When a lease is set to expire or has expired, the LANDLORD will often seek to raise the rent.    Sometimes, the LANDLORD will even seek to raise the rent during the lease.    

DOES THE LANDLORD HAVE A RIGHT TO RAISE THE RENT DURING THE LEASE TERM?         

Usually no.   A limited exception applies to tax credit communities, but in almost all cases regarding conventional properties, the monthly rent amount established in the lease remains the rent amount during the entire tenancy.    However, if the written lease provides for a specific rent increase during a period of the lease term, that rent increase will be enforceable.         

WHEN A WRITTEN LEASE IS SET TO EXPIRE, CAN THE LANDLORD NOTIFY THE TENANT OF A RENT INCREASE TO TAKE EFFECT AFTER THE LEASE EXPIRES?  

Yes.   If the lease has wording to raise the rent in a subsequent month-to-month tenancy, that mechanism will be enforceable if the LANDLORD fully complies with the requirements of the lease provision.

IS THERE A SPECIFIC LIMIT TO HOW MUCH THE RENT CAN BE INCREASED?    

No. Except for some counties and cities. However, the LANDLORD and tenant must agree to the desired rent increase.                       

WHAT ACTION CAN THE LANDLORD TAKE IF THE TENANT IS UNWILLING TO PAY HIGHER RENT?    

If the tenant is unwilling to agree to pay higher rent when the lease is set to expire or has expired, the LANDLORD should nonrenew the lease or month to month.  

This should all be handled in the same timeframe as required if it is a month to month tenancy or if there is a lease.

WHAT HAPPENS IF THE LANDLORD MISSES THE WINDOW TO NON-RENEW THE TENANCY AS OF THE LEASE EXPIRATION DATE, OR IF THE TENANCY IS ALREADY MONTH-TO-MONTH?   

If it is too late to non-renew as of the lease expiration date, the lease will typically become a month-to-month tenancy, and the LANDLORD will be able to non-renew the subsequent month-to-month tenancy. 

 If the tenant is unwilling to agree to pay a higher rental rate, the rent amount for that period will be at the same rent rate as was being charged.

IF ALL TENANTS ON THE EXISTING LEASE ARE WILLING TO PAY A HIGHER MONTH-TO-MONTH RATE UPON THE CURRENT LEASE EXPIRING, HOW SHOULD THIS BE ADDRESSED?    

All tenants on the existing lease will sign a month-to-month addendum showing the higher rent.     Written correspondence from the tenants acknowledging and agreeing to the higher rent amount would normally suffice, and even just the act of the tenant(s) paying the higher rent amount would probably be sufficient to establish the higher rental rate.    However, the month-to-month addendum will better clarify that all other terms and conditions of the original lease will remain in effect.   

REVIEW:

1. You MUST look at the lease to see how much notice is required to nonrenew or give at least 30 days notice (SINCE JULY 1, 2023 LAW CHANGE)  prior to payment period ending date with month to month.

 

2. You MUST tell the tenant the new rent amount BEFORE the window you have to nonrenew the lease or BEFORE the 30 days notice (SINCE JULY 1, 2023 LAW CHANGE)  prior to the payment period ending date with month to month.

 

3. If the Tenant fails to AGREE to the higher amount, you MUST nonrenew the tenant. If you improperly nonrenew, the tenant only has to pay the original rent amount until such time as you properly nonrenew. If you nonrenew and the tenant fails to vacate, we can evict.              

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Most companies have a written policy under which the resident is instructed to put all work orders for repairs in writing. No work order, no repair. In a typical situation though, your maintenance person is verbally notified of a repair need while on the property. The most common response by your maintenance person is “You need to go to the office and put in a work order”. The maintenance person then goes about his or her day doing the normal repairs and maintenance on the property and following the work orders that have been provided by the office. In other words, the maintenance person is doing the jobs as dictated by the office and office policies. The resident who gave verbal notice is ignored.

Your Company “Work Order Policy”

A typical company policy as outlined in the lease or the Resident Manual dealing with repair requests states that in the event a repair needs to be done in a unit or there is some sort of a problem that needs attention, the resident is to come to the office and fill out a work order request. There are obvious reasons for this type of policy, as it documents the work order, alerts management and maintenance to the problem, provides evidence why and when maintenance entered an apartment, and establishes that all important paper trail which we are always recommending be created. Generally, if a resident fails to put in a written work order, maintenance staff will not voluntarily go out to the unit until such time as the work order is in place, unless a true emergency exists.

