MILITARY RESIDENT

No one would dispute that a soldier is deserving of respect. The soldier relinquishes his liberty to join the service and sometimes pays the ultimate sacrifice. Law makers have enacted various laws to protect service personnel in their dealings in the “civilian” world. Regardless of whether the law makers were motivated by esteem or by a desire to please voters, the result is the same. A person serving in the active military is entitled to special housing rights.

Nondiscrimination

A Florida manager may not discriminate against a service-member in offering a dwelling unit for rent or in any of the terms of the rental agreement. A violation of the law could subject the manager to same penalties as for changing the locks or turning off the electric service. Even if the service member had no financial damages, he would be entitled to at least three times the monthly rental rate, plus attorney fees and court costs.

Some counties and municipalities have their own ordinances that make it unlawful to discriminate against service-members. Besides making the manager pay damages, attorney fees and costs, these local laws often authorize the local government agency to investigate and file a complaint on behalf of the service-member. The significance of that is the resident may not need to find an attorney to help him. The city or county can sue the manager on the resident’s behalf.

Early Lease Termination

A resident who is in the military service can terminate the tenancy under certain circumstances. Criteria must be met:

1. The resident must give written notice 30 days prior to vacating.
2. The resident must give you a copy of the military orders that are the basis for the termination.
3. The resident’s circumstances must “fit” into one of the following categories:

A. The service-member is required, pursuant to a permanent change of station orders, to move 35 miles or more from the location of the rental premises;

B. The service-member is prematurely or involuntarily discharged or released from active duty or state active duty;

C. The service-member is released from active duty or state active duty after having leased the rental premises while on active duty or state active duty status and the rental premises is 35 miles or more from the service-member's home of record prior to entering active duty or state active duty;

D. After entering into a rental agreement, the service-member receives military orders requiring him or her to move into government quarters or the service-member becomes eligible to live in and opts to move into government quarters;

E. The service-member receives temporary duty orders, temporary change of station orders, or state active duty orders to an area 35 miles or more from the location of the rental premises, provided such orders are for a period exceeding 60 days; or

F. The service-member has leased the property, but prior to taking possession of the rental premises, receives a change of orders to an area that is 35 miles or more from the location of the rental premises.

Death of a Service-member.

If a service-member dies during active duty, an adult member of his immediate family may terminate the rental agreement by giving the manager a 30 day (at least) written notice of termination. The notice must be accompanied by either a copy of the military orders showing he was on active duty (or a statement signed by his commanding officer) and a copy of the service-member's death certificate.

Consequences of Early Termination

If the rental agreement is terminated under the special military statute, the resident is liable for the rent through the 30 day notice period. A pro-rated amount would be due if the thirty day notice ends in the middle of a month. The resident is not liable for any other rent or damages due to the early termination, no matter what the lease may say. The resident is not obligated to repay concessions.

If the service-member has not yet taken occupancy of the unit and gives at least 14 days notice of the termination, no damages or penalties of any kind can be assessed.

Nonwaiver

No part of the special military statute can be waived by the parties. The manager cannot have the resident sign an agreement that defeats the protections of the statute.

METHAMPHETAMINE IN THE APARTMENT COMMUNITY

The manufacture and use of methamphetamine, a highly dangerous, addictive and illegal drug is rampant throughout the United States. Usually it is manufactured in clandestine labs in trailers and homes in remote areas. Due to the severity of the problem, law enforcement has been making methamphetamine eradication a major priority. One of the big problems with methamphetamine manufacturers is the fact that they are often also seriously addicted to the drug they manufacture and sell. Once arrested, they may serve some time only to be released and resume the manufacture of the methamphetamine.

The Manufacture of Methamphetamine

Methamphetamine can be manufactured in any room of an apartment. The chemicals used are commonly available from the hardware store, paint store and online from chemical supply houses. All the ingredients used in the manufacture of methamphetamine are completely legal. Many of these ingredients are highly flammable, volatile and poisonous. Often a methamphetamine lab is discovered due to a fire or explosion.

What to Look For During Your Inspections

An operating methamphetamine lab will be simple to spot. You will see chemicals, propane tanks, burnt cookware, glassware, bottles of chemicals, and be struck with the odor of the noxious substances used in the manufacturing process. The problem is that in order to see it, you will need to enter the unit. Many property managers fail to conduct regular inspections of their properties and assume if the property looks nice and neat from the outside, an interior inspection is not necessary. All managers need to implement a policy of routine interior and exterior inspections. The interior inspection may be conducted less frequently than the exterior inspection, but in any event, inspections must be done on a regular basis. Severe damage can be done to an extremely valuable asset, and had an inspection been done sooner, often the damage could have been detected, stopped, or the resident could have been removed from the premises.

Items Which Could Indicate a Methamphetamine Lab

Glass jars with liquids or residues, large numbers of boxes of over-the-counter cold tablets, bottles of red phosphorous, iodine, sulfuric acid, hydrochloric acid, marked and unmarked bottles with colored or white solid on the bottom, coffee filters, strong noxious orders, laboratory type glassware, burnt cookware or frying pans, kerosene, paint thinners, acetone and starting fluid, piles of rechargeable batteries, propane tanks, pressure cookers, ice tea jars, gasoline cans with tubing.

