FLORIDA USE TAX ON INTERNET PURCHASES

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

Sales Tax

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

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

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

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

 

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

Why is This Use Tax Just Appearing Now?

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

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

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

How to Begin Paying the Use Tax

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

Is this Something to Worry About?

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

Our necessary disclaimer!

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

 

FIREWORKS

Firework usage in Florida during the Independence Day period and New Year’s Eve ranks right up with baseball, hotdogs and apple pie. On top of that, Florida is one of the few states in the US where fireworks are completely legal if used to scare off birds, illuminate railroad tracks, agricultural uses or to start a race. WHAT? Then how come anyone can buy them? Fireworks stores get around the law by having customers sign a statement that they're at least 18 years old, and promise to use the fireworks for the exempted purposes. I am not just talking about sparklers or bottle rockets, but huge rockets, large exploding fireworks with up to 500 grams of gunpowder, firecrackers and aerial bombs. Fireworks that can kill or maim are for sale to the public in Florida every day of the year.

Close to 10,000 people are hospitalized each year due to injuries suffered through the use of legal fireworks. Many fires are started each year due to the use of fireworks, resulting in millions of dollars of damage The US Consumer Product Safety Council gives a chilling account of the dangers of fireworks. The problem the property management industry faces is that most leases do not address fireworks or prohibit them in any way. I am sure the board of directors of the condo where you rent out a unit will love that. This needs to change beginning now. All your new leases should contain a clause such as the one below which prohibits the use of or possession of fireworks on the premises. Can you change or add this to the rules and regulations of your current residents who signed leases prior to your decision to make this prohibition? Most judges would feel that this is a reasonable change or addition to your rules and regulations or community policies, but you need to notify each and every resident of this new prohibition. Enforcement is another issue. Prior to Independence Day or New Year’s Eve, a letter should be posted on every resident’s door advising of your rule and that you are absolutely serious about enforcement. You should make sure your staff abides by this rule as well, as if a resident sees a staff member violating the rule, your enforcement capabilities will be pretty weak. Can you evict someone for violating your fireworks prohibition? Possibly, but do not count on it. In apartment communities, we recommend having staff members patrol the property during the holiday periods where the use of fireworks increases. Many local jurisdictions have prohibitions on the use of fireworks, so the resident may be committing a crime. Suppose fireworks on the property you manage injure someone? Can your company be held liable? Absolutely, especially if you are failing to enforce your rules.

SAMPLE CLAUSE FOR LEASE, RULES/REGS, COMMUNITY POLICY

“Explosive devices, smoke bombs, firecrackers, flares, sparklers, fireworks or any other noise, smoke, flame or spark-creating item or novelty is expressly prohibited in the rental premises or anywhere on the premises or common areas. Possession of and/or use of any of the foregoing by the resident, any occupants or guests of the resident whether or not the items are legal or illegal to purchase, possess or use under the laws of the State of Florida, may subject the resident to eviction from the premises and shall constitute a serious default under the terms of the lease agreement”

 

FIRE DANGERS AT MOVE IN

 

The electricity is off in apartment, and the new resident is to have it turned on in his name according to the lease. While moving in, boxes are placed on the counter and electric stove top. Children love to play with knobs of course, and the resident’s child turns the stove burner on. No harm done. The electricity is off. The next afternoon, the resident has the electric put in her name, and it is turned on. You guessed it. The unit burns to the ground. Could this have been avoided by the actions of the property manager? To a large extent, yes.

 

Electric Issues

 

Ideally, an apartment can just sit there vacant with the electricity off. Due to the need for air conditioning to continue to run to avoid mold growth, this is impractical at times. It is important that the property manager coordinates the electric issues along with the resident to avoid confusion, and to avoid situations in which the residents will stay in a unit where the electricity is on in the owner’s name and fail to put it in their name. Failing to follow up to see if in fact the electricity has been put in the resident’s name is a recipe for disaster, and you will find that out 2 months after the resident takes possession you get a $400.00 electric bill.

 

Should the Electricity Be Shut Off Before Occupancy?

 

If the electricity is shut off or the order placed for shut off is done prior to the resident’s occupancy, you run the risk that the resident will begin moving into the unit while there is no electric service on. As a force of habit, the resident will switch on light switches or turn on knobs and realize that the electricity is off. The problem is that the switch or knob is not always turned back to the off position. Frequently, children will play with the stove knobs, and since the electric is off, it will go unnoticed if the knob is left in the “on” position. Items such as boxes and fragile goods are often placed on the countertop and stove top during the move-in process, as the furniture has not arrived, and the counter is the only handy or convenient place to put the items. Upon the resident having the electricity turned on, disastrous results can occur.

 

Requiring Electric To Be On Before Keys Are Given to Resident

 

One possible way to avoid the fire problem is to withhold the keys until such time as the resident has paid the deposit and the electricity is now on in the resident’s name. This is a sure way to avoid an accidental fire, but could be met with resistance by the resident who may be insistent upon gaining access immediately. We would not want this strategy to be construed as any type of breach of contract by the manager or allow a resident to say that possession was not granted. If you choose this route, we recommend that the resident agrees to this in writing.

 

Precautionary Steps

 

If the possession of the unit will be granted to the resident without the requirement that the electricity is turned on or a confirmation thereof, the knobs should be removed and placed in a cabinet out of the reach of children. If possible, place tape over the knobs with a warning that the electric is not on and items should not be placed on the stovetop. Warnings should always be given to the resident regarding electrical safety with instructions not to place items on the stove. We recommend that you prepare a warning notice right away, and make this a part of your move-in procedures. When the keys are given to the resident, the warning should be given as well.

