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

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

What Constitutes a “Transient” Rental?

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

What Taxes Need to be Collected?

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

What is Taxable?

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

The List

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

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

 

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

 

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

 

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

 

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

 

Other potentially taxable amounts:

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

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

Phone and Long Distance Charges:

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

Exceptions to the Tax:

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

 

Are You In Compliance?

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

 

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

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

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

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

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

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

 

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

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

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

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

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

Sample Lease Wording

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

 

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ALL ADULTS AS TENANTS ON A LEASE

 

WE OFTEN GET REQUESTS TO PUT SOME PEOPLE ON THE LEASE AS OCCUPANTS AND NOT AS TENANTS WHO WILL ACTUALLY SIGN THE LEASE.  CHILDREN AS OCCUPANTS ARE FINE. A CHILD IS ANYONE UNDER 18.

 

ADULT OCCUPANTS ARE A BIG PROBLEM THOUGH.  DO YOU KNOW WHY?

 

MY NAME IS HARRY HEIST, FOUNDING PARTNER OF HEIST, WEISSE & WOLK AND IF YOUR WATCHING THIS WE PROBABLY ARE PREPARING A LEASE FOR YOU OR YOUR LEARNING HOW TO GET A GREAT LEASE. 

 

THIS VIDEO IS ONE OF THE MANY SHORT VIDEOS ABOUT THE LEASE.

 

IF WE PUT AN ADULT ON THE LEASE AS AN OCCUPANT AND THE TENANT VACATES AT SOME POINT, WE COULD HAVE A SERIOUS PROBLEM EVICTING.

 

SOME PEOPLE THINK IT IS ACTUALLY EASIER TO EVICT A PERSON WHO IS NOT A LEASE SIGNER BUT IN FLORIDA, ITS A NIGHTMARE.

 

IF A TENANT VACATES AND YOU MAY HAVE BEEN ACCEPTING RENT FROM THE OCCUPANT ARE THEY A TENANT OR AN OCCUPANT?

 

DO OCCUPANTS HAVE ANY LEGAL OBLIGATION TO YOU? NO.  CAN YOU SUE THE OCCUPANTS IF THEY DONT PAY? NO

 

HOW ARE YOU GOING TO DEAL WITH THE SITUATION WHERE THE TENANT VACATES LEAVING THE OCCUPANT BEHIND?  HAPPENS A LOT.

 

AN OCCUPANT HAS EVERYTHING GOING FOR THEM AND MORE AND WHAT DO YOU GET? NOTHING BUT POTENTIAL PROBLEMS.

 

NOW, THERE ARE EXCEPTIONS.  IF THE ADULT IS A COLLEGE STUDENT, SON OR DAUGHTER OF THE TENANT, LIVE IN CARETAKER, REALLY ELDERLY PERSON, ITS USUALLY OK TO HAVE THEM LISTED ON THE LEASE AS AN OCCUPANT.  STILL DANGEROUS THOUGH.

 

IF THE ADULT HAS SOME SORT OF DISABILITY WHERE THEY DON’T HAVE THE MENTAL OR LEGAL CAPACITY TO ENTER IN A CONTRACT, THEN WE PUT THAT ADULT ON THE LEASE AS AN OCCUPANT.

 

YOUR GENERAL RULE SHOULD BE THAT ALL ADULTS ARE ON THE LEASE AS TENANTS WHO WILL SIGN THE LEASE. DONT BE CONVINCED OTHERWISE.  IT’S A ROOKIE MOVE.

 

WANT A DEEPER DIVE INTO THIS? WE HAVE A MORE DETAILED VIDEO ON EVICTTV.COM

QUESTIONS? FEEL FREE TO CALL THE OFFICE OR EMAIL US AT INFO@EVICT.COM 

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If a resident who surrenders the rental unit continues to keep the rent current after giving up the right of possession, does the manager have the ability to retain the security deposit or last month’s rent? When does the statutory claim letter have to be sent? To answer these questions, it is important to first examine Florida Statute 83.49 in conjunction with Florida Statute 83.595.

Florida Statute 83.49 (3)(a) in part provides, “Upon the vacating of the premises for termination of the lease, if the manager does not intend to impose a claim on the security deposit, the manager shall have 15 days to return the security deposit together with interest if otherwise required, or the manager shall have 30 days to give the resident written notice by certified mail to the resident's last known mailing address of his intention to impose a claim on the deposit and the reason for imposing the claim.