Note: Almost all the above listed items are common by themselves. It is the collection of the items in one area which should raise some serious suspicion.

Behavioral Tip-offs

Unusual, paranoid behavior by the resident Nonpayment of rent, unemployment by the resident, blackened windows and drawn curtains, frequent visitors at all hours and excessive traffic, and, extensive security such as additional locks and reinforced doors

You Have Discovered a Methamphetamine Lab, Now What?

If you feel that there is the manufacture of methamphetamine on the premises, you should notify local law enforcement immediately. You should insist that they come with you to do an inspection, as often law enforcement does not immediately wish to shut down drug operations, but unfortunately want to watch the unit in question in operation for an extended period of time to get the “bigger fish”, or arrest a larger number of people. Notify your attorney immediately, and do not serve any notices without the attorney’s consultation and advice. Methamphetamine labs are extremely dangerous and sometimes booby trapped. Do not enter the unit again if you have strong suspicions, and leave this to the professionals.

Remediation and the Law

Many states are enacting laws which require complicated and expensive testing and remediation procedures based on the presence of certain chemicals in a rental unit. Sometimes the amount of the chemical needed to trigger remediation is so minute, it borders on absurdity. Some states have enacted laws which will require disclosure to future residents or adjacent residents. We are watching the laws carefully so Florida does not become one of those states. If your local municipality is dealing with this issue, please feel free to contact our office. Often local municipalities come up with ordinances that have not been properly thought out. We do not need the manager to become the victim in this war on drugs.

 

 

MANAGER’S MAINTENANCE RESPONSIBILITY

The manager’s duty to maintain the rental premises can be found in FS 83.51 of the Florida Residential Landlord and Tenant Act. The statute can be confusing, because it mandates its coverage in broad language and then exempts certain situations and then overrides some exemptions. This is due to Florida’s building, housing and health codes moving from local to statewide application. It is important to understand that the statute requires the manager to comply at all times during the tenancy, not just at the initial occupancy. The manager is subject to regulatory changes throughout the tenancy. Also, note that the statute distinguishes between a single-family home or duplex and a three or more unit building. In this article I will refer to the manager of a single family home or duplex as the “single-family” manager and the manager of three or more units as the “multi-family” manager.

 

FS 83.51(1) Building Codes

 

FS 83.51(1) mandates that the manager comply with all building, housing and health codes (hereafter just “codes” for short) or, in the absence of codes, comply with specific building and structural requirements. The definition of “building, housing and health codes”, which can be found in FS 83.43(1), is so broad as to encompass almost anything that applies to housing. Codes include both state and local housing regulations. Since local jurisdictions may have implemented more stringent regulation than is contained in the state codes and may have implemented other housing regulations, local ordinances should always be checked. If a visit from code enforcement, the health inspector, the fire marshal or any of the other myriad regulatory officials results in some infraction being discovered, the appropriate response is to remedy the deficiency diligently and thoroughly. This is important not only to avoid further issues with the regulatory authority, but also because unresolved violations are grounds for the resident to withhold rent or terminate the lease. Further, the resident may use a violation complaint to a government agency as the basis to accuse the manager of engaging in illegal retaliation, when the manager attempts to enforce rules, serves lease noncompliance notices (Seven-Day Notices), issues a non-renewal notice, or takes just about any action that the resident feels singles him out for alleged discriminatory treatment.

 

If there are no applicable codes, the statute requires that certain building and structural components be kept in good repair and capable of resisting normal forces and loads. It specifically lists roofs, windows, screens, doors, floors, steps, porches, exterior walls and foundations. It also requires that the plumbing be in reasonable working condition. At one time this provision may have been important in those areas of Florida without codes. Today the Florida Building Code and the health code apply on a statewide basis. This part of the statute would have limited, if any, applicability. However, a judge, who is not familiar with the Florida Building Code, may look at the enumerated items as a guide to who should be responsible for the repair, for instance, of the screens.

 

The multi-family manager cannot modify his responsibilities for compliance with the codes. Any attempt to do so by the multi-family manager will be void and unenforceable.

 

FS 83.51(2): More Duties to Maintain

 

FS 83.51(2) contains additional maintenance obligations for the manager. The manager is responsible for:

 

1. Extermination of rats, mice, roaches, ants, wood-destroying organisms and bedbugs. The statute enumerates these pests. Note that bedbugs, a recent plague to managers, are specifically listed.

 

2. Locks and keys. Since the manager’s duty to maintain continues during the tenancy, damaged locks not the fault of the resident must be repaired by the manager.

 

3. The clean and safe condition of the common areas.

 

4. Garbage removal and outside receptacles therefore. The manager must supply outside garbage cans, if appropriate, and, if necessary, a dumpster, trash compactor other proper receptacle. This includes arranging for garbage pick-up in areas without county/municipal garbage service.

 

5. Functioning facilities for heat during winter, running water and hot water. One can immediately notice the absence of what some would say is the most necessary “functioning facility” of all in Florida – air conditioning.

