LEASE CANCELLATION BY THE RESIDENT

 

Given the huge amount of information that we are bombarded with, it’s amazing that we can keep as many things factually correct as we do. It’s not surprising that the three-day lease cancellation myth has become established in so many residents’ minds. While Florida law does not provide a cancellation period, the careless manager may provide the applicant with the ability to cancel the lease by failing to deliver the lease.

 

Rescission is the Correct Term

 

Technically, the legal term is “rescission”. A rescission is the unmaking of a contract. There is no contract. It is a nullity. A cancellation is the abandonment or repeal of a contract. Since the common usage is “cancellation”, I will use it in this article.

 

No Three-Day Cancellation Period

 

There is no three-day cancellation period for residential leases in Florida. It doesn’t matter whether the lease is for only one month’s duration or for a period of years, or for any term in between. It doesn’t matter what the monthly rent is or how it is payable. It doesn’t matter if it’s a single-family home, a duplex, a condominium or an apartment. It doesn’t matter if the property is in the city or outside city limits. It doesn’t matter. It can’t be cancelled within three days. Although there is no right to cancel residential leases, there is a right of cancellation that applies to certain other types of contracts, for example door to door sales or home equity mortgages. This is what probably led to its mistaken application to leases.

 

Giving the Resident a Copy of the Lease

 

We recommend personally giving a copy of the completely executed lease to the resident as soon as the manager or his agent signs the lease. This prevents any dispute as to whether the resident knows that there is a binding lease in effect. If the manager cannot give the lease to the resident personally, then other possible methods are an email attachment with a delivery receipt, fax with a delivery confirmation or a certified letter to track the receipt.

 

Bad Manager Practices

 

It is an all too common manager practice to hold the resident’s copy of the lease until move-in. A manager does this at her own risk. Another frequent manager excuse is that a copy of the lease was available for the resident to pick up or that the resident didn’t keep his appointment to pick up the copy. Judges are unimpressed with these excuses. That being said, a resident cannot intentionally frustrate delivery of the lease by such actions as refusing certified mail.

 

Partial Performance

 

If the manager has forgotten to give the resident a copy of the lease, but the manager and resident are performing under the lease, can the resident cancel? The resident’s performance may include, for example, accepting the keys, obtaining utilities in his name, moving in some personal items, or actually occupying the premises. The manager’s performance may include complying with the resident’s preparation requests (using paint of a requested color, installing new appliances, etc.) or actually giving possession. Resident cancellations after partial performance by either the resident or manager are legally problematic. Partial performance of a lease may make the lease binding. The more extensive the performance by the resident or the manager in reliance upon the lease, the less available the right of cancellation is to either the manager or the resident. The manager should consult her attorney for advice in such situations. (Note that partial performance applies to an unsigned lease also, but with significant differences not discussed here.)

 

I caution that it is dangerous to rely on partial performance, as it may not save the manager’s entire lease. A manager may be found entitled to only her out-of-pocket expenses as damages. "Out-of-pocket” expenses are her actual cash outlays, such as the costs to turn the apartment again, to re-advertise it, etc., as opposed to her "statutory or contract damages", such as rent to relet under Florida statutes or liquidated damages under an early termination addendum.

 

So much work is involved in guiding an applicant through the rental process to the signing of the lease; it is a shame to see it fail at the finish line. The final important step is the delivery of a copy of the completely executed lease.

 

LEASE BREAKS DUE TO MEDICAL REASONS

Every manager will eventually experience the situation in which the resident has a family, medical or work issue, and the resident desires to break the lease. Can the resident simply break the lease if something either in their control or out of their control occurs? Florida law does not give the resident any leeway in this area. Unless the lease specifically has a clause or clauses allowing a resident to be released from the lease obligations if a particular event occurs, the resident will be held to the lease. In reality, the resident will most likely walk out on the lease anyway, but may be still obligated to you under the terms of the lease agreement. The question then remains, what will a judge say in court?

The Medical Lease Break

Florida law does not allow a resident to break a lease due to a medical condition, either preexisting or new, although you may want to allow the resident to break the lease without penalty in certain circumstances. There are many elderly residents in Florida who cannot complete their lease terms due to having to be placed in an assisted care facility. Other residents may have a serious sickness which requires long term care or some condition which does not permit them to reside on the premises on their own. We recommend that with verification from a physician, you allow individuals to break their lease without penalty. If you were to treat the vacating resident as a typical lease break, and you decide to take the case to Small Claims Court, many judges would probably rule that due to the impossibility of the resident to perform the lease obligations, through the judge’s equitable powers, the resident will be allowed to break the lease without penalty.