The Reality of the Resident’s Expectations

The resident sees Mike the maintenance person driving the golf cart, flags him down and notifies him that the A/C is not cooling properly. Although Mike tells the resident that she needs to put in a written work order, the resident expects this to be a mere formality and that Mike will be out nonetheless as soon as possible to fix the problem. Mike, following company policy, fails to go out. A few days go by, and then the resident calls the office, wondering why the A/C is not being fixed. As far as the resident is concerned, she put management, through Mike, on notice of a repair need, and Mike did not make the repair. The resident now begins the process of trying to break their lease, withhold rent or completely badmouthing the property, plastering notices on every resident’s door.

Is the Resident Correct?

Most property managers will feel that the resident is completely wrong, as the resident did not follow company policy or procedure. The resident did not put the work order in writing; therefore, the company is off the hook as far as the property manager is concerned. The resident withholds rent, breaks the lease or somehow the situation ends up in court. At court, the resident will testify that she told Mike the maintenance person that a repair was necessary and Mike failed to make the repair. You and Mike will then tell the judge that the resident never put in a written work order, and that is why the repair was not made. Now for the tough questions. The judge may ask you or maintenance whether the resident did in fact notify Mike that a repair was needed. If Mike answers “yes”, which he would have to do if he were telling the truth, the judge will not be happy with Mike or management. Possibly the resident was justified in withholding rent or breaking the lease. While we all know that a resident is required to give a manager 7 days written notice if they intend to withhold rent or break a lease, some judges will ignore this requirement by Florida law.

 

Actual Notice Versus Company Policy

In the foregoing example and possible court case, the resident shows to the judge, a point confirmed by maintenance, that the resident gave ACTUAL NOTICE of a repair need which was not performed. The fact that the resident gave actual notice, while not according to company policy, will result in the judge being very unsympathetic to management and maintenance, and could cause you to lose a case in court. Judges are not big on your company policies or procedures. There is nothing in the law that states that a resident must put a routine repair request in writing. The judge will be more concerned whether the resident gave some sort of notice, and in this example, the resident did give notice, corroborated by the maintenance person’s testimony.

Do We Now Ignore Company “Work Order Policy”?

As we have seen, requiring a resident to provide you with a written work order is a good policy and should be continued, pushed and encouraged by all means. On the other hand, if maintenance is notified of a problem by a resident, be it at the pool, while doing another repair in the apartment, or anywhere on the grounds, that maintenance person needs to be proactive, write a note down on the pad that he will carry at all times, and create a work order from that. Once that work order is created, the scheduling should be done with the resident to avoid any accusations by a resident that maintenance entered a unit without authorization or notice. Remember, when you are in court, about the last thing a judge cares about is your “company policy”.

 

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A disabled applicant should be treated just as any other applicant.  The process of accepting an application, showing available units, doing a credit and background check, and executing a lease should be the same as you it would be for a non-disabled person.  There are a few exceptions, described later in this article.

The Business Office.

Make sure that your leasing office meets accessibility standards. This includes being sure there is an accessible route from the parking area to your leasing office.   This may mean adding a ramp or curb cut, or outfitting at least one restroom that is accessible.

Reasonable Accommodations.

If the disabled applicant needs an accommodation in order to apply for housing, make it.  Examples include allowing a vision-impaired applicant to have his friend complete the forms, or allowing a service animal to enter the business office.  Another example would be to allow the disabled person’s guardian do the paperwork and sign the lease.

The applicant may say she wants the unit, but will need a modification or accommodation.  You can ask the applicant to put the request in writing and provide you with verification of disability.  (Hopefully, you already have a policy in place for handling this type of request.)

Question “Do’s”

Generally, a manager should only ask a person with a disability questions that are asked of all applicants or residents.  It’s OKAY to ask questions such as:

• Can you pay the rent?
• Do you have references regarding your resident history?
• Who will be living in the unit?
• Do you have a criminal history?

 

If ours is an apartment community designated for people with disabilities, you can ask the applicant if he or she qualifies for the housing.  

Question “Don’ts”

It is NOT ok to ask the following:

• Do you have a disability? 
• Do you take medication?
• How severe is your disability?
• Why are you getting SSI?
• Can I see your medical records?
• Have you ever been hospitalized for mental illness?
• Have you ever been in drug or alcohol rehab?
• Are you capable of living independently?