 

The statute provides that the multi-family manager and his residents can agree under written leases that the residents are responsible for these maintenance duties. At one time this part of the statute was a benefit to managers. It is not much benefit today. The majority of codes now adopted in Florida place the responsibility for the duties listed in 1-5 above on the multi-family manager, and the multi-family manager is still responsible for these duties if the codes require it of him. For example, if the codes require a manager to remove garbage, then the codes control. Any agreement by the multi-family manager and his residents otherwise is void and unenforceable.

 

Charging the Resident

 

Although the multi-family manager may have to provide and the single-family manager may choose to provide garbage removal, water, fuel and utilities, they can require the residents to pay the costs and charges for these services.

 

Eviction Defenses

 

The statute contains another provision that at one time was helpful to managers, but with the statewide application of the building and health codes, is not much assistance today. The resident may not use the manager’s failure to comply with the maintenance duties listed in 1-5 above as a defense to an eviction. However, the resident may use the manager’s noncompliance with codes as a defense to an eviction. Since most codes overlap the duties listed in 1-5 above, the codes are the resident’s defense.

 

Smoke Detectors

 

The statute requires the single-family manager to install working smoke detectors at the beginning of occupancy. The statute is silent as to any duty to maintain the detectors during the tenancy, so it appears permissible to require the resident to replace batteries and check that the detectors remain operational. The statute gives guidance on the type of smoke detector required. It gives no guidance on the number or placement of the detectors. Managers should check with their local fire marshals on these points. Although the statute does not require multi-family managers to install smoke detectors, the fire codes require such installation or more.

 

FS 83.51(4) Resident Fault

 

The manager is not liable for maintenance or repairs required by the statute, if the resident, his occupants or guests caused the condition by their negligence, intentional act or noncompliance with the lease or the statutes. While this may seem to shift the cost of maintenance and repairs to the resident when he, his occupants or guests are at fault, it can be difficult to accomplish in practice. The manager bears the burden of proof in any litigation in which the manager claims the damage is caused by the resident, in an effort to hold the resident financially responsible for the repairs and as an explanation why the manager did not undertake the repairs, perhaps in response to the resident’s attempt to withhold rent. The manager must prove that the resident, his occupants or guests caused the damage or that the damage was the result of their lease noncompliance.

 

Sometimes it’s easy to prove, and sometimes it’s not. The manager must also provide proof of the maintenance or repair cost. This may require vendors to appear in court to testify as to the cause as well as to the cost.

 

A manager may want to evict the resident for failure to reimburse the manager for a maintenance or repair bill that is alleged to be the resident’s responsibility. Many judges consider such costs to be a deposit claim issue to be resolved at the end of the lease, not a possession issue. This is true even if the lease provides that the resident is responsible for paying maintenance or repair costs when billed. The exception to this might be if the current costs are significant, exceed the security deposit by a significant amount, and the manager can show the judge the manager's property is being intentionally destroyed or abused. Even then the court outcome is not predictable.

 

Conclusion

 

The statute at one time was more beneficial to managers than it is today. With the advent of statewide codes and the proliferation of local additional codes or more stringent code provisions, the statute’s exemptions are of limited value today. The message of the statute today is that compliance with the codes is a serious matter. The failure to comply with codes can be used by the resident as the basis to withhold rent, terminate the lease or to defend against an eviction.

 

MANAGEMENT STOPPING THE EVICTION ACTION

Almost every day we get a request by phone, email or fax to “stop” an eviction. We don’t mind it, as it is less work for us to stop an eviction than to bring it to completion. However, we immediately ask the property manager why the eviction is being stopped. It is important that we know the answer, as often property managers improperly stop evictions for wrong reasons and find themselves in trouble later, possibly having to file another eviction needlessly. While we don’t mind filing evictions multiple times on the same resident, your company might not like the fact that money is needlessly wasted on attorney’s fees and costs. If the property manager does not completely understand the eviction process or is desperate to collect any money he can, he often will stop an eviction and end up paying a big price later. Do you really want to make your attorney wealthy?

Why Stop an Eviction?

The eviction has been filed, and the property manager subsequently receives the keys, or it appears the resident has vacated. This is a common reason. The resident may come into the office with $1000, representing the rent amount owed, and the manager accepts the rent and figures that the eviction should be stopped. This is another common reason. Sometimes the resident makes a significant partial payment and has promised to come in 5 days later and pay the rest. We hear it all the time. You call and want to stop the eviction. The eviction was filed in error, and the property manager hastily wants the eviction stopped. Whoops. It happens. In this article we are going to examine the reasons why property managers stop evictions and how the eviction should be stopped, if it all.

The Resident Has All of the Rent

The Three Day Notice demanded $750, and since the eviction started, the resident now owes another $750, as you are into the next month. He has a cashier’s check or money order for $1500 and has come into your office. Do you take it or refuse it? The first inclination, especially in these tough economic conditions, is to take the resident’s rent money. Sounds good, right? But Wait! What about the attorney’s fees and costs? A typical eviction attorney who does volume evictions will charge between $125 and $150 in attorney’s fees for the basic eviction, PLUS you have to pay the costs, which at a bare minimum (depending upon how many residents are being evicted) will run you at least $200. Who is going to pay that money? Some property managers think the resident will pay it. Good luck. Not only do they rarely voluntarily pay, but you cannot force them to pay it. By accepting the $1500, the eviction is dead and gone, and the resident cannot be forced to pay the attorney’s fees and costs. Can you deduct it from the security deposit when they vacate? Possibly, but the manager is not really the prevailing party in the eviction lawsuit, as the eviction has been stopped before a judge made a decision, and there probably is not enough money in the security deposit to cover the attorneys fees, costs and possible damages to the premises or rent owed. The lease may state that the resident is liable for all attorney’s fees and costs, but by accepting the rent and voiding the eviction, a resident can fight you on this, especially if she did not realize that you would be trying to take the money owed from the security deposit when she vacated.

