge the Condition Report, and the manager LOSES.

 

4. The Forgetful Resident The resident is in a hurry to move in and the last thing on his mind is to complete a Condition Report. He throws it into the kitchen drawer and it sits there for the next year. The manager never receives the Condition Report. Now the resident moves out, there are damages, and the manager has absolutely no Condition Report to form the baseline as to the condition of the unit. The manager charges the resident for damages, the resident objects, disputing the charges, and maybe the resident claims he did indeed fill out the condition report and get it back to the manager by giving it to your leasing agent who was fired 3 months ago. Worse yet, the dishonest resident finds the blank Condition Report in his kitchen drawer upon move out and decides to fill in the CURRENT damages that he caused during the tenancy, keeps a copy and claims he gave you the original 2 days after he moved in! This resident’s claim, “It was like that when I moved in,” will be hard to beat in court when you don’t have the Condition Report.

The Solution

As you can see by the examples above, giving the resident the Condition Report is just plain wrong, silly, lazy, and the list goes on and on. The manager should be the one who inspects the unit and fills out the Condition Report. You cannot give control over such an important aspect of property management to a person who is not skilled in or has no knowledge of inspecting a unit. The manager knows or should know how to do this properly and will go through the unit marking down preexisting cosmetic damages. Ideally, the inspection and Condition Report will be accomplished with the resident present, but if not, it will be done before the resident moves into the unit along with the video taping of the unit and plenty of digital pictures. Many of our clients, especially the large multifamily ones, insist on allowing the resident to complete the Condition Report. We can assure you that when our client performs the move in inspection and completes the Condition Report, the chance of a security deposit dispute, or in the worse case scenario, losing a dispute in court, is diminished greatly. It is simply the right way to do YOUR job.

 

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Unfortunately these days’ managers often have to lower rent rather than raise rent each year. With the huge surplus of vacant homes and condos in the rental market at the moment, residents are balking at paying the same amount of rent at renewal time, and are even asking the manager to lower the rent during the tenancy, knowing they can find cheaper accommodations. Out of desperation, many managers are agreeing to lower the rent rather than have a vacant unit. Usually the resident initiates contact with the owner during the lease or at renewal time to discuss the rental rate, and the usual threat is made that if the rent is not lowered, the resident will be moving.

Owner Issues

If the resident is dealing directly with the property owner or agent in an apartment setting, the negotiations can be done directly with the resident. It is crucial that the manager does not imply a particular rent amount will be owed unless this has been decided. Any promise or implication that the rent will be lowered will be latched onto by the resident and relied upon. It must be made clear that no deal will be consummated unless it is done in writing and signed by all the parties involved.

Mid-Lease Modifications

A mid-lease modification can be handled by a simple addendum stating the new rent amount and signed by all parties. This may present a good opportunity for the property manager to have the resident sign a brand new lease, thus extending the tenancy, but some residents may wish only to stay until the natural expiration of the lease, and an addendum will be the appropriate vehicle. If the resident also pays other amounts in addition to the rent, it is imperative that this addendum wording does not end up inadvertently reducing the rent further than what the manager expected. Often there is “base” rent plus other items making up the “entire” rent. The resident may currently be paying a rent amount of $700 plus $50 for the garage and $25 for cable. In the resident’s mind, rent is $775, because that is what he pays each month. In your mind, “rent” is the base amount of $700 plus the other charges, and you are lowering it to $650. Putting a clause in an addendum that states that the parties simply agree that the rent shall be lowered to $650 will cause an ambiguity. Is the total rent now $650 as the resident may assert, or is it now $725 as you will assert? Any ambiguity in the agreement is construed against the party creating the document (most often the manager), so the ambiguity will almost always work in the resident’s favor; this presents a clear danger to the manager.

An Early Payment Option

As an incentive for the resident to pay the now reduced rent, it is possibly to place a clause in your addendum stating that the rent shall be $X amount if paid by a certain date and $Y amount if paid by a later date. Many managers are already familiar with early payment discounts, but this is structured a bit differently and has 2 distinct rent amounts. Problems occur when the resident pays the lower amount at the later date; this can cause disputes, so care and thought should go into making such an addendum.

New Lease Rent Modifications

The parties may agree to a lower rent amount in a new lease. We recommend that any negotiations be memorialized in writing prior to lease signing and that all parties execute the new lease before the beginning date. In lease execution, care should be taken to have all residents sign the new lease, never allowing just one resident to sign if other residents are listed on the lease.

What About Prepaid Last Month’s Rent?

The resident may have paid a last month’s rent upon moving into the unit. How is this affected by the rent modification? The resident of course will want to be refunded any amount to the extent that the last month’s rent exceeds the new rent amount. When will this occur? Now? At the beginning of the last month? We recommend that this refund is done at the time of vacating the premises, and this can be addressed in the addendum to the lease. Another option is that the excess in the last month’s rent shall be added to the security deposit, which will give the manager a larger sum to use in the event of damages or other money owed. Anything can be done; it is all in the addendum wording.