 

The following is the full text of Florida Statute 83.595:

83.595 Choice of remedies upon breach by resident.

1. If the resident breaches the lease for the dwelling unit and the manager has obtained a writ of possession, or the resident has surrendered possession of the dwelling unit to the manager, or the resident has abandoned the dwelling unit, the manager may:

 

1. Treat the lease as terminated and retake possession for his own account, thereby terminating any further liability of the resident; or
    
2. Retake possession of the dwelling unit for the account of the resident, holding the resident liable for the difference between rental stipulated to be paid under the lease agreement, and what, in good faith, the manager is able to recover from a reletting; or
    
3. Stand by and do nothing, holding the lessee liable for the rent as it comes due.
    

2. If the manager retakes possession of the dwelling unit for the account of the resident, the manager has a duty to exercise good faith in attempting to relet the premises, and any rentals received by the manager as a result of the reletting shall be deducted from the balance of rent due from the resident. For purposes of this section, "good faith in attempting to relet the premises" means that the manager shall use at least the same efforts to relet the premises as were used in the initial rental or at least the same efforts as the manager uses in attempting to lease other similar rental units but does not require the manager to give a preference in leasing the premises over other vacant dwelling units that the manager owns or has the responsibility to rent.

 

A manager legally acquires possession of a rental unit three different ways: eviction, surrender or abandonment, all three of which are listed in Florida Statute 83.595(1).

Regardless of how the rental unit is reacquired, one constant remains: the resident’s right of possession is terminated. Does this mean the lease is “terminated”? Based on the wording of the statute and which collection remedy the manager chooses in a lease-break situation, the answer will only be “yes” if the manager takes back the unit on “his own account”. Under Florida Statute 83.59 (3) (a), the manager’s obligation to send the claim letter is not triggered until the premises are vacated for “termination of the lease.”

Therefore, if the manager chooses to retake possession on the account of the resident, or “stand by and do nothing”, then the lease is technically not terminated. If a judge accepts this position, then the manager’s obligation to send the claim letter is not triggered until a replacement resident is found, or until the lease expiration date occurs.

Therefore, if a resident clears the unit out and turns in keys because of a great new job in California, but continues to keep the rent current, the manager should be able to keep the deposit in escrow until true termination of the lease occurs, and then make a decision at that point (within 30 days) as to disposition of the deposit. Similar logic would apply to last month’s rent being held in escrow. It is important that the manager be able to document reletting efforts, not only to show that the manager has met its duty to use good faith in finding a replacement resident, but also to support the manager’s decision in holding off from sending the claim letter, when there may not be any immediate claim when the resident vacates early.

A related issue occurs if a resident is evicted. The manager still has the right under Florida Statute 83.595 to hold the resident to the lease balance when an eviction occurs. If the manager elects to find a replacement resident on the account of the resident after the eviction is finalized, a very good argument could be made that the manager can hold off sending the security deposit claim letter in accordance with the above guidelines. Nevertheless, our office recommends sending a claim letter within 30 days of the writ being executed, since after most evictions are finalized, at least the security deposit amount is owed, and some judges may be reluctant to accept an interpretation of the statute which allows the manager to delay in sending a claim letter after the right of possession has vested back to the manager. However, the better argument is that termination of the resident’s right of possession and termination of the lease can be two very different points in time.

 

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Two residents are on the lease agreement. One of the residents stops by your office and throws a set of keys on your desk proclaiming, “We are outta here”, and rushes out of your office. You decide to check the unit out, and it appears vacant. The electric is off, the unit is relatively clean, and the only personal property that you see is a box of books, an old television, bag of clothes and computer monitor. Looks surrendered for sure. Within a few days you have your maintenance staff do a full cleaning of the unit, including touch up painting and a trashing out of the remaining property. The locks are changed, as this is your usual procedure. A week later, one of your residents appears in your office claiming that she could not get into the unit. You inform the resident that her roommate turned in keys the prior week, and that the unit has been cleaned out and locks changed. Surprised and shocked, the resident in your office demands to know where all her personal possessions are, including a computer, CD collection, valuable antiques, expensive mountain bike and designer clothes. You state that there were no such items in the unit, and the resident storms out. You then get a letter from a lawyer, or possibly the police pay a visit to your office. Did you do something improper?

What is Surrender?

The term surrender is not specifically defined under the Florida Landlord/Tenant Act. Many managers assume that act or turning in keys constitutes a surrender, and in many cases, a judge would be satisfied that surrender occurs with the turning in of keys. However, it should be clear to the property manager that all residents on the lease have indicated in unequivocal terms that they have vacated the premises and are turning possession over to the manager. A writing signed by all residents is preferable, and no human beings should still be living in, using or sleeping in the unit. The property manager has to review very carefully the circumstances of keys being turned in; unless the keys are clearly being turned in as a consensual act by all residents on the lease, it can be very dangerous to presume surrender has occurred. Even if there is only one resident on the lease, if keys show up in the property manager’s drop box with no note, it may not have been the resident dropping the keys off.

The Property is “Surrendered” But Not Vacant

Your residents, all of them on the lease, may have given you the keys and indicated to you that they have surrendered the premises. You go out to the premises, and someone appears to be living there. You see clear and convincing evidence that the premises are being occupied by someone other than the residents who were just in your office yesterday. The premises are not surrendered, and if you think the occupant in the unit is a trespasser, think again. If that person claims he is there with the permission of your residents who just gave you the keys, you will be forced to file an eviction against your residents, as they have not completely surrendered the premises. The fact that the residents came to your office, turned in keys and said they were out is not sufficient.