The Resident Has a Partial Amount of Rent Owed

In some instances, the resident does not have the full rent but a good portion of the rent owed. The temptation is great, the pressure to collect rent is on, and the property manager accepts the payment. The result? Same as above. The eviction is dead and gone. Good luck collecting attorney’s fees and the remaining rent balance. Hopefully the regional manager or the property owner gave the property manager authorization to “eat” the attorney’s fees and costs and possibly have to incur them again in the next eviction which may have to be filed.

The Resident Has Turned in Keys

The majority of residents under eviction vacate before the process is completed. This is a good thing. Many begin looking for new accommodations the day after they are served with the eviction papers if they have not already begun looking, knowing than an eviction is imminent. The result is that the resident packs up and leaves. In some cases they turn in keys, clean the unit and surrender the premises to the manager. This is the ideal situation. Why not stop the eviction action at this point? Our question we have is why stop it at all? Our attorney’s fees cover the entire eviction from beginning to end. If the resident vacates a day after we file the case or has to be forcibly removed, our fee stays the same. The only additional cost involved is the fee that the Sheriff’s department charges, and the Sheriff is not needed in all cases, especially those where the residents have turned in their keys and fully vacated the unit. Stopping the eviction will result in the resident NOT getting a Final Judgment of Eviction on his or her permanent record. The manager needs to make a decision whether they want the resident to just have an eviction filing on their record or whether they want the resident to have an actual Final Judgment of Eviction on their record. Just because the resident has turned in the keys does NOT mean they have completely surrendered the unit to you. You can never be completely sure. There will come a day when you receive keys from a resident and then will be surprised to find another person living in the unit who tells you they are there with the permission of the resident who turned in the keys to you. The result is that the unit has NOT been completely surrendered and you do NOT have possession. You can see how stopping the eviction at this point will result in you not being able to remove this person.

The Resident Has “Abandoned”

Your maintenance tech goes to the unit under eviction, and it appears that the residents have “abandoned”. The electric is off, the next door neighbor said they saw them driving off in a truck in the middle of the night, and the unit is trashed. Looks abandoned, smells abandoned and probably is abandoned, BUT by law it may not be. Abandonment is defined by Florida law, and we urge you to get a full understanding of this before you ever assume a unit is abandoned. Our recommendation in cases where all the residents have not given you possession, but rather have seemingly abandoned, would be to continue on with the eviction if you are worried at all that the resident is going to come back, or if there is anything left in the unit. Carry the eviction to completion, get the writ of possession, and have the Sheriff execute the writ of possession. This will assure you that the eviction is completed. If the residents were to return, they are not able to retake possession, and you are not liable for any personal property which was put to the property line after the writ of possession was executed. It is the safest route.

The Proper Way to “Stop” An Eviction

The proper way to “stop” an eviction is to not really “stop” it at all. In situations when the property manager is going to accept rent, in full or part, a Stipulation should be used. The Stipulation is the document under which the property manager agrees to take a specific sum, and the resident agrees to pay the balance if any, including the attorney’s fees, costs, late charges or any other amounts owed according to a written “payment plan”. This “payment plan” should not be confused with any other type of payment plan or workout agreement you may enter into with your residents. A “Stipulation” is an actual court document that becomes a “court order” once the judge signs an order approving the Stipulation. This court order will authorize you to obtain a Final Judgment of Eviction if the resident fails to comply with the terms of the Stipulation. Most judges approve Stipulations under which the resident must pay according to the Stipulation AND pay the rent on time for a period of up to 6 months. You see, the eviction is not really “stopped”, but rather it is suspended or deferred by the Court. If the resident pays according to the Stipulation, the resident can stay. If the resident fails to make one or more payments on the past balance owed or the rent as it becomes due, the eviction is revived and your attorney can request a Final Judgment from the judge without having to file an eviction all over again.

Should You Always Use a Stipulation?

We feel that in most cases if you are going to accept a partial or even full payment from the resident, a Stipulation should be used. Obviously, in many cases the resident does not have a significant amount of money, and you should not stipulate, but rather just refuse the rent and continue on with the eviction. If a resident owes $1500 and only can offer you $100, it usually is not appropriate to enter into a Stipulation. The amount you decide to accept in order to enter into a Stipulation is up to your company policy, and this should be established and written down, if not already in place, to avoid inconsistent actions which could result in Fair Housing issues. If you are not stipulating, make sure the resident does not try to slip in a payment without your knowledge, since if this payment is accepted, the resident has essentially paid rent during the eviction, and the eviction may have to be dismissed. It is crucial that you have a system in place to prevent inadvertent acceptance of rent from a resident once an eviction is filed.