 

Liability Issues.

When managing property, if the property manager orders the electricity to be turned on, as is often the case after a resident vacates or a unit has been vacant, it is crucial that an inspection is done first to assure that the stove is in fact off and nothing is placed on the stove. Often when units are being rehabbed between residents, workers will put a tarp on the counter or otherwise use the counter and stovetop for flammable items. It is bad enough that a fire can be caused by a resident who possibly did not know the dangers. Now that you know, you have a responsibility to make sure you are never the one at fault.

FIGHTING CRIME ON YOUR PROPERTY

As unemployment rates rise in this tough economy, many studies have shown that criminal activity will also increase. Even worse, as property owners face difficulties with their mortgage payments, they may skimp on spending money on security related maintenance or criminal background checks. They may also be so anxious to rent the property that they approve renters who fail applicant screening tests. This type of thinking will cost the property owner more money in the long run, as resident retention will plummet, and the property value will spiral downward, while civil liability for crimes committed on your property could zoom out of control.

The Starting Point: Screen Your Residents!

Elizabeth has just arrived at your leasing office. She fills out the rental application and lists her previous manager as a reference. She also represents on the application that she has never been convicted of a felony and has never been evicted. You verify that there has been no felony conviction, and that the resident has never been evicted. Is this a strong screening process? We say no! Why, you ask? To start with, no telephone call or other contact was made with the former manager. Maybe that “reference” would have turned out to be anything but a “reference”. Perhaps they would have told you about prior conduct problems that the resident had. Make sure your application contains language authorizing the prior manager to divulge all information in its residential file to you. If Elizabeth was served with a Seven Day Termination Notice for drug possession by the prior manager, it is possible that you would have learned of it by simply making a phone call. We always advise our clients to use diligence to determine whether the prior manager is real, and not just a friend of the applicant, so that you are not “conned” by the applicant. Suppose that the prior manager discovered “crystal meth” inside Elizabeth’s apartment and issued her a Seven Day Termination Notice. If Elizabeth bailed from the unit before an eviction was started, the eviction action would not have shown up on the prior eviction screening report that you ran, because there was no eviction in the first place; the resident skipped out. In fact, even if an eviction lawsuit is commenced, if there is no final judgment of eviction, the resident’s prior eviction action may not show up at all on the report. At our seminars, we also urge all property managers to access to public records to see if there have been prior eviction actions started. Maybe your “hot” prospect is under eviction now! Another mistake you made here is not requiring Elizabeth to inform you if there has ever been an “Adjudication Withheld”. While this might sound like some fancy legal language, it is easy enough to understand. “Adjudication Withheld” simply means that the criminal conduct likely took place, but the court is not entering a conviction. The judge sets forth conditions that must be met, and if those terms are satisfied, the conviction is not entered. For example, Elizabeth was arrested for drug possession. The judge may order her to attend a treatment program. As a property manager, you want to have the right to exclude from your community applicants who have had an ‘Adjudication Withheld” on their record. You also should have checked the FDLE website to see if there is a criminal history. You should also be very diligent in researching whether any sexual offenders or predators are living on the premises. You can access that information on the FDLE website.

Enforce Your Lease, and Team up With Your Attorney

Word travels quickly through an apartment community if the property manager is reluctant to enforce the terms of the lease regarding conduct because the manager does not like confrontation. Do not let the “inmates run the asylum”. A property manager needs to fight crime head on and evict the “rotten apples” from the community. If the property manager is aggressively fighting crime, that message will also spread fast, and some of your problem residents may move out on their own without the time or expense involved in an eviction. When a resident engages in criminal conduct in violation of your lease, you should already have an attorney in place that works fast, efficiently and is very reachable, so that you can respond swiftly to the situation. Work with your attorney to build your case, so that the appropriate seven day notice of lease termination can be issued to the resident. You will need PROOF! Often police reports will be needed, along with a list of residents who are willing to testify against the resident, in the event an eviction action is contested and a hearing is scheduled. The important thing is not to act impulsively. Disregarding your attorney’s advice will only enable the criminal resident to remain on your property longer, and even may make you accountable and liable to pay the resident’s attorney’s fees and costs in the event that the judge rules against you in court. When it comes to lease enforcement, the property manager should regularly inspect. You would be surprised how many criminal violations are discovered in this way. You should also have an “open door” policy for your other residents, so that they report criminal behavior to you. You want to learn about all lease noncompliances, not just ones that you discover. Neighborhood Watch programs may also be an effective way for your residents to take back control of your community.

Use Courtesy Officers.

A property manager should consider using a “Courtesy Officer”, as that may have a positive impact on the crime rate at your community. Criminals usually do not like additional people looking over their shoulders and may end up leaving your community voluntarily. The “Courtesy Officer” can respond to many types of prohibited conduct, including but not limited to late night/early morning disturbances. They can also contact police to report criminal activity, monitor your pool area and can tag illegally parked cars. There are many other security measures that a proactive property manager can take.  With regard to “Courtesy Officers”, never give the impression to your residents that you “have security”, as a judge could find that you gave the resident a false representation, since “Courtesy Officers” have limited responsibilities. For instance, they might just roam around the apartment community or answer complaints. It is vital that you sign a written agreement with the “Courtesy Officer” which sets forth the understanding of all parties. Your “Courtesy Officer” agreement should list the responsibilities of the “Courtesy Officer”. It should contain something similar to this: “ The Courtesy Officer’s responsibilities are the enforcement of federal, state and local laws, to protect life and property, to keep the peace, and to notify the property manager as soon as possible after learning of any safety or security issues, even if unrelated to law enforcement”. You should also have the “Courtesy Officer” acknowledge that there is no employer-employee relationship, and not treat the officer like an employee. The “Courtesy Officer” should be listed as a vendor in your records. Your company should also have language in the agreement allowing the “Courtesy Officer” and property manager to terminate the agreement at any time. If the “Courtesy Officer” is living in your apartment community, then you should be using a normal market rent lease along with a Courtesy Officer Addendum.