One Resident Surrenders

One resident on a two resident lease comes into your office and hands you the keys announcing “they” have vacated. This is a common occurrence. You will then check the premises, and if it appears there is little to no personal property on the premises, the usual assumption is that all the residents have vacated. The problem is that only the resident who has given you the keys has in fact vacated, but the other resident has no idea this has occurred, as she may have been staying at her boyfriend’s house. This resident then appears in your office after locks have been changed and wants to know why she has been locked out. You reply that possession was turned over by the other resident the week before. Unbeknownst to you, the resident who surrendered the keys to you sold all the other resident’s personal belongings and threw the rest in the trash. They were not getting along. Now the other resident is attempting to hold you responsible for all the missing items. What happened? Only one resident gave up the right of possession, and that was not complete surrender.

Written Notification Of Surrender

There will be times when you do not receive the keys but receive a letter from the resident or residents stating that they have indeed vacated the premises. This would seem to constitute surrender, but again, the unit must be examined to see if this is truly the case.

Some Final Words

As you can see, receiving keys or a letter from the resident or residents may indicate that the residents have vacated the premises, but if anyone is left behind, you do not have a surrender; if you do not have clear confirmation from all residents on the lease that the right of possession has been given up, it can be dangerous to presume a surrender. Never assume you have complete surrender and right to possession of the premises until you examine the premises and consider all the underlying details of the case; if you have any doubts, consult your attorney.

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Storms in Florida have resulted in many new legal issues between the manager and the resident. Unfortunately most managers are not prepared for the myriad number of problems, and often decisions are made which ended up in litigation. Common problems included the residents taking it upon themselves to secure the property and in the process damaging the property. In many cases the premises are substantially damaged, and the resident is allowed a rent rebate or some concession which ends up not satisfying the resident and becoming a problem later. Construction workers often are not able to complete repairs in a timely manner. In severe damage situations, the residents refuses to vacate the premises and also refuses to pay rent. Who is liable for protecting the resident and his personal property? Can we make a resident leave if the premises cannot be repaired quickly, or it is necessary to have the resident leave the premises to have the repair properly made? What about generators? In a multi-family environment such as an apartment community, the misuse of a generator can put people and property at great peril. Can we prohibit them? The following discussion is preliminary at best and is meant to give you some ideas which you may wish to implement in your lease or an addendum to your lease. It is by no means complete, but it is a start.

What are the Manager’s Obligations?

Many leases contain clauses reminding the resident that the manager is not responsible for their personal property, and the resident agrees to this. Surprisingly, these clauses are not always upheld in court for situations in which damage to the resident’s personal property was not due to any fault of the resident. If there is a pipe break, and the resident’s personal property is damaged or destroyed, this clause may not hold up. In the event of a storm, if there were some simple steps that the manager could have taken to help preserve the personal property of the resident from damage, things are not as clear. The duty of the manager to secure the premises is not spelled out anywhere in Florida law. We recommend the following clause.

MANAGER’S OBLIGATIONS: Resident agrees Manager has no obligation to install storm shutters and/or take measures to prevent wind, rain and/or other objects or projectiles from entering the premises in the course or event of a windstorm, flood, hurricane, hailstorm, tropical storm, or any other act of nature (hereinafter “Storm”) that may strike in the area of or affect the premises rented by Resident from Manager. Resident agrees Manager has no duty to advise Resident as to evacuation orders, potential or current storms, safety measures, storm-preparedness procedures, or storm recovery resources. Resident agrees to use due diligence in keeping informed of the current and future weather.

What About the Resident’s Personal Property?

Florida law does not prohibit or specifically allow a manager to require a resident to get insurance for her personal property, commonly known as “renter’s insurance”. There also is no affirmative duty on the manager to secure the resident’s personal property, which may be in accessible areas such as balconies or lanais. It is possible that a particular area of the outside of the premises is subject to flooding. The manager may have a duty to warn residents of this if the manager has knowledge of a low section of the property or prior flooding. Many residents are not aware that the typical insurance policy that a manager has on a rental property in no way includes coverage on any of a resident’s personal property or coverage for any other loss that may occur to a resident other than personal injury or death due to the manager’s negligence. We recommend the following clauses:

RESIDENT’S OBLIGATIONS REGARDING PERSONAL PROPERTY: Resident agrees the rental premises are located in an area that may be subject to storms, and as a result, it is necessary to take steps to protect one’s personal property, including but not limited to securing objects that may become projectiles, keeping important documents in a location safe from damage, providing for the safekeeping of keepsakes, and obtaining appropriate insurance. Resident understands that, even with precautions, damage to personal property, including vehicles, may occur.