The Resident Pays EVERYTHING Including Attorney’s Fees and Costs

You might wonder why you should not stop an eviction if the resident is paying you absolutely everything they owe. It happens. The resident comes into some money, receives a tax refund, settlement or begs, borrows and steals to be sure they can pay and stay. We once had a resident rob a bank and then pay the rent to stop his eviction. If the resident pays you EVERYTHING in full, a Stipulation is not necessary, BUT what about next month’s rent? Will the resident be in the same position of nonpayment next month? If so, you may have to file another eviction on that resident and go through the entire process again. You need to make a decision whether you just will stop the eviction OR enter into a Stipulation under which the resident is ordered by the Court to pay the rent as it becomes due on time for the next 6 months. This is a judgment call on the property manager’s part, and also will depend upon where your property is located. Some judges will only allow Stipulations on past balances owed, but most will allow Stipulations on future payments as well. Your attorney can tell you whether the judge will allow a future rent payment Stipulation. Our recommendation? Stipulate whenever possible, so you can avoid filing an eviction on the resident again within the next 6 months.

The Eviction is Proceeding, the Resident Wants to Pay, and You Are Confused!

Call your attorney! Many property managers only have one or two evictions in a year, and if you are in that lucky category, you are more apt to be confused or make mistakes during your eviction. In a way, it is a good problem. Call your attorney right away if a resident want to pay and stay or you are thinking about stopping an eviction for whatever reason. Your attorney is not hired to just file your eviction, but is there to assist you throughout the entire process. Many things can happen during the eviction process, and your attorney will know exactly how to guide you. Take advantage of the availability and willingness of your attorney to help you. It’s your attorney’s job.

 

NONRENEWING THE RESIDENT

There will inevitably come a time in the landlord/tenant relationship where the manager wishes to end the tenancy at either the end of the lease term or at some later time, if the tenancy has become month-to- month. Successfully terminating the tenancy will depend upon the terms of the lease and the proper timing and service of the Notice of Non-renewal. Failure to non-renew properly can result in an unwanted extension of the tenancy. An improperly served or timed Notice of Non-renewal does not cure itself by the passage of time and thus becomes void to the resident’s favor. Just as the resident has a right to leave after the expiration of a lease, the manager also has a right to make a resident leave at the expiration of the lease. In this article, we will examine non-renewing a resident at lease end and non-renewing the month-to-month resident.

NON-RENEWING A RESIDENT AT LEASE END

DO YOU NEED A REASON TO NON-RENEW AT LEASE END? A manager can non-renew a resident for any reason or no reason at all, as long as the non-renewal is not based upon any illegal, discriminatory or retaliatory reason. A manager is not required to provide the resident with the reason for the non-renewal. It is imperative that if there is a reason for the non-renewal, that the manager has this well documented in the manager’s files. Often a resident who is non-renewed claims that the non-renewal was based upon race, handicap, familial status or almost any other reason related to their status as a protected class. In the event the resident files a discrimination lawsuit, a complaint with HUD or the local fair housing office, the manager will be required to provide proof that the non-renewal was not based upon an illegal discriminatory reason, but was rather based upon some valid business decision or due to the resident’s noncompliance with the lease or Florida law.

DO YOU NEED TO PROVIDE A RESIDENT WITH NOTICE OF NON-RENEWAL PRIOR TO LEASE END? If the lease is silent as to any notice requirements at the end of the lease term, the lease will automatically end at the lease ending date, the manager shall have the right to immediately file an eviction action, and the resident will be considered a holdover resident, thus owing double rent for each day the resident remains on the premises. No notice at all from the manager is legally or contractually required in this instance. Although it may not be required by the lease and is certainly not required by Florida law, we highly recommend that the manager give a Notice of Non-renewal to the resident at least 30 days prior to the end of the lease. This will help prevent any misunderstandings or the possibility that the resident may have forgotten that the lease is ending and may be expecting that it will continue if the manager does not advise otherwise.

HOW MUCH NOTICE SHOULD BE GIVEN PRIOR TO LEASE END? If the lease requires notice by the manager prior to lease end, as many leases do, this must be strictly followed per the lease terms, otherwise the lease will automatically convert into a month-to-month tenancy. In some cases the lease is silent as to notice requirements by the manager but does have a notice requirement on the resident. In this case we recommend that the manager follow the same notice requirement that is imposed on the resident. If you are asking the resident to give you 30 days’ written notice prior to the lease end, you should give the resident at least 30 days’ written notice.

NON-RENEWING THE MONTH TO MONTH TENANCY

WHAT IS A MONTH-TO-MONTH TENANCY? A month-to-month tenancy occurs when a resident is residing on the premises after the lease has expired, or if there was never a lease in the first place. Since we highly recommend against a manager failing using a lease agreement of some sort, and there are sales tax ramifications of moving a resident into a property without a lease, we will deal here with cases where the lease has expired and has become a month-to-month tenancy. The lease becomes a month-to-month tenancy when the manager allows the resident to continue to reside on the premises after the lease expires, collecting the rent from the resident and basically carrying on business as usual, with the only difference being that the lease has expired. All the same terms and conditions of the lease still will apply, and it is not required that the manager charge or collect sales tax when the lease becomes month-to-month.