Crime-Free Lease Addendum

Florida Statutes surprisingly do not specifically state that a resident who commits a crime on or near the premises is subject to termination. If the resident has signed a Crime-Free Lease addendum in which he agrees not to participate in any criminal conduct or allow any criminal activities to occur on or near your property, a judge will likely be more inclined to approve the eviction of the resident who has committed a crime on or near your property. There are Multi-Family crime free programs available that are free of charge. Both the property and the property manager can receive certification under the program if certain requirements are met. As part of your crime free program, it may be advisable to contact your local police department to take advantage of free services that they may have. For example, a police department may agree to hold a “SWAT” training exercise in the parking lot one night in front of a building where you suspect drug activity is taking place. Now, that is one great message to send to your criminal resident!

 

FAILING TO TELL YOUR ATTORNEY ALL THE FACTS

 

An unnecessary, self-inflicted injury is a client’s failure to disclose to his attorney all the facts. It is human nature that a person doesn’t want to disclose his mistakes or case weaknesses. Maybe they’ll magically disappear, won’t be discovered or won’t make any difference. They don’t disappear. The resident knows about them, and they do make a difference when the resident springs them on the manager’s lawyer in court.

 

Your attorney’s general advice to you is based upon the facts. Without knowledge of all the facts, his advice may at best be worthless and at worst harmful. It’s never a good idea for the client to prejudge what he thinks the attorney needs. Your attorney is in the best position to judge which facts and documents are important and which is not.

 

Seven Day Notice of Termination

 

Our office rigorously examines a client’s request for a Seven Day Notice of Noncompliance Without Opportunity to Cure (a Seven Day Notice of Termination). We require the client to provide proof of the noncompliance: police reports, witnesses’ names, addresses, and possibly statements, etc. Often we find that a client has omitted key facts. The reasons range from innocent omissions to intentional concealment to aid in obtaining the Seven Day Notice of Termination. Your attorney works to protect you, not the resident. Requiring a vigorous screening of a Seven Day Notice of Termination protects you. Slipping something past your attorney harms you by exposing you to a potentially invalid Seven Day termination case.

 

When negative facts are later discovered, at a minimum you may be withdrawing the Seven Day Notice of Termination. This will embolden the already difficult-to-deal-with resident. At worst it may result in a legal action against you by the resident.

 

Three Day Notice

 

Even a straightforward Three Day Notice nonpayment eviction can go awry when you fail to tell your attorney all the facts. Were there other notices regarding payment sent with or after the Three Day Notice was served? Did you enter into any other agreements as to payment of the balance? What about other correspondence regarding payment or nonpayment? Are there any emails or letters from the resident regarding rent withholding, maintenance complaints, retaliatory claims, or code enforcement notices? Is there any reason to think a Fair Housing claim may be made by the resident? Has the resident claimed protected class status?

 

Before the Hearing:

 

It is probable that the undisclosed fact or document will be supplied to the judge by the resident. The result can be an outright dismissal by the judge, an unnecessary delay while your attorney responds to the resident’s claim, or an unnecessary hearing, perhaps with no money deposited into the court registry. A resident’s “answer” may mislead the judge with untrue or unsupported claims that have slivers of truth from the undisclosed facts or documents. The point is that your attorney usually can deal with these issues, if disclosed, before filing the eviction, either by advising against filing or by explaining them in the complaint or a separate filing.

 

At the Hearing:

 

The stakes are higher when the non-disclosures are revealed at a hearing. You attorney’s ability to win your case can be seriously hampered. Documents needed to counter the unexpected development have not been obtained. Case law to support your position has not been researched. Cross examination of the defendant’s witnesses has not been prepared. Witnesses needed by the manager are not in court prepared to testify. The benefit of the eviction procedure providing for quicker hearings with less discovery becomes a disadvantage when confronted by surprise documents and testimony.

 

Consequences:

 

If the defendant has an attorney, an adverse court decision will likely result in a substantial defendant’s attorney fee award paid by the manager. This is in addition to any damages recoverable by the defendants. If the manager’s undisclosed actions have been statutorily prohibited practices, for instance locking the resident out or improperly disposing of his property, there are statutory damages tripling the monthly rent amount. Often the resident will file a counterclaim for defamation, harm to credit standing, or impairment of future ability to obtain housing caused by the filing of the eviction. A lost eviction case can lead to a fair housing complaint. Clients, who have not experienced the financial exposure or legal complications resulting from an unfavorable outcome, have difficulty understanding the seriousness of filing even the simple Three Day Notice nonpayment eviction. Non-disclosure by the client to his attorney can result in the attorney seeking to withdraw from the case or demanding additional attorney fees.

 

Ask Your Attorney:

I’m not implying that a client has to send his attorney the resident’s entire file. Someone with even a little experience in property management knows when a document or other fact should be disclosed. A good rule of thumb is that if you question whether it should be disclosed, it should be. Talk to your attorney. Allow your attorney to decide what is or is not relevant to your case.