RENTER’S INSURANCE: Resident understands and agrees Manager’s insurance if any DOES NOT cover injury or death to Resident’s person or loss of any kind to Resident’s personal property or expenses incurred by Resident due to a storm, including but not limited to, loss of perishables, interruption of water, electric, cable or other utility service, relocation expenses and/or temporary or permanent housing. Resident agrees he or she has an affirmative obligation to obtain renter’s insurance to cover losses in the event loss should occur to Resident’s person and/or personal property due to a storm. Failure by Resident to obtain renter’s insurance is done at the complete and total risk of the Resident.

LIABILITY OF MANAGER: Resident waives any liability or duty on the part of the Manager for any damage to person or property should any occur due to a storm. Resident agrees to indemnify Manager should any third party institute an action for damages against Manager due to damages caused to person or property by Resident’s personal property and/or Resident’s actions or inactions relating to such personal property. Such indemnity shall include attorney’s fees and costs of Manager incurred in any actions for damages by a third party.

Storm Preparation Actions by the Resident

Certain steps should be taken by a resident to minimize the risk of harm to the resident, personal property belonging to the resident, and property belonging to others due to the resident’s personal property becoming a projectile or otherwise causing damage to another’s property. At the same time, a manager does not want a resident to drill holes in the premises, put nails into the premises or take steps to protect the resident’s personal property which could cause damage to the premises in the process. We recommend the following clauses:

STORM PREPARATION: Once a tropical storm, hurricane, flood watch or warning is issued for a particular area and/or at the request of Manager, Resident agrees to take storm preparedness actions. Any injury to Resident arising from storm preparation is the sole responsibility of the Resident and not of Manager. In the event of damage to Manager’s property due to Resident’s storm preparations, that damage will be the responsibility of Resident. Residents shall remove all authorized and unauthorized objects from the immediate premises that may become projectiles in a storm, such as deck chairs, potted plants, patio benches and any items on a balcony, lanai, patios and/or breezeways of the rental premises. These items should be placed inside the apartment and returned to the outside only when it is safe to do so. In no event, shall any motorcycle, scooter, gas grill, or other item containing gasoline or other fuel, be stored inside in the rental premises. These items must be removed completely from the premises.
 

The Generator Problem

The manager must decide if a gas powered generator will be allowed on the premises. Gas generator dangers are huge. Every year fires are started and individuals die of carbon monoxide poisoning due to generator misuse. In a single family home situation, the manager may not have a problem with allowing the resident to use a generator, but in multi-family housing the risks are multiplied greatly and are severe. Let us assume that an apartment community prohibits generators, but the resident purchases and uses one on the premises. Can the manager remove or disable the generator without liability? We are not sure, but we have created a clause which your attorney may want to review and give you his or her opinion. We are not by providing this clause stating that this clause will definitely be upheld in court or will not create liability on the manager, so you have been warned.

GENERATORS AND FLAMMABLE LIQUIDS: Resident agrees that NO GENERATOR(s) WHATSOEVER shall be permitted to be used by Resident on, in or near the premises. Severe hazards are associated with storing and operating a generator at the property, including injury and death to persons and damage to property. Resident agrees that NO FLAMMABLE LIQUIDS shall be permitted to be stored on, in or about the premises including but not limited to gasoline, kerosene or propane.

REMOVAL OF OR DISABLING OF GENERATORS BY MANAGER: In the event Manager is made aware that Resident is in possession of or using a generator on, in or near the premises, Resident by this document gives Manager absolute permission to disable the generator and/or remove the generator from the premises without notice or further permission of the Resident. Resident agrees to hold Manager, its agents, employees and assigns harmless for any damages suffered as a result of Manager disabling and/or removing the generator from the premises. This includes damages to Resident’s personal property due to lack of electricity and /or damages to or loss of the generator itself.

Notifications to the Resident

Nothing in Florida law requires a manager to notify the resident of an impending storm. It is good in multi-family housing though for the manager to have a policy and procedure in place, as it only makes sense that the manager take steps to notify residents who may not be aware of the situation. A manager cannot force a resident to vacate the premises. We recommend the following clauses:

EVACUATION OF PREMISES: In the event a governmental entity orders an evacuation of the area, Resident agrees to follow such evacuation orders. In the event Resident fails to follow the evacuation orders, Resident agrees that Manager shall not be liable in any way for injury or death of Resident or damage or destruction of Resident’s personal property, including vehicles.

The Damaged Property Catch-22

The most common problem our office deals with in the aftermath of a storm is the damaged unit. The destroyed unit is easy. The residents are gone and can’t move back in. The damaged unit creates serious issues. Does the manager have to repair? Can the manager timely repair? Is there water damage causing mold? Can repairs be made with the resident present? Does the resident have to pay rent? When a unit is damaged, we like the manager to have the pure absolute option to terminate the tenancy and evict the resident if necessary. We don’t need any arguments about the rent, reductions in rent, rent withholding, interference with repairs or any other problems from the resident. We want the manager to simply say “Get Out”, serve the resident proper notice and file an eviction if the resident fails to vacate. Proper lease wording is crucial. We recommend the following clause.