CAN THE MANAGER CHARGE THE RESIDENT MORE RENT WHEN THE TENANCY BECOMES MONTH-TO-MONTH? The law is not clear whether the manager can arbitrarily raise the rent on the resident and force the resident to pay the higher amount on a month-to-month tenancy. The manager will probably be safe in giving the resident 30 days written notice that the rent will be increasing, but should make it clear that the month-to-month tenancy is terminating and the manager is offering a new month to month tenancy at a higher rent amount. Here, by the resident staying on the premises, there is an implicit agreement that rent will be at the higher amount. Many leases contain a clause which states that in the event the lease becomes a month-to-month tenancy and the resident remains on the premises with the consent of the manager, the rent will increase by a specified amount. This is highly recommended, as it will increase the rent and/or encourage the resident to sign a new lease or renew a lease with you.

DO YOU NEED A REASON TO NON-RENEW A MONTH-TO-MONTH TENANCY? A manager can non-renew a resident who is on a month-to-month tenancy for any reason or no reason at all, as long as the non-renewal is not based upon any illegal discriminatory reason. See the discussion above regarding non-renewing a resident at lease end. All the same reasons apply.

HOW MUCH NOTICE NEEDS TO BE GIVEN TO NON-RENEW A MONTH-TO-MONTH TENANCY? If the resident is remaining on the premises under a month-to-month tenancy, and the lease has expired, either party may terminate the tenancy by giving the other no less than 15 days’ notice prior to the beginning of the next monthly rental period IF AND ONLY IF the expired lease agreement does not require a different notice period. This is extremely important!! The lease agreement which the resident signed and is not expired often has a clause which states that either party must give a particular number of days notice to terminate the tenancy after it becomes month-to-month. If this is the case, the manager will be held to the notice requirement in the lease agreement, while the resident simply needs to give no less than 15 days notice to the manager. Here we have an apparent conflict with the lease terms and Florida law. Why should not the resident be bound to the lease terms? This is an example where the resident has a clear right under the law to terminate their month-to-month tenancy by giving no less than the 15 days notice. The lease cannot take this right away from them.

WHAT DOES “AT LEAST 15 DAYS NOTICE PRIOR TO THE BEGINNING OF THE NEXT MONTHLY RENTAL PERIOD” MEAN? The manager or the resident must give the notice at least 15 days before the beginning of a monthly rental period. If the rent period begins on the first day of the month and either party gives 15 days’ notice on the first day of the month stating they will be out on the 15th day of the month, the notice is NO GOOD. The resident will owe rent for the entire month, even if the resident vacates on the 15th. If the notice came from the manager, the notice will be invalid, and the resident can remain on the premises as until the manager give proper notice. If the rental payment period begins on the first day of the month, either party must give the notice no later than the 13th, 14th, 15th, or 16th of the month in order for the notice to be valid, and as mentioned previously, the manager may have to give even more notice if the lease requires the manager to do so.

SUPPOSE YOU ARE HOLDING A LAST MONTH’S RENT AND DECIDE TO NON-RENEW A MONTH-TO-MONTH TENANCY? If you are holding a last month’s rent, when you serve your Notice of Non-renewal, you need to state to the resident in writing that you are applying the last month’s rent to the last month of the tenancy. For example, if you are holding a last month’s rent, you cannot accept rent from the resident in June and then serve them a Notice of Non- renewal on June 1st stating that they must vacate on June 30th. Your acceptance of June’s rent implies that they can stay until the end of June, and your holding another month’s rent implies that you are not going to make them move at the end of June!

SERVICE OF NOTICE OF NON-RENEWAL. Serving a Notice of Non-renewal incorrectly will result in a nullity of a notice, and the tenancy will continue as if no notice was given. Shorting a notice by a few days will not mean that the manager simply has to wait those few additional days and the resident will then have to vacate. The manager will be at square one. Florida law does not state how a notice must be served, so the lease must be examined. If the lease requires that the manager gives the resident 30 days’ notice prior to the end of the lease term, that notice must be actually received by the resident no less than 30 days prior to the ending date. A common mistake is for the manager to mail the notice without giving the required 5 business days for mailing, or just sending the notice by certified mail believing that this is a sure way to prove that the resident got notice, only to realize that the resident failed to pick up or refused the certified mail. We recommend that a Notice of Non-renewal be served multiple ways, including mail, only if time permits and hand- delivery or posting on the premises in the resident’s absence. First and foremost, the notice must be served in accordance with the lease. Sometimes a resident will fail to put a notice in writing, and the manager will then seek to take advantage of this and try to prove that since proper notice was not given, the resident owes an additional month’s rent. Most judges feel that if the resident can prove that they put you on notice, then the requirement of written notice is not as important. If a resident gives you verbal notice that they are leaving, follow this up with a confirmatory letter stating, “This will confirm our conversation whereby you have indicated that you are vacating the premises on (insert date). The manager should also then serve a Notice of Non-renewal to the resident just to be safe.