Disabilities and Fair Housing laws

In a hypothetical situation, a resident tells you she can no longer climb the stairs in your building to her 2nd floor apartment due to a disability, and you have no 1st floor apartments available. Should you allow her to break the lease without penalty? The law requires that you make a “reasonable accommodation” for the resident. That might mean agreeing to let them transfer to a first floor unit when one becomes available, but it does not mean the resident can escape the lease obligations altogether. The resident is not entitled to break the lease because she has become disabled. Think of it this way: Breaking the lease is not a reasonable accommodation, because it does not aid the handicapped person in living at your property. It does just the opposite! Your decision to allow a lease break will decrease the possibility of potential litigation or a discrimination case being filed against you. Discrimination cases are most often decided in favor of the manager, but at what cost in wasted time and money?

Anticipatory Breaches

If a resident anticipates prior to lease signing that they may have to terminate their lease early due to a medical condition, wording can be placed in the lease dealing with the terms and conditions of what will be a mutual termination of the lease. We recommend that you ask your attorney to draw up a clause which can be placed in the special stipulation section of the lease to accomplish the wishes of all parties. Ambiguity will cause problems, misunderstanding and potentially litigation. A short statement like “Resident may terminate the lease early if they must go to an assisted care facility” is not specific enough, as it does not deal with monetary issues, notice issues and is open to interpretation.

The Mutual Termination of Lease

In the event the manager and resident agree on a mutual termination of the lease, all terms and conditions should be memorialized in writing and signed by all parties. The security deposit, last month’s rent and any other monetary sums should be completely dealt with to effectuate a clean break with no misunderstandings.   

 

LEASE BREAK RAMIFICATIONS

Your resident skipped out in the middle of the night 3 months into a 12 month lease. No notice given, not even the keys left behind. The only thing the resident left you with was a mess and a vacant apartment. Your owner or management company wants you to sue the resident for the money owed and collect this money. Can you sue? Should you sue? Is it worth it? Are there risks?

Residents break their leases on a regular basis. Sometimes they give you notice, but often they just get up and leave. While in some cases you are quite happy to be rid of a problem resident, in other cases the skip was unexpected, and the manager is upset at the loss of rental income and the prospect of a vacancy or having to retain a new resident.

The usual reaction by the manager is to want to sue the resident to recover the lost rent. Unfortunately, most managers are unsuccessful at collecting the rent in this fashion, and in our opinion, it is just not recommended.

For how much can you sue the resident? You can only sue the resident for the rent that you lost as it becomes due plus the damages to the property that exceed ordinary wear and tear, and these damages must be proven.

When can you sue the resident? You can sue at any time after the skip, but you will not know what is owed until you have the unit re-rented. You cannot calculate the rent owed for the remainder of the lease and sue for this amount, as acceleration is not allowed.

Where is the resident? In order to sue someone, you need to find them. If you cannot find them, you cannot sue them. It is that simple.

So you find the resident and sue the resident. Now what? The owner or the property manager will have to attend a pre-trial which could take hours of waiting. At the pre-trial the resident may not show up, and you will receive a default judgment. If the resident shows, the case might be settled, or if it is not settled, the case will be set for trial at a later date. This will require another trip to court where a full fledged trial will be held and all witnesses must attend.

Can an attorney sue the resident for you? Sure, and you will be throwing good money after bad. A typical small claims suit handled properly will cost between $500.00 to $2500.00 on average in attorney’s fees. You still will need the owner, the property manager and/or witnesses in court at the pre-trial and definitely at the trial.

Doesn’t the resident have to pay your attorney’s fees? If you win in court, the judge may award you attorney’s fee and costs based on the lease or Florida statute. Collecting them from the resident is a whole different story.

Can the resident win in court? A resident who breaks a lease will come up with all kinds of reasons why the lease was broken, most of these reasons pertaining to the condition of the property, repairs that they claim were not completed, safety issues, noise issues or just about anything under the sun. These can all be LIES, but you will have to defend yourself against these lies. Many residents can lie more convincingly than you can tell the truth. If the resident wins, YOU will have to pay the resident’s attorney’s fees. Many judges feel a lot of sympathy for a resident who breaks a lease, if the resident comes up with a good sob story.