 

A Few More “Don’ts”.

Do not presume to know what is best for the disabled applicant.  If a person with a mobility impairment wants a unit on the second floor, do not try to talk him into a first floor unit.  You would be presuming to know better what the applicant needs, than the applicant himself!  It would be a violation of fair housing laws, no matter that you acted with good intentions.

Do not offer a particular accommodation.  Don’t suggest: “Will you need a handicapped parking space since you are in a wheelchair?”  Instead, respond positively if the individual in the wheelchair asks for a handicapped parking space.  The request for such an accommodation should come from the resident, not you.  You can let applicants know you welcome requests for reasonable accommodations and modifications, by noting it in your application materials.

 

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There are two legal doctrines that every property manager must understand. Those two legal doctrines are waiver and estoppel. Why? The outcome of your case may be decided based on these concepts. In short, they can operate as a “death penalty” to your case. Unfortunately, many property managers hear the words “waiver” and “estoppel” for the first time after they have lost an eviction case. The legal doctrines of waiver and estoppel show up in many landlord/tenant related matters.  In the current economic climate, property managers need to be “on their toes,” as residents are become more desperate and at the same time, more sophisticated, in terms of their knowledge of Florida landlord/tenant law.

What Does the Legal Term “Waiver” Mean?

Waiver occurs when a person relinquishes or surrenders his rights or privileges. It can be voluntary or involuntary. The “voluntary” waiver situation occurs when a person signs an agreement relinquishing his rights or privileges. Courts will generally uphold voluntary waiver agreements outside of the landlord/tenant context, if the agreement is very specific as to the nature of the rights being waived” by the parties. However, as you will see later in this article, waiver provisions in leases by no means assure you that resident cannot bring forward a “waiver’ claim. By contrast, the “involuntary” waiver scenario takes place when the law deems that you have lost your right to defend a legal action or sue to enforce your rights because of some prior action on your part. The concept of “waiver” is explicitly written into the Florida Landlord Tenant Act. Even in cases when waiver is not addressed in the Florida Statutes, there is law resulting from previous judicial decisions, otherwise known as “legal precedent”. That simply means that a prior legal decision finding “waiver” on the part of a manager or resident, was the basis for a later decision finding “waiver” on the part of a manager or resident. Usually, the facts of the prior case and the later case would be similar, but would not need to be exactly the same.

 

Common Waiver Scenario # 1 (Rent acceptance after seven day notice)

Ricardo, the property manager at XYZ apartments, observed one of his residents, Betsy, brandishing a gun on the premises. Ricardo called the police, and Betsy was subsequently arrested for felonies involving firearms, an obvious violation of Betsy’s lease with XYZ Apartments. After receiving the police report detailing Betsy’s arrest, Ricardo instructed his attorney to draft a seven day notice of termination of lease based upon Betsy’s noncompliance with her lease. Ricardo posted the seven day notice, but Betsy failed to vacate. Ricardo was left with no choice but to file an eviction action against Betsy. In Court, Betsy pointed out to the judge that a check for $700 was accepted by Ricardo the day after the seven day notice was posted. The judge dismissed the case on the spot! Why? One only needs to look at Section 83.56 (5) of the Florida Statutes: “If the manager accepts rent with actual knowledge of a noncompliance by the resident or accepts performance by the resident of any other provision of the rental agreement that is at variance with its provisions, or if the resident pays rent with actual knowledge of a noncompliance by the manager or accepts performance by the manager of any other provision of the rental agreement that is at variance with its provisions, the manager or resident waives his or her right to terminate the rental agreement or to bring a civil action for that noncompliance, but not for any subsequent or continuing noncompliance.”

In this case, Ricardo in fact, accepted the rent (the $700 check) with knowledge on the noncompliance (the felony firearm arrest). Is this fair? The answer to that question has no bearing on how you should conduct yourself if you aspire to be a successful property manager. Successful property managers do not waste time “second guessing” the law. They make a conscious attempt to learn the law! One of your goals should be to understand how your actions can adversely impact your court cases if you do not understand the law in this area.  