 

EVICTIONS AND THE RENTED GARAGE

Many multi-family unit residents, and in some cases, residents of condo units, either have a garage included in the tenancy, or can choose to have a garage at a cost in addition to their apartment. The way the lease agreement and garage addendum is worded can have major consequences in the event of an eviction action. Failure to use the proper wording can result in the unpleasant situation in which the resident is evicted from the apartment, but the property manager is left trying to deal with a garage full of the resident’s possessions. In a single family home, we do not have these issues, as the garage is usually attached or directly near the premises. In a multi-family setting, the garage is more often detached and may or may not be part of the “premises”.

The Typical Lease

The typical lease will state the monthly rent and then add a section for garage rent or have a check-off section stating that the garage is included. The garage is never mentioned again in the lease, and there is no garage addendum used. Sounds simple enough, and usually there are no problems

The Sales Tax Issue

Most property managers do not realize that if a garage is rented separately from the residential unit, sales tax must be collected on the garage rental. It is crucial to include the garage within the rental for this purpose to potentially avoid any problems with the DOR and sales tax. We recommend that you have a price stated for units with garages and a price for units without garages. Making a separation of the garage from the rental unit can trigger a sales tax issue. If you ever rent out garages to non-residents, you absolutely MUST collect sales taxes.

The Eviction Problem

As mentioned before, usually the garage is not listed as part of the premises but treated separately. This separate treatment can cause a major problem in an eviction action. Typically, the eviction is served on the rental premises and lists the rental premises as the premises that the resident is leasing. Have you ever seen a garage listed on the 3-Day Notice or eviction action? It is assumed by many property managers and thankfully many residents that in the event they get evicted, they need to remove everything from the garage as well, and most do. This assumption though may be false. A property manager could be faced with evicting the resident but not being able to get the resident to take items out of the garage. In fact, we have seen cases in which a resident moved his or her belongings into the garage, actually sleeps there at night, and the traditional eviction action cannot get the resident or his property removed from the garage.

The Lease Tie In

In the beginning of the lease agreement, we recommend that the lease clearly describes the premises as follows “125 Main Circle Unit 306 and Garage Number 16” We do not recommend separating out the price of the garage from the price of the apartment or condo. Simply add these together to have one amount.

SAMPLE LEASE ADDENDUM FOR GARAGE, CARPORT AND/OR STORAGE UNIT

 

1. ADDENDUM: This is an addendum to the Lease Contract for Apartment No_____ in the ________________________Apartments ___________, Florida and is made between Resident(s) (hereafter referred to as “Resident(s)”) and Owner and/or Owner’s agent (hereinafter referred to as “Owner”).

 

2. PREMISES: The Premises as defined herein, shall be an enclosed garage, a carport and/or a storage unit (hereinafter referred to as the “Premises”).

 

3. USE: Only those persons whose names appear on this addendum may use the Premises. The Premises may be used solely for private residential storage, and under no circumstances shall any business activity be conducted from or in the Premises. No person shall be permitted to sleep in the Premises at any time or remain in the Premises with the door closed.

 

4. PETS: No pets or animals may be kept in the Premises.

 

5. DEFAULT AND REMEDIES: If Resident(s) default in complying with this addendum or the law, Owner has the right to retake possession as provided by Florida law and institute eviction proceedings. If, Resident(s) or invitee(s) engage in criminal activity on the premises, such action will be a default for which this addendum and the apartment tenancy may be immediately terminated. In addition to any of the foregoing, Owner has all other rights and remedies provided by law.

 

6. RIGHT TO ENTER AND TERMINATE: Resident(s) consent to Owner entering the Premises at any time and for any purpose without notice. Owner reserves the right to terminate this Addendum at any time and for any reason whatsoever, and Resident(s) agree to immediately remove all items from the Premises or face eviction proceedings from the Premises and the apartment unit.

 

7. REPAIR AND MAINTENANCE: Resident(s) acknowledge that they have inspected the Premises and are fully satisfied and accept it in "as is" condition. Resident(s) agrees to be fully responsible for any damage cause to the interior of the Premises, including but not limited to the walls, ceiling, floor and the door(s).

 

8. ALTERATIONS: Resident(s) may not make any alterations or additions to the Premises or affix anything to the floor, ceilings or walls.

 

9. CONTENTS: Nothing may be used or kept in or about the Premises which would in any way affect the terms and conditions of Owner’s fire and extended coverage insurance policy, constitute a violation of the law, or otherwise be a hazard in Owner’s sole judgment. NO FLAMMABLE OR COMBUSTIBLE LIQUIDS OR GASES, BATTERIES, FIREWORKS, EXPLOSIVES OR ANY OTHER ITEM OR SUBSTANCE, WHICH OWNER DEEMS DANGEROUS OR UNACCEPTABLE, MAY BE KEPT IN THE PREMISES. NO ELECTRICITY MAY BE HOOKED UP TO THE PREMISES, AND NO PLANTS MAY BE GROWN IN THE PREMISES.

 

10. PEST CONTROL: Owner will in no way whatsoever be providing any pest control for the Premises and shall not be liable for any damages caused by pests to the Premises.

 

11. LIABILITY: Owner will not be liable for any damage, loss, or injury to persons or property occurring within or about the Premises, whether caused by Owner, someone else, weather, fire, wind, rain, flood or any other acts of god. Resident(s) are responsible for obtaining Resident(s)' own casualty and liability insurance, and, agree to save and hold Owner harmless and indemnify Owner from any liability. OWNER STRONGLY RECOMMENDS THAT RESIDENT(S) SECURE INSURANCE TO PROTECT YOUR PROPERTY. Resident(s) agree to save and hold Owner harmless and indemnify Owner from any liability resulting from injuries arising from the use of the Premises.