DAMAGE OR DESTRUCTION OF PREMISES: In the event the premises are damaged or destroyed by a storm, and in Manager’s sole judgment it is necessary for Resident to vacate the premises due to a dangerous condition on the premises or for repair, reconstruction or demolition, Resident agrees that Manager may terminate the tenancy. Resident shall vacate the premises within the time period as designated by Manager, and Resident shall not be liable for any further rent under the terms of the lease agreement.

Contact With Your Attorney

Probably the most important thing you can do after a storm is to contact your attorney before releasing a resident, giving a rent concession or making any deals or arrangements whatsoever with the resident. Emotions are running high, situations often are emergent in nature, and anything you do with the resident can have long lasting legal consequences. We urge you to examine your storm policies and procedures and have all preparations in place not just with the properties that you own or manage, but also your personal business. Many of our clients completely lost their offices in the past 3 years and were not prepared to be up and running again quickly. While this article dealt with your agreement with the resident, you need to have a full meeting of the minds in writing with the owners of homes if you are a manager of single family homes, duplexes and the like. This topic will be examined more in depth in a future newsletter.

 

“Serving the Property Management Professional”

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Many managers are now setting aside certain units as “Smoke Free” or renting homes out and prohibiting smoking on all or part of the premises. Many residents do not want to rent a unit where the prior resident smoked, and in many units, smoke travels through the premises interfering with the rights of other residents. Restricting a person’s ability to smoke on the rental premises in full or in part is not prohibited by law. The lease needs to clearly spell out the restrictions, and the challenge to the manager will be enforcement and proof.

Smoking Prohibitions and the Law

There are no laws, state or federal, that prevent a manager from prohibiting smoking in a rental unit, house or designating a building as smoke-free. There are no laws that prohibit a manager from designating certain areas as “smoking areas” or limiting smoking in the common areas.

Smoking Prohibitions and Fair Housing

It is not illegal discrimination to create a smoke-free policy, smoke-free units or smoke-free areas, as smoking is not protected under law. It is important to note that creating a smoke-free policy should never be used to target a protected class, as this can trigger a discrimination action and potentially be considered illegal. Residents who are affected by second hand smoke actually may be able to sue your company under the Americans With Disabilities Act and the Fair Housing Act for discrimination, if they have breathing disorders and you do not make accommodations for them in their rental premises, or the common areas in the event they have health issues which are being adversely effected by secondhand smoke.

The Benefits of Smoke-Free Units

1. Reduced risk of fire and injury. Lighted tobacco products cause over 15,000 residential fires, over 500 deaths and over 1300 injuries due to these fires, and over $300 million dollars in property damage each year.

 

2. Litter reduction. Your maintenance personnel will attest to the fact that cigarette butts accumulate and remain on the premises for a long time. Residents routinely will throw the cigarette butts on the ground, in the garden areas and all around the common areas. These cigarette butts pose a threat to small children and animals that may place them in their mouths and ingest them.

 

3. Better health. Cigarette smoke travels through walls, ceilings, floors, electrical conduits and HVAC systems. This exposes other residents to secondhand smoke, and these residents then suffer health hazards and inconvenience.

 

4. Decreased damage to property. Smoking damages walls, ceilings, carpet, furniture and can deposit a layer of tar on just about any surface with which smoke comes in contact, in addition to increasing the likelihood of carpet, flooring and counter burns. Often smoking related damage requires a substantial expenditure of funds to remove staining and odors, and to otherwise repair the unit.

 

5. Reduced liability. Americans With Disability Act and Fair Housing complaints are rising each year. Accommodating residents who do not want to be affected by second hand smoke and/or reducing the exposure of a resident to second hand smoke will reduce your liability. In addition, a resident has common law remedies, including the implied warranty of habitability and that the peaceful, quiet enjoyment of the premises is being interfered with. Smoke infiltration from another unit may qualify as a violation of the common law rights, and we have seen residents break their lease due to smoke infiltration.

Creating the Smoke-Free Unit or Building

1. Current residents. You cannot prohibit a current resident from smoking, if there is no prohibition in the lease, or the resident has failed to sign a no smoking addendum after the lease has been signed. A non-smoking resident who has already signed a lease may be willing to sign a no smoking addendum, and this can speed up the conversion of a building to non-smoking units.

 

2. New residents or renewals. If your new lease or addendum prohibits smoking, you can prohibit a new resident and their occupants from smoking, or refuse to renew a lease if a current resident refuses to sign the new lease or addendum.