The Counterclaim Risk Any time you file a lawsuit, you run the risk of the resident, with or without an attorney, filing a counterclaim against you. This means that the tables are turned, and now you are not only a plaintiff, but you are a defendant and must defend yourself against the resident’s alleged claims. This often will require you to hire an attorney and subject you to not only your attorney’s fees, but the resident’s attorney’s fees in the event he retains an attorney and prevails in court. A simple lawsuit you file against a resident for rent that he owes you can result in a complex counterclaim filed against you for damages the resident allegedly suffered due to your actions or inactions. The accusations the resident may make could be totally false and outrageous, but you will still be required to defend yourself.

ARE YOU CONVINCED YET? Our office does not recommend lawsuits against a resident unless it is an eviction. If the manager wishes to pursue a resident, we recommend that they do this on their own and recommend that the property manager does not file suit for the manager. Do some managers win and collect their money? Absolutely. Most do not. We recommend that you take the money you would have spent filing a lawsuit, pay for an extra ad in the newspaper, and re-rent the property as soon as possible.

 

LATE CHARGE AND UTILITY CHARGE ACCUMULATIONS

 

You just took over a property that has had 3 managers in the last 6 months. Needless to say things are a mess, and each day you find more money owed by residents and inconsistencies in the rent records, receipts and especially the utility accounts and late charges. It is pretty clear that collection of these amounts was the last thing on the prior manager’s priority list, but your company is now faced with thousands of dollars in unpaid utilities and growing ledgers full of late charges and other unpaid sums. Can you simply bill the resident and get paid? Not so fast. Collecting this money will be a “process”. Can you put the full amount of 4 months of uncollected utility bills and late charges on the on the Three Day Notice and expect to prevail in court? We certainly will not file the case.

 

With the economic downturn, the focus has been on collecting the base rent money. It is hard to turn away a payment of $900 because the $50 late charge was not included. While the resident may be responsible for the payment of late charges, NSF fees and utility bills when they tender the base rent alone, the base rent alone is being accepted. The result is a build up in the other charges, including unpaid late charges building on top of other unpaid charges. Eventually the resident’s ledger is a complete mess and nearly impossible to distinguish. When the next month comes along the resident is given a Three Day Notice with the full amount owed, and again the resident simply pays the base rent which is accepted. If this occurs multiple times, the chances of collection diminishes, and the principle of law referred to as waiver may come into play. Some judges rule that prior uncollected late fees will be waived if base rent is subsequently accepted. Lease clauses indicating that all payments will first be applied to outstanding balances may or may not matter to this type of judge, particularly if there is a clear pattern of the resident paying the exact base rent amount late.

 

Preventing the Problem

 

What is a partial payment? Many managers will tell us that it is their company policy not to accept “partial payments”, but what they mean is that they don’t accept partial “base rent” payments but do in fact accept the base rent, even if a late charge or a utility charge is not included.

 

It is far easier to prevent the problem than to fix the problem. All a property manager needs to do is refuse any payment that is not the full payment amount under the lease terms and demand full payment only with no partial payment accepted. If the lease defines late charges and utility charges as additional rent, all of it goes on the Three Day Notice, and if the resident makes a partial payment, and it is the first time this is occurring, it should be returned to the resident immediately with the resident told in writing and in person if possible that no partial payments are accepted. Property managers who are most successful with collecting the full amounts owed all follow this method, and it sends a clear message to the resident that the terms of the lease will be upheld and enforced by the manager.

 

Solving the Problem

 

Not so fast! The problem of accepting partial amounts cannot be solved overnight. You must first determine what is owed and create a collection strategy. Determining what actually is owed can be difficult in and of itself. If you have inherited a property and it has been mismanaged, often the records of amounts owed are not accurate, or they are difficult to sort out, because when money was received it was applied by the manager’s computer accounting software to monies owed with the balance being “rent“on the computer ledger, but the resident intended for rent to be paid. We recommend that unless the resident has been given a receipt and a balance due statement each time a partial payment was accepted, if the rent is $700 and the resident pays $700, it should be assumed that the resident is paying base rent. Getting a resident in line is a process that cannot be accomplished overnight and should not be attempted through the eviction process unless all else has failed.

 

1. Notify the resident in writing that NO partial payments will be accepted in the future. Explain that the payment the resident makes must include any utilities for the period used and any late charges for that period.

 

2. Demand the base rent and the late charge for that month’s payment on the Three Day Notice. We do not recommend you put the full amount the resident owes on the Three Day Notice if it is a large accumulation of late charges and utility bills.