 

12. SECURITY: Owner does not provide and has no duty to provide security services for Resident(s)' protection or the protection of Resident(s)' property in the Premises. Resident(s) must look solely to the public police for such protection. The Premises has a lock, which Owner does not warrant in any way. In the event any locks are broken, Resident(s) shall be responsible for the cost of replacement of the locks. Resident(s) may not change the lock(s) on the Premises.

 

13. POLICIES: In addition to the policies herewith and the attached rules and regulations or any other attachments, the receipt of which is hereby acknowledged, Resident(s) agree to observe and be bound by any other reasonable policies or rule changes which may be later implemented by Owner.

 

14. GARAGE SALES: Resident(s) agree that no “garage sales” shall be permitted in or around the Premises, parking areas or common areas, and nothing shall be sold out of or around the Premises, parking areas or common areas without express written permission of the Owner.

ABANDONED PROPERTY: Resident(s) agrees that should they vacate leaving any items in the Premises or should Resident(s) fail to vacate the Premises after notice or eviction, Owner is expressly given permission to dispose of the items in any way, holding the Owner harmless, and Resident(s) agree to be liable for any expenses arising out the disposal with regard to any items left in premises after Resident(s) vacate the Premises. Resident(s) expressly agree to waive all rights and procedures regarding the disposition of abandoned property provided in Florida Statutes.

BY SIGNING THIS RENTAL AGREEMENT, THE TENANT AGREES THAT UPON SURRENDER, ABANDONMENT, OR RECOVERY OF POSSESSION OF THE DWELLING UNIT DUE TO THE DEATH OF THE LAST REMAINING TENANT, AS PROVIDED BY CHAPTER 83, FLORIDA STATUTES, THE LANDLORD SHALL NOT BE LIABLE OR RESPONSIBLE FOR STORAGE OR DISPOSITION OF THE TENANT'S PERSONAL PROPERTY.
 

 

EVICTIONS AND THE MEDIATION PROCESS

 

Often management or property manager will be ordered to attend mediation in an eviction action. Depending on the complexity of the case, the mediation could last anywhere from minutes to hours, although most will take 30-60 minutes to complete. On some occasions the mediation will be scheduled so that a court hearing will take place on the same day in the event that the mediation is unsuccessful. Usually the mediation will take place in a room located in the courthouse. Please keep in mind that if you have been ORDERED to attend the mediation by the judge in your case, then you MUST attend. If you fail to attend, the judge may and likely will enter a default against you. You should NOT treat this as a voluntary process.

 

The Basics of the Mediation

 

Mediation is a process in which a person who does not have an interest in the outcome of the case, the mediator, attempts to promote understanding between the parties to a lawsuit. The ultimate goal of the mediator is for the property manager/management and resident to resolve their differences by reaching a settlement. The mediator has no power to force the parties to settle. In most Florida Counties there is no charge for an eviction-related court ordered mediation, if the County Court has jurisdiction in the case. For cases which are filed in Circuit Court, a fee may apply. Some counties pay their mediators, while others only use volunteers. Most mediators are not manager/resident attorneys. In fact, most are not lawyers! Some mediators may have little or no experience in property management matters. You should keep that in mind, so you are not frustrated at the mediation. Being disrespectful towards a mediator can only lead to trouble for you, as you want the mediator to persuade your opponents that their case is weak. If you do not treat the mediator in a dignified manner, they may reverse the tables on you and go out of their way to portray to the other parties that your case is weak.

 

Why You Have Been Sent to Mediation

 

Judges typically order parties to mediation for a number of reasons. First, if the residents’ answer to your lawsuit raises some issues, then your case may be a candidate for mediation. Next, most judges have a very full schedule of cases and would prefer to avoid placing a trial or hearing on their docket without encouraging the parties to settle their outstanding disputes. Finally, you have been sent to mediation, because they WORK. More often than not, the mediation process does encourage settlement. Some judges may require the residents to place fully accrued rent money in the court registry as a condition of mediation. Other judges may require that some money be deposited, and some judges may ignore this requirement.

 

Benefits of the Mediation

 

For many property managers/management, the thought of losing a lawsuit can be quite stressful. A loss in court can mean long delays before your problem resident is removed, wasted legal fees and perhaps responsibility to pay the residents’ attorney’s fees. Additional time spent in court also prevents the property manager from devoting valuable time to his or her property. Energies that could be directed towards other aspects of the real estate business, marketing for example, instead must be used to deal with the problem residents. It is also comforting to know that if you settle your case, then you have retained greater control of your destiny, eliminating the uncertainty of a judicial determination. Once you leave the outcome of your case in the hands of the judge, then only one thing is almost CERTAIN: there will be a LOSER and a winner. It is usually all or nothing! It is very hard to get inside the mind of a judge, and different judges may give very different rulings when presented with essentially the same set of facts. In fairness to judges, they often do not have the authority to “split the baby” and make all parties feel good. Going to court is always a gamble, even when both the facts and law appear to be in your favor. With the proper attorney representing you, the odds should be even more in your favor, but there is ALWAYS the possibility that you may NOT win your case. Mediation can also be used to effectively keep the property manager’s/management accounts receivables in line. For example, during a resident eviction, if the residents place money in the court registry, you can obtain that money faster by settling, if the residents agree to turn that money over to you. Waiting until a hearing is scheduled if the mediation is unsuccessful can cause the property manager or management to wait weeks until the registry money can be obtained, and this assumes the judge’s ultimate ruling will be favorable regarding a disbursement to the manager. Also, while your residents who are under eviction are living in the premises, the rental delinquency amount continues to rise, which could cause a very ugly accounts receivables report. If you manage to work things out at mediation such that your residents agree to move out, then you can turn your attention to finding a paying resident instead of a waiting for a trial or hearing. Finally, if your mediation is successful, you can have “PEACE OF MIND” that your case has been resolved, and that you can move on! It cannot be overstated how stressful ongoing, contentious litigation can be, and the toll certain cases can take on one’s ability to enjoy life.