 

SAMPLE LEASE WORDING

”Resident agrees that Resident, guests and/or occupants will not smoke or ignite any tobacco, clove, incense, or other legal or illegal smoking product on the premises. The premises for the purposes of this section includes the interior or the apartment, the breezeway outside the apartment, and any lanai or balcony if provided. Smoking for the purposes of this section is defined as igniting, inhaling, exhaling and/or carrying any lighted legal or illegal smoking product. In the event Resident, guests or occupants violate this smoking policy, Resident shall be in breach of the lease agreement and subject to eviction action, in addition to being liable for any damages to the premises cause by smoking or costs incurred by Manager in removing smoke odor”

Note: The above sample clause is for a complete smoking prohibition. The clause can be modified to allow lanai smoking, smoking areas or other variations.

Practical Considerations

While smoking can be prohibited in the lease agreement or addendum, enforcement is always going to be a problem. We all know that residents often will not do what they are “supposed” to do or what they “agreed” to do in the lease. A no smoking clause is a start though, if you wish to create a smoke-free unit or building, but proof will become an issue in the event of a violation or violations.

 

“Serving the Property Management Professional”

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A Small Claims Court case is simply a lawsuit by one party against another party where the sum sought after is up to $5000.00. Florida law has created a system within the County Court system where smaller cases such as these are handled in a unique and often expeditious manner. There are many ways of proceeding if one finds himself or herself as a defendant in a Small Claims Court case. You may be able to file a Motion to Dismiss if there are defects in the Plaintiff’s case, an Answer may be appropriate, possibly a Counterclaim will be necessary, or the case can be amicably settled. This article will only deal with settling the most common Small Claims Court case whose subject matter is a Security Deposit Dispute, and assumes the Small Claims Court case is NOT filed by an attorney, but rather is pro-se, meaning that the Plaintiff filed the case on his or her own without an attorney signing the paperwork.

The Security Deposit Dispute—The Most Common Small Claims Court Subject Matter

The vast majority of Small Claims Court cases involve a dispute over a security deposit. The Plaintiff, a former resident, will claim that you failed to return the security deposit, failed to send out notice in the required time period or unfairly charged the security deposit for things that were not the Plaintiff’s responsibility. Most of the time the Plaintiff is suing for no more than the security deposit amount plus the costs of filing the lawsuit. While you may firmly believe that the amount you charged the Plaintiff is absolutely correct, this type of case is one of the best kinds to settle rather than fight.

Why Should We Settle?

The Small Claims Court case regarding a security deposit dispute is much harder for the manager to fight than one may think. The same judge that seems very tough on residents in eviction court often seems to bend over backwards to believe the Plaintiff’s story of the evil, greedy manager who charged the Plaintiff for damages he did not do to the unit that the Plaintiff left cleaner than it was when the Plaintiff moved in. While the ex-resident Plaintiff is bringing the case against your company and should have the burden of proof, the judge will demand that you prove that the unit was not damaged when the resident moved in, the resident did the damage while living there, it was over and above ordinary wear and tear, and you can prove the costs of the repairs or replacements. You may need a detailed move-in and move-out inspection form, photos, videotapes, maintenance persons, vendors and just about anybody you can possibly think of that had contact with the unit in court with you to prove that the amount you charged the Plaintiff was correct. You may have a stack of bills for carpet cleaning, pest control and painting, but the judge will not look at these if you try to use them to prove the Plaintiff damaged the unit, as these bills will be considered hearsay. You will need to bring the painter, pest control person and carpet cleaner into court to testify, and often they do not want to come to court or, when they do come to court, make poor witnesses. In almost every single case we examine, the manager has severe weaknesses in the case.

The Mechanics of the Small Claims Court Case

The Plaintiff files the Small Claims Court case in County Court and has the case served upon you, the defendant, by Registered mail, private process server approved by the court, or most commonly, by a Sheriff’s deputy. When the case is filed, a date is specified on the paperwork for a Pretrial or Mediation date. If the case is not settled before the Pretrial date, you must attend this Pretrial, or you will have a judgment automatically entered against you or your company. At the Pretrial, a mediator is appointed to the case, and there is an opportunity to sit down in a private room with all the parties present to discuss the possibility of settling the case. If the case is not settled, the parties go back to the courtroom where they wait for a trial date from the judge. The parties must then attend the actual trial, where the case will be fully tried with all witnesses present. At the end of the trial, the judge will make his or her ruling and may award costs at that time.

How Long Does the Process Take?

The Pretrial process usually takes from 1 hour to 3 hours depending on how many cases are assigned to the court that day. The time is usually spent waiting in the courtroom to be called by the clerk. Once called and a mediator is assigned, the actual Mediation session usually takes between 30 minutes and one hour. If the case is not settled in Mediation, the parties will be sent back into the courtroom, where the wait can be from 5 minutes to one hour to get a date from the court for the trial. The trial is usually scheduled to be held within 60 days from the Pretrial date. On the trial day, the parties can potentially wait up to 2 hours for the trial to begin, and a typical small claims trial takes anywhere from 30 minutes to 2 hours on average. Unlike what you may observe on “The People’s Court” or “Judge Judy”, all the rules of civil procedure apply in the Small Claims Court trial, and it is actually taken very seriously by the judge. You need to have all your witnesses and evidence in court. If you are unprepared or disorganized, expect to be intimidated and berated by the judge. Frequently the judge is already annoyed that the case was not settled, and most judges really do not seem to enjoy small claims court trials.