 

Common Waiver Scenario #2 (Rent acceptance after 3 day notice)

Samantha, the property manager, issued a valid Three Day Notice to Pay Rent to Esmeralda. The amount owed to the manager by Esmeralda was $2500. Samantha requested that her attorney file an eviction action after Esmeralda’s three day notice expired. Four days after the eviction was filed. Esmeralda dropped off money orders totaling $250. That day, Samantha was understaffed at her management office and mistakenly deposited the money orders. Was there a happy ending to this story from Samantha’s perspective? Of course not! If rent is accepted, whether in full or in part, (notice that only 10% of the amount owed was paid), by a manager subsequent to the service of a Three Day Notice To Pay Rent , then the manager is deemed to have waived its right to evict the resident based on that Three Day Notice to Pay Rent. This is based on the same reasoning as in Scenario #1 above - Section 83.56 (5) of the Florida Statutes. Even though Samantha may argue that she deposited the partial payment without realizing that Esmeralda was out of compliance with the lease, judges will universally consider the deposit into the manager’s/management bank as acceptance, and most will charge the manager with knowledge of the resident’s noncompliance. Some judges will still grant the eviction based upon the resident’s failure to deposit into the Court Registry the remaining 90% rent balance, but don’t count on it. 

 

Common Waiver Scenario #3 (Rental assistance forms)

Tim, your resident, is behind in rent for the month of September. “Great news” he tells you. The county housing assistance agency will pay for that month. You gladly sign Tim’s housing assistance application. A few weeks later you receive the September rent check from the housing agency. The October rent, however, is not paid by Tim, and you request that an eviction action commence. At court, Tim’s attorney enters his rental assistance application into evidence. You were so happy that Tim was receiving help back in September that you did not carefully review the agreement. It turns out that the assistance form is rigged with conditions. The housing assistance application stated that, “The manager agrees not institute an eviction action for 45 days from the time payment is received”. Therefore in this case, the manager waived their right to evict Tim, because the eviction action was filed prior to the 45 day grace period expiring. These forms frequently limit the rights of property managers and management and can be very dangerous. Our firm advises our clients not to sign those forms. 

 

Common Waiver Scenario #4 (Partial or Late Payment of Rent)

This is the “classic” Estoppel case. Charlie paid rent late every month for 6 months. In fact, he paid his rent on the last day of the month. On the seventh month, the property manager decided that she had enough of this nonsense and instituted an eviction action against Charlie. In court, Charlie’s lawyer asks the judge to throw out the case based on the doctrine of Estoppel. The judge agrees. The same result often happens when the property manager constantly accepts partial payments. As we have pointed out numerous times in this newsletter and in seminars, the resident is actually being rewarded for bad behavior in these cases. Why? Courts will rule that the doctrine of estoppel will apply if:

1. Words and admissions, or conduct, acts, or all combined cause another person to believe the existence of a certain state of things

2. In which the person speaking, admitting, acting and acquiescing did so willfully, culpably, or negligently,

3. By which such other person is or may be induced to act so as to change her own previous position injuriously. What does that mean? If the property manager is giving the impression to the resident that the terms of the lease need not be followed, then the manager seriously jeopardizes her ability to enforce the terms of the lease. 

This situation also comes into play when you do not act promptly to remove an unauthorized resident (link to our article “authorizing the unauthorized resident) or when the property manager serves notices after a non-renewal notice is issued (link to our article “No more notices after Non-Renewal). You should also be aware that under Florida case law, some judges have ruled that serving a Three Day Notice upon a resident voids all earlier Three Day Notices. You should not give the residents any Three Day Notices while an eviction action is ongoing!

 

Does the “No Waiver” provision in my lease protect me?

It may not! Courts will often not allow a manager to defeat potential waiver defenses by including favorable language in their leases. Many courts take the view that these provisions are against public policy. In addition, many judges may determine that such a clause violates Section 83.45 of the Florida Statutes (Unconscionable Rental Agreement) or Section 83.47 (prohibited lease provision) if those judges believe that you are attempting to take away from the residents protections already granted to them by the Florida Landlord Tenant Act (Chapter 83 of the Florida Statutes).

 

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A census is the legally mandated counting of people in the United States and its territories. It fulfills an important constitutional purpose. While each state has two Senators to represent it in the United States Senate, the number of Representatives in the United States House of Representatives is based upon the population of the state: the greater the population, the greater the number of Representatives. The power of any state to advance its legislative agenda and to secure benefits for its citizens increases with the number of Representatives which it has. In addition, the census is the basis for distribution of many government benefits and programs for schools, hospitals, transportation, and most importantly to managers, housing. It is particularly important for Florida, whose population has increased since the last census, to get every person counted.