 

3. At the same time the Three Day Notice is served, prepare and Serve a Seven Day Notice of Noncompliance with Opportunity to Cure, and on that notice you will clearly state the balance owed to you for the past amounts of late charges and utilities. If it is confusing or you think the resident may dispute the amount because of the past partial amount acceptance actions, attach a ledger to the Seven Day Notice. Make sure your ledger is accurate, because if it is not, you will really have a dispute later.

 

What Will Occur?

 

1. The resident may attempt to pay the base rent as before. We feel this should be refused and returned to the resident. Accepting this amount does absolutely nothing to solve your problem.

 

2. The resident may attempt to pay the full amount owed on the Three Day Notice but not the amount on the Seven Day Notice. If you have also given the Seven Day Notice of Noncompliance with Opportunity to Cure for the other past due amounts, and your company is insisting that all these amounts be aggressively pursued, you would need to refuse the amount tendered pursuant to the Three Day Notice, because the resident is still in noncompliance by not paying the amounts demanded on the Seven Day Notice of Noncompliance. However, now you are locked into filing a questionable Seven Day case. At the time the money tendered is returned, use this opportunity to explain to the resident that the amounts must be paid in full and you will not accept anything less than the full amount or, if your company permits, enter into a payment plan with the resident using the Past Due Amounts Workout Agreement.

 

3. The resident may pay everything that is owed, but we doubt this will happen if the accumulated amount is high. If you get the full amount, congratulations.

 

Why Use the Past Due Amounts Workout Agreement?

 

The Past Due Amounts Workout Agreement is like a promissory note, but it is used during a tenancy rather than after a tenancy. It allows you and the resident to come up with a plan to pay the past due monies owed in a fashion that hopefully the resident will be able to pay by converting any past due amounts into “rent”, and it makes the entire balance due and owing as “rent” if the resident fails to pay per the agreement. This will allow you to place the entire balance owed on a Three Day Notice in the event the resident fails to pay.

 

Best Practices When Accepting a Partial Amount

 

While it is easy for us to tell you to refuse a base rent payment or base rent including a current late charge that does not include the accumulated utilities or past accumulated late charges, we know acceptance of such payment will happen, and it may be your company policy. If you do this, we urge you to always immediately give the resident an accounting showing exactly how the monies the resident paid were applied. If they are applied to utilities and late charges first, make this perfectly clear, as the resident will often use the defense in court that she has “paid the rent”. You want to be able to tell the judge that money was accepted and applied first to the other amounts owed and second to the rent, AND that the resident completely knew it and understood it.

 

Not Sure How to Proceed?

 

If you are not certain how you should go about cleaning up seriously delinquent accounts, we recommend you call your attorney as ask for advice. Certain fact situations may require differing strategies. Always resist the temptation to simply put the full past due accumulated amount on the Three Day Notice.

 

Renewing a Lease?

Never renew a lease unless all the past amounts are paid or you have asked your attorney for advice on how to address the amounts owed on the new lease. Failure to do this correctly could result in you completely losing any ability to collect the accumulated past due amounts

KEY RETURN AND POSSESSION DATE

Many property managers consider the return of keys as the date that the resident gives possession. When the key return occurs, they begin to count the 15 or 30 days as required by law for returning the security deposit or making the claim. Sounds reasonable, right? Wrong. This method of determining the possession date gets countless managers in trouble, as the resident argues about the key return or key return date, resulting in potential accusations of a violation of the security deposit claim/return laws.

The Lease

Your lease most likely has a clause which states that the resident is to turn in the keys, garage door remote, etc., upon surrender of the premises to you. This reminder is important, as often the resident leaves forgetting to return these items, and besides, when the key is returned, it is usually clear that the resident has in fact surrendered. Unfortunately, like any other lease clause, residents will do whatever they want. They do not always do "what they are supposed to do".

Your Company Policy

You may have a company policy that states that the resident has not surrendered the rental premises unless the keys are returned. While this seems like a logical policy, the reality of the resident not returning the keys can make this policy silly, as most managers have taken possession of a rental unit at one time or another, even when no keys were ever returned. The policy may be good in theory, but in reality it does not always work. Furthermore, many judges do not care much what your company policy is.

What is the Surrender Date?

Your residents are supposed to leave at the end of October. They have given notice that they are leaving, their lease may be expiring, or possibly you non- renewed the residents. At the end of October, no residents show up in your office to drop off the keys. The question now is whether the residents have indeed surrendered.