Settling Prior to the Pretrial, the Cost-Benefit Analysis and “Principle”

Settling the Small Claims Court case prior to Pretrial/Mediation is the preferred way to go. At this point you will have little to no time into the case and will have avoided countless hours of aggravation. You need to make a simple cost benefit analysis of the situation and avoid wanting to go to court for “the principle of the matter”. Fighting over “principle” is just not wise. First, your expenses will be increased and secondly, you have no idea whatsoever if you will win in court, as Small Claims Court is so full of surprises. If you and the Plaintiff can come up with an agreeable amount, the agreement is put into writing, the money is exchanged, and the Plaintiff files a Voluntary Dismissal with the court. Does it make sense to take 3 staff members out of the office for 5 hours? Are you sure you are going to win in court? Will you need to get your attorney heavily involved? Will you need to subpoena parties? Will your vendors that you subpoenaed be aggravated with you? Will they show up in court? You need to take a deep breath and ask all these questions before you chart out your course of action. Assuming you are agreeing to give the Plaintiff some money to settle the case, it is imperative that you do not just send the Plaintiff the money. You must do this in conjunction with a proper Voluntary Dismissal and release. You don’t want to settle with the Plaintiff and then have his or her co-resident sue you over the same dispute. Smart settlement is a smart thing to do. Principle does not pay.

Settling the Small Claims Court case at the Pretrial Mediation

Surprisingly, most Small Claims Court cases are settled at the Pretrial Mediation. The court has fully trained volunteer mediators from all walks of life whose mission it is to have you settle the case and walk out of the courthouse relatively satisfied. In the mediation, each party has a chance to present their side of the story in front of the impartial mediator. The mediator also will conduct a caucus at times, whereby one party leaves the room and the other party can privately speak with the mediator. When you go to mediation, you want to be very prepared, as sometimes; a good mediator will encourage a party to settle if they feel the other party has a very good case. Once the parties come to an agreement, the mediator writes everything up on a settlement form, and the case is over. Assuming it is a security deposit dispute and you are agreeing to return some funds to the resident, this will all be written out, and you must comply with the Settlement agreement or you will have a judgment entered against you. Since we know that most cases are settled at Mediation, try to settle the case BEFORE mediation to avoid wasting time.

Suppose Mediation is Unsuccessful?

If Mediation is unsuccessful, a trial date will be set by the court. It is important to bring your calendar with you to Mediation, as once the trial date is set, the only way it can be changed is with agreement by the parties or the court granting a Motion for Continuance. After a trial date is set, there is plenty of time to decide whether proceeding with the trial is prudent or settlement is the better way to go. A case can be settled at any time prior to the actual trial date. Sometime after the parties have some time to reflect on the mediation, settlement becomes easier. The time before trial can be used to continue to attempt settlement through the use of offers and counteroffers. Always get the Plaintiff’s phone number and current address so the lines of communication can be kept open.

Your Attorney’s Role in a Small Claims Court Case

It is a good idea to always notify your attorney the moment you are served with a Small Claims Court case so your attorney can quickly review the paperwork and give you some advice. Most honest attorneys will tell you the truth about your case, disclose how much it will probably cost to fight the case and advise that you try to settle the case. In most cases, if your attorney advises that you settle the case, they can provide you with advice and with forms to help make this happen. You may want your attorney to attempt to settle the case. This is often an excellent route to take, as long as it will not take your attorney too many hours to accomplish this task. Give your attorney a figure that you will settle on, agree on attorney’s fees, and let your attorney run with it. A pro-se plaintiff will be surprised that you have an attorney involved in the case and will be more likely to want to settle. Here you attorney acts in a quasi-mediator fashion to get the parties to settle. The truth is, most attorneys have no desire to fight small claims court cases regarding dispute security deposits, because in most cases, they know that in the end, their client will not be happy having to pay their attorney’s fees and possibly losing the case in whole or part. Your attorney will advise you if you can go it alone, or if the attorney should file a Notice of Appearance and take over the case.

“Serving the Property Management Professional”

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The resident moved out, and you or your maintenance staff begins the fun process of repairing all the damage, painting, replacing carpet, replacing kicked in doors, repairing door frames and filling holes where your resident decided to practice the sport of boxing. The kitchen is an absolute wreck, requiring a deep clean taking hours, and the refrigerator shelves are either broken or missing. The bathroom has deep mold where every bit of caulking ever existed, and the floor is severely stained due to standing water or whatever else. I need not go on, you get the picture.