National Census Day

National Census Day is the day on which the “count” is fixed. April 1st is the relevant day, whether the questionnaire is completed or the census worker visits before or after April 1st. Census takers are more properly called “enumerators”. During March of that year, questionnaires are mailed to residences to be returned in April. From April through July, enumerators will visit homes that did not return the questionnaires. In an accommodation to America’s multi-lingual nature, enumerators will carry cards in numerous languages. The cards will inform non-English speaking interviewees that they should tell the enumerators their language, and the Census Bureau will follow up with someone speaking their language. If the resident is not home at the time of the enumerator’s visit, the enumerator will leave a notice of visit on the resident’s door. The resident can use the contact information to arrange a convenient time for the re-visit. The personal interviews take less than half an hour.

Legally mandated

The census is “legally mandated”. Enumerators have the legal right to have access to individual homes and multi-family properties to collect census information. Enumerators may have to return several times to collect the information. Various other census workers may seek access to the residents for census related operations, such as non-response follow-up re-interviews (quality check of an enumerator’s prior interview), census coverage follow-up (check possible double counting or clarify responses to prior questions), and field verification of mismatching addresses. There is the possibility that enumerators will contact some residents several times in the various follow-up and verification interviews. Managers should recognize this and expect some resident complaints about multiple interviews. Residents should be told to direct any complaints or comments to the Census Bureau, as the manager cannot prevent, limit or interfere with enumerators.

As part of the census the Census Bureau is performing another mandatory survey: the American Community Survey. The ACS collects population and housing information. Managers are required to cooperate in the ACS.

Managers’ Cooperation Required

Managers and their agents are required to cooperate and take reasonable steps to assist the enumerators by permitting access. If the enumerator is unable to make contact, the manager/agent should also assist by indicating the best time to contact residents, if known to the manager/agent. Finally, the enumerator may not be able to establish contact, and request the manager/agent to compile certain information on the occupants. The law does not provide for the option to demand written notice or written requests from enumerators as to what they want. So, managers/agents should neither expect nor require that enumerators give written demands for information. Enumerators will attempt to schedule mutually convenient times for meetings and allow managers/agents adequate time to gather and respond to information requests. However, given the deadlines imposed on the Census Bureau for completion of the census, the enumerators will expect a quick response.

The Census Bureau’s position

The U.S. Census Bureau has advised the National Multi-Housing Council as follows:

If the enumerator is unable to contact the occupant within the specified number of attempts, the enumerator may ask for as much information as the owner/manager can provide for an occupied unit. However, if the owner/manager states that the unit was not occupied on April 1, 2010, the enumerator will complete the questionnaire using the owner/manager as a knowledgeable respondent for the vacant unit.

The owner/manager should provide the information necessary to complete the census questionnaire, to the best of his or her knowledge. Questions on the census questionnaire have been approved by law, and the owner/manager is not in violation of any privacy laws if he or she provides the requested information. Although the owner/manager may not be able to answer all questions, such as race or ethnicity, an attempt by the owner/manager to provide available information should be made.

Verification

Managers/agents can demand to see the enumerator’s identification. The Census Bureau indicates that all enumerators will have official government ID badges and may be carrying “US Census Bureau” bags. Managers/agents can request that the enumerator present his government ID badge and another picture ID badge. If a Florida manager/agent wants further verification, he can contact the Regional Census Center for Florida in Atlanta, Georgia at 404-335-1555. Enumerators are not permitted to enter the residents’ homes, and therefore, they should never request to do so.

Notifying Residents

Since managers and their agents will be the secondary source of information, the more residents that the enumerators contact, the less time and work will be needed by managers/agents with enumerators. Managers may wish to alert their residents that census workers will be on the property. Managers may also want to inform residents that census workers may not request to enter residences, and that residents can verify their identity by requesting to see their ID badges, and if in doubt, they can contact the Regional Census Center.

Follow-up notices will be left on a resident’s door, if the resident is not home at the time of the census worker’s visit. (For simplicity in notice to residents, we advise referring to them as “census workers” rather than “enumerators”.)

Scams

Managers should be aware that like any other government program, the census will have its fair share of scams and scam artists impersonating enumerators. Enumerators do not use email or the internet to contact anyone. Enumerators will not ask to enter the home “to go to the bathroom” or for any other reason. Enumerators or census forms do not request donations, social security numbers, or detailed financial, banking or credit card information. Enumerators may use the phone to follow up on questions on a returned questionnaire, but will never ask questions beyond the ones on the census questionnaire. Be careful of relying on caller-id as proof of the caller’s identity, as scam artists can make it appear to be from the “Census Bureau”.