Rent and Keys

It would seem logical that if you did not receive the keys from the residents on the surrender date, the residents would continue to owe rent until such time as those keys are returned. This is simply not practical, as the chances are the residents have vacated on the surrender date, but for whatever reason or no reason at all, they drove off with the keys.

The Manager’s Actions

The manager who does not receive the keys on the surrender date often decides to continue charging residents rent. This amount will be deducted from the security deposit or could exceed the security deposit funds, resulting in the residents owing more money than the security deposit, which amount could eventually end up on a credit report.

Now For the Dispute

1. Charging the resident rent: Once the residents receive the Notice of Intention to Impose Claim on Security Deposit, the fireworks begin. The residents are furious that you would have charged them rent, when in their opinion, they vacated the property, and since they were not living there, they should not have to pay any further rent. They may even bolster their argument by showing you the notice of vacating they gave you or the notice of non-renewal you sent them. In your mind, since no keys were returned, they owe rent. In their mind, they vacated just as planned and owe nothing.

2. The 30 day Notice Period requirement: The manager receives the keys on the 4th day of the month or goes to the property on the 4th and finds the keys sitting on the countertop with a little note next to them and a forwarding address. A common problem occurs when the manager begins the counting period of 30 days to send the claim letter as of the key receipt date. Typically the problem is caused when the manager waits until what they consider the 29th day to send the notice out. Savvy residents know about the law regarding the security deposit and the timeframes under which the manager is working. The result is that the residents are now demanding the full return of the security deposit, as in the residents’ opinion, you sent it out late. The argument then becomes whether you sent the notice out on time. The manager argues that the resident did not return the keys until the 4th or not at all, since the keys were left on the counter. The residents argue that you knew or should have known that they had vacated, and you should have begun counting your 30 days from the date that the residents were supposed to vacate. The residents may even argue that they returned the keys to your receptionist or dropped them in the drop box. Who is correct, the residents or the manager? It is tough to predict how a Judge will rule under these facts; the best answer is for the manager to avoid this problem.

Avoiding the Problem

If you are told by the residents that they will vacate at the end of the month, or you gave them a notice of non-renewal for that date, it is YOU who should be going over to the property on the first day of the month and seeing if they have completely vacated. Sitting in your office waiting for keys which may never be returned is patently foolish. Additionally, waiting until the 28th, or 29th day from the key receipt date to send the deposit claim letter is dangerous and increases the odds of a dispute immensely. NEVER rely upon the return of the keys to begin the counting of your days when making the claim upon the security deposit, regardless of company policy or lease wording.

 

 

INTEREST BEARING SECURITY DEPOSIT

Most resident security deposits are held in non-interest bearing accounts in a Florida banking institution. This is due to the fact that most property managers do not feel it is worthwhile to keep the funds in an interest bearing account, as under current Florida law, the manager will be required to account for the interest each year and either give this interest to the resident in whole or part. Often the banks will not impose their monthly fees if the account is non-interest bearing, as the banks are reaping the rewards of the money held by them. Even in light of Florida law, many property managers see these often large deposits building in the bank accounts and are desirous of keeping the interest for their company. If you have 200 residents each paying $500.00 in a security deposit, this amounts to $100,000.00 sitting in a bank, and potentially $5,000.00 in interest, assuming a 5% interest rate, being lost to the banks and not being received by the property manager. Unfortunately, Florida law simply does not allow the property manager to keep all the interest. This article will examine the current law regarding security deposits, how they are held and where the interest can go.

What Must Be Held In That Escrow Account?

Deposit money must be held in the escrow account. Deposit money is defined by Florida law as any money held by the manager on behalf of the resident, including, but not limited to, damage deposits, security deposits, advance rent deposit, pet deposit, or any contractual deposit agreed to between manager and resident either in writing or orally. "Security deposits" means any moneys held by the manager as security for the performance of the rental agreement, including but not limited to monetary damage to the manager caused by the resident's breach of lease prior to the expiration thereof. By the way, this definition is word for word from Florida Statutes Section 83.43 (11) and (12). As you can see, if you collect money from a resident and that money is not a “fee” but a potentially refundable “deposit” or “advance rent”, it must be retained in the escrow account and accounted for by the property manager.