 

Action to be Taken Before the Mediation

 

It is very important to have all of your “ducks in a row” prior to your scheduled mediation. First, make sure that you are very familiar with not only your version of the dispute, but the argument made by your opponent. If it is an eviction matter which is being litigated then the property manager should bring copies of the payment ledger, lease and Three Day Notice. You should review the residents’ answer or motion sent to the court, so that you can persuade the mediator of your position and downplay the merits of your opponent’s position. Also, by reviewing the residents’ response with your attorney, you are less likely to get caught off guard at the mediation by last minute surprises. For example, if the property manager accidentally accepted payment from the residents after the eviction complaint was filed in court, and the residents noted this in their written response to the court, then you would likely be wasting your time at the mediation, since you would probably lose your case under Florida law because of a waiver problem. Maybe you did not accept payment in the above example, but somebody else in your office held on to the check for 3 weeks before sending it back to the residents placed under eviction. If the information contained within the residents’ answer turns out to be true, you may be willing to compromise more in the mediation process, since the odds of losing at trial have just increased. Make sure you know the exact location of the room number and full address of the location of the mediation. DO NOT BE LATE! Remember, if you do not appear, the judge assigned to your case may treat your non-appearance as a default and DISMISS your case. Be clear on what your settlement authority is.

 

The Mechanics of the Mediation

At the start of the mediation, the mediator will introduce himself. The party that filed the lawsuit (the plaintiff) will then be invited to verbally lay out their case. The defendant will then be given a chance to respond. After that, the mediator will likely ask both the property manager and the resident’s questions, so that they can determine the strength and weaknesses of the lawsuits. DO NOT INTERRUPT the residents or mediator when they speak. You will come across as overly emotional, and it is very disrespectful to the mediator and the process. Next, the mediator may want to caucus. This simply means that the mediator will speak in private with each party and attempt to move them closer to settlement. Now you will better understand why being prepared and respectful towards the mediator is vital to your success. It is very often at the caucus stage that the mediator will make their strongest presentation to the resident as to why the resident should settle, if the mediator believes that your case is strong. Having the mediator do this has a very profound psychological effect on the residents. In fact, since the residents understand that the mediator is unbiased, it can be devastating for them to hear that they will likely lose their case. It is a very useful strategy to utilize the “caucus”. If you see that progress is not being made at your mediation, it may be wise to suggest to the mediator that he or she caucus with the residents, if you sincerely feel that you have a strong case. Another useful strategy to keep in mind, especially if you are in a mediation regarding an eviction, is to remind the residents that by settling the case prior to a potential final judgment, the residents can protect their rental history from reflecting a final judgment. Having a final judgment of eviction on their rental history can make it extremely difficult for the residents to rent elsewhere. If you and the residents cannot come to a settlement over the amount owed, then another useful tactic is to try and convince the residents to turn in keys and VACATE, especially, if you can lease the property sooner than later. Finally, if you can reach a settlement, the mediator will have the parties sign a legally binding document, and then the judge may approve the agreement in private, or call the parties into court to verify that they understand the terms of the settlement. If monies are to be paid to you by the residents as reflected in the agreement, then you should request that the payments be made in money orders or cashier’s checks, and the settlement agreement can reflect that condition. The agreement should also state that the property manager is entitled to a final judgment of eviction should the residents fail to meet any of their obligations listed in the settlement agreement. One final word: the types of stipulation forms used at mediation can be provided by our firm prior to the mediation date. If the case can be settled at mediation, it can often be settled prior to mediation. This can really cut down on time spent away from the office and additional expenses, when all residents who signed the lease sign a stipulation in the comfort of your own office, early in the eviction process.

 

EVICTIONS AND REPAIR REQUESTS

Your resident owes you 3 months’ rent and is currently under eviction. The air-conditioning breaks and the resident places a work order. The eviction is almost completed. Must you make the repair? The answer is a simple “yes”. The resident has three unauthorized occupants living in your apartment, and his garbage disposal is broken. Do you need to get it fixed? You bet. The rent delinquency, noncompliance or eviction status has nothing to do with your obligations under the lease and Florida law to maintain the premises and make necessary repairs. No matter how angry you are at the resident or how delinquent the resident may be in rent or other monetary obligations, the manager must proceed as if the resident is completely current and not in violation of any of the lease terms or under eviction.

The Manager’s Obligations

The manager’s obligations are many. Florida Law Section 83.51 clearly states the manager’s obligations, and they must be followed unless specifically excluded in the lease agreement. The lease agreement may add further obligations on the manager, and finally there is the common law implied warranty of habitability.

1. The Manager’s Obligations under the law

83.51 Manager's obligation to maintain premises. (annotated) (1) The manager at all times during the tenancy shall:

As you can see, there is no exception here for evictions or when the resident is in default. The manager’s obligations are “at all times during the tenancy”

1. Comply with the requirements of applicable building, housing, and health codes; or

All state and local building housing and health codes are included here. These can be obtained by the manager ahead of time, or you can wait until you get an inspection by the DBPR if you are an apartment community and you will surely find out!

2. Where there are no applicable building, housing or health codes, maintain the roofs, windows, screens, doors, floors, steps, porches, exterior walls, foundations, and all other structural components in good repair and capable of resisting normal forces and loads and the plumbing in reasonable working condition… The manager's obligations under this subsection may be altered or modified in writing with respect to a single-family home or duplex.