Should You Sue the Resident? Will You be Sued?

Residents who leave the rental premises in deplorable conditions usually are judgment proof. It would be absolutely ridiculous to spend any serious time or money trying to go after persons like this. Most managers know this, but many still insist on filing a small claims court case and pursuing a judgment. If a manager is local and has time on their hands, usually there is not much harm in filing a small claims court case, and there is little expense if no attorneys are involved. Unfortunately, the manager may have no choice in the matter and be the one who gets sued! There is no doubt that the manager will retain the entire security deposit in a situation in which damages meet or exceed the security deposit amount, and many times, the resident will seek to get the security deposit returned to him or her.

The Seriousness of a Small Claims Court Case

Most managers have no idea how serious a small claims court case can become. The manager may file the case on his own, and the resident hires an attorney who invariably files a counterclaim, meaning the manager now is suing and getting sued at the same time. The prevailing party may be awarded attorney’s fees. This means that if the resident wins and has an attorney, the manager may end up having to pay thousands of dollars in attorney’s fees to the resident’s attorney. The amount of attorney’s fees the judge may award has absolutely no relationship to the amount of the dispute. You could easily have a $5000.00 attorney’s fee award when the dispute was about a $500.00 security deposit, and the judge felt you overcharged by $50.00.

The Proof You Will Submit in Court

Daytime court television shows probably do the most serious injustice to the court system and lead people to believe that this is indeed how court “works”. While some judges in small claims court do indeed play fast and loose with the evidence of the parties, most judges follow the laws, and this means the rules of evidence are followed. Most managers will have a stack of bills and receipts which they think they will use to convince the judge that the resident damaged the property. Sounds reasonable. After all, why would the manager have spent all this money if the resident left the place in good clean condition with no damage? It would seem to make sense that the judge will look at the bills and receipts, and this will help you convince the judge that you indeed were harmed by the resident and should be entitled to keeping the security deposit or getting a judgment against the resident.

The Bills and Receipts Problem

Ready for the big surprise? Bills and receipts cannot be submitted as evidence in court to PROVE the resident did the damage. Bills and receipts are what is known as “hearsay” and CANNOT be used to prove the resident did the damages.

 

 

What is “Hearsay”?

Most people think hearsay means that when someone tells you something, you cannot use that statement in court. This is partly true. If I tell you that “John stole the car”, you cannot go into court and say that “Harry told me that John stole the car”. Why? Because if I am not in court with you, the defendant will have no way of cross-examining me. This means that what you are saying is “hearsay”, and the judge cannot listen to this, and it will not be used as evidence in court. Now on the other hand, if I were also a witness in court, and you told the judge that Harry told me that “John stole the car”, I can be called up to the witness stand and be cross-examined. The statement will then be admissible into court.

Other Examples of “Hearsay”

Besides just statements by people that cannot be cross-examined in court because they are not in court, there are other things which are considered hearsay.

1. Affidavits. Many property managers get the repair people and vendors to sign an affidavit, get it notarized, and then they think they can show it to the judge. It does not work; it is hearsay, because the vendor or repair person cannot be cross-examined in court.

 

2. Witness Statements. Getting 5 statements signed by people who observed the damages would seem like compelling evidence in court, but again, it is hearsay, unless the person or persons who signed the statements are in court.

 

3. Estimates. No good. Hearsay, unless the person who wrote up the estimate is in court and based the estimate on personal observation.

 

4. Bills. This is the classic mistake of the manager. The stack of bills cannot be admitted into court to prove that the resident damaged the property, unless the person who did the work is there in court, and a witness which can be cross -examined.

 

5. Police reports. There are times where properties are so severely damaged that the police are called in to write up a vandalism report. Hearsay again, unless the law enforcement person who wrote up the report is in court with you.

 

Is there any value to bills, invoices and receipts?

While they cannot be used to prove damages, they can be admitted into court to prove what something cost you, and if you have proof of payment, they can be used to prove that you paid for something like the supplies, the vendor, and the repair person. This certainly limits the usefulness of your bills, invoices and receipts, BUT will help your case in court; if you make it clear to the judge that they are being admitted as business records to prove what you paid.

 

Our Recommendations

If you end up in small claims court involuntarily, i.e. you have been sued; call your attorney as soon as possible. Don’t wait until the last minute when the chances of settling the case are seriously jeopardized. If you decide to file a small claims court case on your own, take the time to talk to everyone who worked on the premises to make sure that they will be there with you in court. You can subpoena these people as well and hope they come to court, but you don’t want to have an angry carpet cleaner who had to kill 5 hours waiting in court with you. Examine your evidence carefully, and try to put yourself in the judge’s seat for a moment and ask, will my evidence and testimony completely convince a judge that the property was not damaged when the resident moved in, and was in a damaged state when the resident moved out? Then expect the resident to come up with all kinds of lies and stories to make you look like the bad guy.

“Serving the Property Management Professional”

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