SUPPOSE THE RESIDENT REQUESTS MORE TIME? We see more problems develop when the manager and resident come to some sort of agreement but fail to memorialize this agreement in writing. If the resident requests more time, the manager and resident should sign a document whereby the manager agrees to the new vacating date and the resident agrees to vacate at that time. If the resident is going to be paying for this privilege, all this should be spelled out. NEVER MAKE VERBAL AGREEMENTS ON EXTENSIONS.

WHAT HAPPENS WHEN THE RESIDENT FAILS TO MOVE? Would it not be nice if people did what they said they were going to do when they said they were going to do it? If the resident fails to move at the expiration of the Notice of Non-renewal, the manager has some choices. The manager can file an eviction immediately, wait to see if the resident will move or give the resident an extension. If the resident has not vacated, the manager should immediately contact the resident to see what the resident’s intentions are. It may be the case that the resident is almost out or just needs a couple days. The manager may want to wait it out. If the resident needs an extension, we recommend that the resident sign an Agreement To Vacate. Never assume that just because the resident is supposed to be out or says he or she will be out, that the manager now has a right to take possession of the premises. The only way the manager can take possession of the premises, even after a Notice of Non-renewal has expired is by surrender, abandonment or eviction. Always call your attorney if you have any doubt whatsoever that the resident may not be completely out.

 

MANAGEMENT NONRENEWING THE MONTH TO MONTH TENANCY

The date the resident notifies you he is vacating will affect what the resident owes you, if anything. While this is all nice, the fact remains that the resident often will just do what she wants, tell you she is leaving, pack up and leave. Good luck penalizing the resident or collecting the following month’s rent because the resident failed to follow the law. However, it is not worthless to require proper notice, as many residents do follow the law and live up to their obligations. Therefore, it is crucial for you to know the mechanics, so you can properly advise the good, responsible resident on how and when to give you notice. More importantly, when you are non-renewing the month to month resident, you must strictly follow the law. Unfair as this may seem, the resident can hold you to the law, and doing the notice improperly could lead to serious legal ramifications, especially if it was crucial to you or the property owner that the resident vacate according to the Notice of Non-renewal. If you fail to properly non-renew a month to month tenancy, your attempt becomes void, and basically you must start over again from scratch. The fact that you may have given short notice or even the proper number of days notice can be nullified by when or even how you gave notice to the resident. You might think that if you shorted the notice or gave it on the wrong date, you simply need to wait until the end of the next month or until the time on your notice elapses, but unfortunately, time will not cure a defective notice. Just like giving a Three Day Notice that expires a day early, your waiting a couple more days does not “cure” the defective notice. You have to start all over again.

The Dangers of Doing It Wrong

Usually there is a definite reason you or the owner want to non-renew a month to month resident. It may be that the owner wants to move back into the unit, the resident is chronically late, the owner wants to sell or rehab the property, the property has been sold or is under contract, the residents are causing problems: the list goes on and on. If you non-renew the month to month resident incorrectly and must start all over again, serious time can be wasted. In other words, a simple error in non-renewing a month to month resident could result in killing an important real estate transaction, in which huge amounts of money are at stake, or resulting in you losing good residents who may living in surrounding units if you can’t get the problem resident out and become delayed.

How Much Notice is Needed to Non-Renew the Month to Month Resident?

15 days of course, right? Hold on there.  While the resident only must give at least 15 days’ notice prior to the end of the monthly rental period, the manager is actually held to a different standard. If the lease is silent on notice, the manager has to give at least 15 days’ notice prior to the end of the monthly rental period just like the resident, BUT if the lease requires MORE notice, the manager MUST follow the lease agreement. You may feel that since the lease agreement is expired, it has no meaning, but this is completely incorrect. You still are held to the terms of the expired lease. The first step is to examine the lease carefully. We recommend that the manager give at least the same amount of notice to terminate the month to month tenancy as the manager has required of the resident. The number of days notice and the timing of the notice are the two main factors that can get the manager or manager in huge trouble if the Notice of Non-renewal is incorrect. Always remember that the number of days notice is the minimum number of days’ notice to be given PRIOR to the end of the monthly rental period. The most common mistake by managers is to think that they can give 15 or 30 days’ notice any time they wish, and that the resident must vacate at the end of that 15 or 30 day time period.

How Must the Notice Of Non-Renewal be Served?

Florida law does not explicitly provide how you must serve the notice; the important thing is that you can prove the resident got the notice. Again, you must go to the expired lease and carefully look to see if there are any requirements of the parties to serve notices to each other in a certain fashion. If your expired lease requires that the notice be mailed, you MUST add 5 additional business days on the front end of the notice for mailing time. Don’t think that since you mailed it in the 15 or 30 days before the end of the monthly rental period as required by Florida law or the expired lease, you just have to wait another 5 days, and your notice is now fine. Your notice was defective the minute you failed to mail it at least 5 business days before 15 or 30 days prior to the end of the monthly rental period. Time does not cure the defective notice, and again, even though the lease is expired, you still must follow what the expired lease provides.

Best Practices on Notice of Non-Renewal Serving

There will come a time when your resident is extremely upset that the month to month tenancy is being non-renewed, especially if the month to month tenancy has gone on for some time. The resident may deny getting the notice. Serving the Notice of Non-renewal multiple ways is your safest bet. Serving the Notice of Non-renewal by regular mail, certified mail, hand delivery and posting on the door of the unit if the resident is not home or refuses to answer the door, may seem excessive, but just wait for the day when the resident denies he ever got notice. Private process servers also are available to serve notices and their word and affidavits of service are well respected by the judicial system. If you need a name of a private process server, give us a call, as we use them all over the state.