The above requirements apply to all multi family housing. 

2a.Unless otherwise agreed in writing, in addition to the requirements of subsection (1), the manager of a dwelling unit other than a single-family home or duplex shall, at all times during the tenancy, make reasonable provisions for:

This wording is a bit confusing, but the following obligations apply to apartment communities.

 

1. The extermination of rats, mice, roaches, ants, wood-destroying organisms, and bedbugs…
2. Locks and keys.

This does not require that the manager re-key after each move-out, but we recommend it.

3. The clean and safe condition of common areas.

This is a very serious obligation, especially in light of the “safe condition” requirement.

4. Garbage removal and outside receptacles therefore. 5. Functioning facilities for heat during winter, running water, and hot water.

Note that air conditioning is not mentioned here. This is an example in which the lease will govern and/or if there is air conditioning provided, the manager must keep it working. Also, many local building codes do contain provisions requiring central air conditioning or screens on windows.

2b. Unless otherwise agreed in writing, at the commencement of the tenancy of a single-family home or duplex, the manager shall install working smoke detection devices. As used in this paragraph, the term "smoke detection device" means an electrical or battery operated device which detects visible or invisible particles of combustion and which is listed by Underwriters Laboratories, Inc., Factory Mutual Laboratories, Inc. or any other nationally recognized testing laboratory using nationally accepted testing standards. (4) The manager is not responsible to the resident under this section for conditions created or caused by the negligent or wrongful act or omission of the resident, a member of his family, or other person on the premises with his consent.

In the event a resident intentionally or negligently breaks or damages something that would normally be the manager’s obligation, the manager does not need to take action. However, the problem is proving the resident’s actions or negligence. Always document and photograph a repair after it is completed, as some residents will intentionally break something again in an attempt to withhold rent.

Common Repair Requests

Some common requests by a resident during an eviction would be items such as pest infestation problems, plumbing problems, garbage disposal repair, water heater repair, and quite often, air-conditioner repair. We recommend that the items are dealt with immediately, just as you would for any other resident. The property manager or management must completely put out of his or her mind the fact that the resident may be delinquent or under eviction.

The Manager’s Obligations Under the Lease

The manager may have further obligations to the resident for repairs or maintenance under the terms of the lease. We always recommend shifting as much of this as practical, but there will be many situations where the manager is contractually liable to maintain or repair something on the premises, or this liability is implied. An example of this might be a hot tub or pool. While we doubt that either of these are a necessity of life, if they exist on the premises and are not excluded from the manager’s obligations, these items would need to be fixed and put in working condition just like any other item, regardless of the resident’s delinquent rent or eviction status.

The Consequences of Not Making a Repair

The manager may have filed a typical eviction for nonpayment of rent. During the eviction, the resident requests a maintenance issue be attended to. The manager refuses to deal with the problem, and a hearing is set by the court. Even though the manager’s failure to make a repair after an eviction action is filed or after the resident is delinquent should not become a part of the testimony put forth in an eviction trial, this type of thing invariably will come out in court, causing the judge to possibly not look kindly on the manager. The manager may be placed in a position in which he or she will have to explain to the judge why something that was indeed the manager’s obligation was not fixed. If the judge is not satisfied with this reason, the sympathy factor for the resident increases dramatically, and if the resident had other repair or maintenance issues prior to the eviction which he or she is using as an eviction defense as the reason for rent withholding, the manager will definitely not look good.

Once You Pay the Rent, I Will Make the Repair!

Unfortunately, we hear that managers say this to their residents on occasion. This is probably one of the worst things you can say to a resident, and if a judge knew you did, you would be in some hot water in court. This is clearly not allowed under Florida law.

The Dangerous, Threatening or Belligerent Resident

A resident under eviction or delinquent in rent may be a danger to the manager. Tempers may flare during a repair which could result in a serious altercation involving injury or even death. If necessary, retain the services of the police when going to the rental premises if you feel in any way that you are in danger, and refrain from discussing the eviction or delinquency at all costs.

 

EVICTIONS AND FLORIDA EVIDENCE LAW

Most property managers have a solid handle as to what their attorney will require before filing an eviction for nonpayment of rent. In that situation, property managers expect to fax over a Three Day Notice for Nonpayment of rent, the lease and sometimes the payment ledger. Assuming the Three Day Notice, the lease and the payment ledger present no issues; your attorney will file the case. After a while this routine becomes like clockwork for the property manager. Like all good things, this walk in paradise will come to an end, once the property manager attempts to file an eviction based upon a noncompliance of the lease terms by the resident other then for nonpayment of the rent. In this situation, a good attorney looking to protect the property manager will refuse to file an eviction based upon a Seven Day Notice of Termination of Lease unless all of the statutory requirements have been satisfied, and the attorney is certain that there is enough proof to win in court.  

Let Your Attorney Protect You

You may be wondering about who or what your attorney is protecting you from when your lawyer declines to file an eviction based upon a weak Seven Day Notice case. First and foremost, your attorney with be protecting you from yourself! That is right. A property manager can be his or her own worst enemy by impulsively filing an eviction in the heat of the moment. In those moments, the property manager is so focused on removing the bad resident that a shutdown occurs when the attorney advises that the case will likely not hold up in court. The seasoned attorney will stand up to the manager and respectfully warn that the manager could be on the hook for substantial legal fees if the resident contests the case and hires an attorney. Worse yet, you could be wasting valuable time, because the bad resident will still be residing in the unit, creating the same problems and making life very stressful. The solution? Let your attorney do his or her job in these kinds of eviction cases. Your attorney must be given proof of the noncompliance by the resident so that the judge in your eviction matter will rule in your favor. Florida law has some very clear guidelines as to what type of proof can be submitted to the judge during the eviction trial. In a nutshell, your proof is the means by which your lawyer can capture the attention of the judge to rule in your favor. The tricky part is turning your proof into evidence that is reviewed by the judge. If your proof is not considered evidence, then it is of absolutely no value to you. The purpose of this article is to provide property managers with a basic understanding of Florida Evidence law, so that they can successfully litigate their eviction case if and when a court hearing becomes necessary.