The Non-Interest Bearing Account

Unfortunately, most deposit money is held in a non-interest bearing account for reasons previously mentioned. The bank retains all the interest, and the property manager and resident get absolutely nothing in return. If anything, the property manager may get their bank fees waived, and this is common practice in many banks. The money must be in a separate escrow account in a Florida banking institution.

The Interest Bearing Account

Florida law states that if the deposit money is held in an interest bearing account, the property manager has two choices when dealing with the interest.

Choice #1: The resident must receive of that interest paid at least 75% of the annualized average rate payable on such account. For the sake of simplicity, let’s say that the deposit was $1000.00 and the interest paid on that money was $50.00. The property manager can choose to give the entire $50.00 to the resident OR can give the resident $37.50 and retain $12.50 for the property management company.

Choice #2: The property manager must pay the resident 5% simple interest per year.

When and How Must Interest be Paid to the Resident if Choice #1 or #2 is picked?

While this may come as a surprise to many property managers, the interest must be paid to the resident directly or as a rent credit at least once annually, which means usually at the time of the lease end or renewal of the lease. Many property managers roll over the deposit money into a renewal, forgetting that they must account to the resident for the interest and pay this interest or credit this interest to the rent. While there is no specific penalty to a manager listed in the Landlord/Tenant Act, managers who are licensed by the Division of Real Estate could find themselves subject to a serious FREC complaint for a simple mistake such as this.

So You Still Want To Keep All The Interest?

Some of our clients, against our advice, specifically agree with the resident in writing in the lease agreement that the property manager shall retain all the interest on the deposits. These staunch believers in freedom of contract feel that if all parties are in agreement, it should be allowed and will not be challenged. Unfortunately, Florida law does not draw clear lines of when and where we can move outside of the Landlord/Tenant Act and contractually agree to something that is not specifically permitted in the Act. Florida Real Estate Law specifically allows parties to a sales transaction to agree who retains the interest on the deposits, but unfortunately, we do not have this specific authorization in the Act. We have seen clients who retain the interest in full audited on a regular basis, and the auditors have not cited them for this practice. If you choose to keep all the interest, do so at your own risk, and remember that in the event of litigated disputes, you always have to fear the potential of class action litigation. If you do the same or similar thing to all your residents, attorneys can and will sue you in a class action. This can result in huge sums, including attorney fees and costs, paid by your company to your attorney, whether you win or lose, AND the plaintiff’s attorney, if you end up losing in court.

INSURING A SMOOTH RESIDENTIAL EVICTION

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

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

THE SOLUTION

 

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

 

“SPEEDY EVICTION TIPS”

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

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

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

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

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

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

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

“EVICTION CHECK-LIST”

 

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

 

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

 

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

 

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

 

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

REMEMBER! YOU CAN NEVER ALTER A NOTICE AFTER SERVICE

 

INSURANCE INFORMATION DEMAND

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

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

The Law

Florida Statutes 627.4137 is called Disclosure of Certain Information Required” and sets out what the insurance company and the insured must disclose to an attorney who is representing an injured party. While you may feel this does not apply to you, the statute requires the “insured,” i.e., the owner of the property you are managing, or maybe even your company, to disclose certain information. Although you most likely are not the “insured”, you are the agent of the insured, and need to communicate with the owner of the property and make sure that either you or the owner complies with the law and provides the information to the lawyer. It may be as simple as making a phone call to the owner’s insurance agency or faxing them the demand letter received from the attorney, and the information will begin to flow. If it does not, follow up.

The Resident is a Fraud!

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

What Does the Letter Demand?

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

The Purpose of the Insurance Information Demand

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

Notification to the Insurance Company

Besides complying with the law under the statute, it is crucial that the owner’s insurance company is notified whenever an attorney is indicating that he or she will make a claim. Many insurance carriers will try to refuse coverage of a claim if it is not reported to the insurance company within a certain amount of time as required under the policy. Once you receive the letter from the attorney, you are fully put on notice that there is some sort of claim, and this needs to be reported. If the claim is against you or your company, make sure you notify your insurance company immediately. If the claim is against the owner of the property you manage, take swift action to notify the owner, and most importantly, be able to prove you did.

Notification of the property owner

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

INSPECTIONS OF UNITS

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

Common Practice

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

The Law and Inspections

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

What Can Happen Inside A Unit?

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

Apartments

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

Managing Homes

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

Inspections After Seven Day Notices

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

Inspections and Fair Housing

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

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

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

 

INHERITING THE BAD LEASE

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

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

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

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

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

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

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

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

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