Fair Housing Considerations

In the multi-family setting, if you reduce a resident’s rent, word will spread like wild fire throughout the apartment community. You should expect other residents to come into your office asking for a rent reduction. Is everyone entitled to a rent reduction? Should you only reduce rent where you know a resident has lost her job? It is imperative that a written policy is in place before you ever begin negotiating rent with a current resident. It is bad enough when new residents are getting concessions and lower rents, and now you have to deal with the irate resident who has been with you for 5 years. Failure to give a rent reduction to someone of a protected class could result in a discrimination complaint that you may have difficulty overcoming.

 

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There will invariably come a time when a manager simply makes an honest mistake. How the manager handles the mistake can have a great effect on the outcome and resolution of the matter. The resident is the consumer, and consumers often feel that they are entitled to some sort of compensation from the manager. Whether they truly are entitled to compensation is really not the issue; the bottom line is that they feel that they are. Making the wrong statements or taking the wrong actions can turn a small problem into a tremendous time consuming and expensive proposition. This article will examine some of the common mistakes made by managers and some suggested courses of action.

You Thought The Resident Vacated

This is a common mistake. The lease is up or almost up, the manager checks the unit, the electricity is off, and all appearances seem to indicate that the resident is indeed gone. There are a few items left behind, but the manager does not feel they are of any value, and the manager throws the items away and changes the locks. The resident returns furious and is demanding the items back, and then compensation when he realizes they are gone.

Recommendation :Keep the resident as calm as possible, make him understand that you were under the impression that he had vacated, and give him an “Incident Report” to fill out. Once this is filled out and firmly in your control, you can decide to come to an agreement with the resident for compensation. It is crucial that you do not act excited or scared, as the goal is to have the resident tell the truth and to accept a fair settlement. Once you agree on an amount, we recommend strongly that you have the resident sign a release if money exchanges hands.

You Served a Three Day Notice but the Resident Had Already Paid the Rent

This seemingly innocent mistake can enrage a resident and potentially have legal ramifications, especially if you served the notice in a fashion where neighbors could see the notice. The resident is embarrassed and enraged.

Recommendation: Keep the resident as calm as possible, downplay the notice, and tell her it simply was a mistake. Profuse apology is not necessary. Use the opportunity to change the subject, and ask her if there are any maintenance requests or problems.

You Accidentally Filed An Eviction But the Resident Had Paid the Rent

You would be amazed how often this occurs. An accounting error results in an eviction being accidentally filed, or you forget to cancel the eviction with your attorney. The resident will most assuredly call you or storm into the office with eviction papers in hand.

Recommendation: Call your attorney immediately, have him or her prepare and file a Voluntary Dismissal immediately, and give a copy to the resident. Your attorney can do this immediately while the resident is fuming in your office. If the resident asks whether this will show up on the credit record, you may have to admit that the eviction filing will be a matter of public record, and you will be happy to provide a letter that the resident can use showing that the eviction was simply filed in error. If you don’t immediately dismiss the case, or the resident gets an attorney, you could end up paying hundreds if not thousands of dollars in attorney’s fees. Take action fast, and again downplay the situation

You Engaged In Some Sort of Self-Help Personal Property Removal

Your resident has an old couch in the yard, a rusty bike and a car transmission on the front lawn. Code enforcement is citing the property, and you send your maintenance staff to remove the items and take them to the trash heap. The resident is furious at you and now wants you to pay for his valuable items.

Recommendation: Keep the resident calm, do not let the resident know you may have committed a crime, or at the bare minimum, civil theft, have the resident fill out an “Incident Report”, and try to settle. As with any settlement, use a General Release. You do not want to involve police or lawyers in this matter.

You Told the Resident “You Should Have Purchased “Renters Insurance”

Many casualties can occur in a rental unit that are through no fault of the resident. A few examples are pipe breaks, water heater breaks, water intrusion due to a roof leak, and power surges due to a faulty wire. Are these the resident’s responsibility or the owner’s responsibility? No one is sure. Many managers rely on the clause in the lease that states that the manager is not responsible for the resident’s personal property. Will this clause be upheld in court? Maybe not, if a judge believes the resident receives an implied warranty of habitability, or if the disclaimer clause is overreaching. One of the worst things a manager can say when the resident asks for reimbursement for a damaged item is, “You should have renter’s insurance.” This infuriates the resident, and instead of the resident wanting $500.00, the resident goes to an attorney, and the amount now goes up to $5000.00.

Recommendation: The next time casualty occurs to a resident’s personal property, get them to fill out an “Incident Report” immediately, and DO NOT immediately tell them that you are not going to pay for the damage. You may later refuse to pay or you may settle, but in the meantime, you want the resident to memorialize the amount in writing to avoid future problems.

The “Incident Report”

Below is the Incident Report we recommend you use. 

INCIDENT REPORT

TO BE FILLED OUT BY RESIDENT

 

Resident Name _____________________________________

Apartment number ________________ Date: _______/_______/______

Date of incident____/____/_____

_____PERSONAL PROPERTY DAMAGE OR LOSS

_____APARTMENT DAMAGE

_____VEHICLE DAMAGE

_____INJURY TO PERSON(S)

Detailed description of event, loss etc: BR>

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

__________________________________________________________

Cost estimate of damage/loss $________________

Witnesses to damage/loss:

Name_________________________ Phone_______________________

Name: ________________________ Phone_______________________

I hereby swear that the statement I have made regarding the aforementioned incident is true.

 

______________________________
SIGNATURE OF RESIDENT

DATE_________________________

 

“Serving the Property Management Professional”

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