The Florida Evidence Code

The Florida Evidence Code was adopted by the Florida Legislature in 1976 and became effective in 1979. The evidentiary provisions are found in Florida Statutes Chapter 90. Many of these provisions have procedural components and therefore have been adopted by the Florida Supreme Court as rules of procedure. The Code in Sections 90.201 through 90.207 authorizes a court to treat something as fact without the need for further proof at trial; this is called judicial notice. The court can take judicial notice of a matter at anytime during your hearing. Usually these are rules of the Florida Supreme Court, acts of the Florida Legislature or Florida Ordinances. The Court can also take judicial notice of facts that are easily ascertainable, such as the fact that July 4, 2010 was a Sunday. Property managers will rarely if ever be lucky enough to have their key evidence judicially noticed at trial. The property manager who is dealing with a resident hosting loud parties will not have the evidence regarding the noise judicially noticed; such a noncompliance will have to be proven by testimony of witnesses or some other form of evidence.

Documentary Evidence

Todd and Lisa live in two separate second floor units at the Lakes of Transylvania apartment complex. Sam is their downstairs neighbor. Sam is often heard yelling while on his cell phone out in the common areas and playing loud music very late at night inside his apartment, along with excessive guest traffic in and out of his apartment. Todd and Lisa complained to the apartment manager, who correctly recommended that they call the police and obtain further proof in regard to Sam’s obnoxious conduct. Todd and Lisa also began playing private detective. Todd found an old tape recorder, and when Sam acted up again one night, Todd turned the machine on and recorded the loud music along with Sam yelling profanities. Meanwhile, Lisa snapped a bunch of pictures which showed at least 30 people near the front door of Sam’s apartment with some of those 30 people inside the unit.

Laying the Foundation

Fast forward to Sam’s eviction trial. In order for the tape recording and photographs to be admitted into evidence, your eviction attorney must lay a foundation through witnesses. All that fancy language means is that your eviction attorney will need to ask Todd and Lisa very specific questions prior to the judge allowing the evidence to be admitted. For example, Todd will be asked questions about how he physically recorded the tape and kept custody of the tape; he will be asked if he ever heard Sam’s voice in the past and how many times he has heard it. Then Todd will be asked if heard the recording which has been listed as an exhibit. The attorney would then ask Todd if he recognizes the voice, and finally Todd would be asked whose voice it actually was. Finally, the eviction attorney would request that the judge enter the tape recording into evidence. With regard to Lisa’s photographs, she would be asked if she was familiar with the photographs, how the photographs were developed, if and how she was familiar with the area contained in the photographs, and if the photographs accurately depict what Lisa saw on the date and time of the incident. One other key point to remember: if the resident that you are trying to evict attempts to offer impermissible evidence at trial, your eviction attorney needs to object at the hearing, or you will have waived your right to contest that evidence in any appeal. Suppose Todd or Lisa failed appear in court, like so many other resident witnesses who tell a property manager that they will attend court and testify against the resident that you are evicting. There would be hearsay implications if Todd or Lisa failed to attend the eviction hearing, which leads us to our next evidence issue.

WHAT IS HEARSAY?

The hearsay rule in Sections 90.801 through 90.806 of the Florida Statutes prohibit admission of oral or written out of court statements to prove the truth of the matter being asserted, but out of court statements may be admitted for a purpose other than proving the truth of the matter asserted if the statements are relevant to prove a material fact and are not outweighed by any prejudice. Some property managers assume that hearsay means that a person told you something and you are prevented from admitting that statement into evidence at a court hearing. That is not true if that witness is in court with you. The reason is simple. If the witness cannot testify at trial and submit to cross-examination by the opposing party, then the statement is inadmissible. Out of a principle of fairness, the law gives those being accused the right of cross-examination. In the above example, had Todd or Lisa failed to appear in court, the photographs or tape recording would have been inadmissible, since Sam would not have been able to cross-examine Todd or Lisa. This same principle applies to the property manager who takes pictures of a unit after the resident vacates for purpose of proving damages made to the property by the former resident. Take the pictures yourself if feasible, because a third party may not be associated with you three years later. You might not be able to locate that witness, and if you do, he still may not show up in court, even if subpoenaed.

HEARSAY MISCONCEPTIONS?

Perhaps the biggest myth regarding hearsay is that you can use a police report in court as proof without the police officer who signed the report being present. Make no mistake about this: police reports are not an exception to the “hearsay” rule in Florida. The same holds true for repair bills. A representative from the company that undertook the repair must appear in court to testify. The same holds true for written statements from residents. The property manager must understand that obtaining signed; notarized letters from your residents loaded with complaints against another resident will not make their way into evidence. Load those complaining residents into your van and take them to court, because they will be required to testify, or you can kiss your eviction goodbye…unless you were savvy enough to obtain a police report and subpoena the officer! Florida law permits some exceptions to the “hearsay” rule, which include statements for the purpose of medical diagnosis and treatment, statement of a child abuse victim 11 years of age or less, and business records made at or near the time of the event, by a person with knowledge, kept in the course of normal business activity, provided that it was a regular practice of the business to make such a record.