Privacy

Managers are not violating the privacy of their residents, as managers are required by law (Section 223 of Title 13, United States Code) to comply, and are subject to a fine for failure to comply. Enumerators should have available for managers/agents a Confidentiality Notice.

The Census Bureau only collects the information required by the law and imposes strict confidentiality requirements on those collecting and processing the census information. Federal law provides penalties of up to five years in prison and a $25,000 fine for the unauthorized disclosure of personal data by any enumerator or other census worker. Anyone who suspects an unauthorized disclosure can contact the Chief Privacy Officer for the Census Bureau, who is responsible for implementing privacy policies.

Information Requested

Managers/agents should expect that their files may very well lack some information sought. Fair Housing concerns have limited managers from acquiring information on ethnicity or race. Managers/agents are only required to supply the information that they have. The questionnaire consists of only 10 questions, but 5 of the questions have to be answered and re-answered for each occupant of the residence. The enumerator will assist the manager/agent with any interpretations of what a question is seeking.

In conclusion, managers have a vested interest in cooperating in the census. It brings some of those hard-earned tax dollars back to Florida and the manager’s community. Managers have a legal obligation and an economic incentive to see that every person in their apartment communities or rentals is counted. For more information on a Census, visit the website of the US Census Bureau.

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At any given moment, people who are not authorized occupants or residents on a lease are living in an apartment with the authorized resident. This is just a fact of life. Possibly the occupant is there on a temporary basis or just has decided to move in with the resident. Often the occupant is there for a long period of time, uses the amenities, makes repair requests, stops by the office and pays the rent and acts just like an authorized occupant or resident. The unauthorized person become familiar to staff, and many of the staff members have no idea the person is not in fact authorized.

The Resident And The Unauthorized Occupant

A resident who allows an unauthorized occupant to reside on the premises is in default of the lease and is blatantly disregarding the terms of the lease. That resident is no different than the resident who gets the unauthorized pet, parks improperly, causes a disturbance or does not pay rent. They are in default, pure and simple.

Why Do We Treat The Unauthorized Resident Lightly?

Usually if a property manager is not dealing with a HUD property or Low Income Housing Tax Credit Property, an unauthorized occupant is overlooked. If the resident is paying the rent, the property is kept up, there are not an excessive number of residents in a unit, occupancy is low, and parking is adequate, a property manager will overlook the unauthorized occupant.

The Huge Danger of Overlooking the Unauthorized Occupant

An unauthorized occupant is living on the premises without having gone through the normal credit or criminal background check. He or she may have an extensive criminal record, or even be a sexual offender or predator. The property manager has no idea of this and would have almost certainly turned this person does under normal application screening procedures. Nevertheless, the mystery person is now living on the premises.

The Unauthorized Occupant is Locked Out And Needs To Be Let In

One of our clients recently had a situation in which a woman that the maintenance tech recognized needed the maintenance tech to open the apartment in the early morning hours, as she had locked herself out. Since she was familiar looking to the maintenance tech, as she had lived on the property for quite some time, he opened up the apartment for her. She then decided to remove everything of value from the apartment. Later that day, the actual resident came home to find all his items of value taken, and the maintenance tech admitted he had let the woman in the night before. Problem? She was not an authorized occupant, and maintenance had no right letting her into the unit. Liability? What do you think?

A Recent Tragic Case Underscoring Potential Liability

Here is the scenario. This same scenario can apply to a resident renting in a condominium or single family home. An unauthorized occupant becomes familiar to the staff and has resided on the property for some time. The unauthorized occupant kills another resident in the apartment community. Is the apartment community liable? Over the next couple years, this exact case will be tried and a jury will decide. How would you decide?

 

Our Recommendations

We strongly urge that you take an unauthorized occupant seriously and consider it a serious lease default. If you wish to authorize this person, please read the article Authorizing the Unauthorized Occupant and take the steps to authorize the occupant if you so desire. Otherwise, serve your Seven Day Notice With Opportunity to Cure, refuse any rent payments, call your attorney, and evict everyone if the resident refuses to remove the unauthorized occupant. Remember that once you know there is or was an unauthorized occupant, make sure you follow up to confirm that the person is truly gone and not just being more careful about being caught.

 

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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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