Concrete Examples of Non-Renewing the Month to Month Tenancy

The below examples assume that the monthly rental payment period begins on the first day of the month. If the lease requires the rent to be paid on a day other than the first day of the month, we recommend that you call your attorney for advice on when to give the Notice of Non-renewal, as things can get tricky and confusing, another reason to always have rent due on the first day of the month.

Example Set #1- Lease is silent on how many days’ notice for terminating the month to month tenancy, or lease states 15 days

1. Manager gives resident Notice of Non-renewal on 5th of September, stating the resident must vacate by 30th of September.

Result: This is perfectly proper notice, and if the resident fails to vacate, eviction can begin.

2. Manager gives residents notice on the 4th of September, stating they must vacate on the 28th of September.

Result: This is not proper notice, and the residents do not have to vacate, and the manager will have to start over again. The notice should have ended on September 30th.

3. Manager mails resident notice on 15th of September, stating he must vacate by the 30th of September.

Result: This is not proper notice, and the resident does not have to vacate, and the manager will have to start over again. The notice is short.

4. Manager gives resident notice on 1st of September, stating she must vacate by the 16th of September.

Result: This is not proper notice, and the resident does not have to vacate, and the manager will have to start over again. The notice should have stated that the resident was required to vacate by September 30th.

5. Manager gives residents notice on the 17th of September, stating they must vacate by the 5th of October.

Result: This is not proper notice, and the residents do not have to vacate, and the manager will have to start over again.

Example Set #2- Lease states 30 days’ notice must be given to terminate a month to month tenancy

1. Manager gives resident notice on 31st of August stating he must vacate by the 30th of September.

Result: This is proper notice, and if the resident fails to vacate, eviction can begin.

2. Manager gives resident Notice of Non-renewal on 5th of September, stating the resident must vacate by the 6thth of October.

Result: This is not proper notice, and the resident does not have to vacate, and the manager will have to start over again.

3. Manager gives resident notice on 5th of September, stating she must vacate on the 30th of September.

Result: This is not proper notice, and the resident does not have to vacate, and the manager will have to start over again.

4. Manager gives residents notice on 1st of September, stating they must vacate on the 30th of September.

Result: This is arguably not proper notice, and the residents do not have to vacate, and the manager will have to start over again. Arguably, it is short by one day.

5. Manager gives resident notice on 20th of September, stating he must vacate by the 20th of October.

Result: This is not proper notice, and the resident does not have to vacate, and the manager will have to start over again.

The Extension Request

Inevitably you will be put in a situation when the resident requests more time. This request and your response has to be treated with extreme care, as it can result in false expectations, misunderstandings and potentially create a situation in court where you have a “he said/she said” battle, which may or may not involve an out of state owner of the property who may or may not have to appear in court. When asked by resident for an extension of time, if you feel it is warranted, or you feel the property owner may agree, clearly tell the resident that no extension will be granted unless the property owner agrees and everything is put into writing. If it is your own property, this is not an issue, as you can make a decision immediately, but if you are managing for another, you will need to check with the property owner, obtain clear direction from the property owner in writing (email is fine), and then relay it to the resident immediately with the resident signing an “Agreement to Vacate” form. If there are multiple residents, all residents must sign this form. If only one resident is available, give the resident a deadline to have all residents available to sign the Agreement to Vacate, or indicate the Notice of Non-renewal stands. This is when everything usually falls apart. It is crucial to be definitive and firm with the resident, and document everything in writing with the resident. Any delay or failure on your part to get back to the resident with an answer will be conveniently interpreted by the resident as implicit agreement to the requested extension, while you have no agreement in writing. By telling a resident that he can have an extension, you essentially have voided your Notice of Non-renewal. You can’t then fall back on the original Notice of Non-renewal. If the resident does not sign an Agreement to Vacate if an extension is granted, you could lose an eviction action, or have to re-do the Notice of Non-renewal, resulting in potentially damaging delays if the resident fails to vacate on the new agreed upon date. Never trust that residents will do “what they are supposed to do”. Assume the opposite, and if you are not sure how to handle an extension request, the best thing you can do is call your attorney immediately before doing anything.

 

 

MAILING THE THREE DAY NOTICE

Mailing the Three Day Notice is fraught with problems The resident can deny receipt of the notice, extra days must be added to the expiration date of the notice due to mailing, potentially more days added if payment is to be by mail, and the notice should not be called a Three Day Notice at all, since it will be far more than three days. Since a mailed notice will not be a true Three Day Notice, we will refer to the notice in this article as a “Notice to Pay Rent or Vacate”

Why Mail a Notice?

1. The lease may require it. The lease agreement may actually require that a Notice to Pay Rent or Vacate be mailed. A property manager will often inherit leases from other states or those drafted by attorneys who are unfamiliar with the workings of Florida law. The property manager faced with an unfamiliar lease needs to carefully read the lease to see if there are any clauses pertaining to the mailing of notices. Many attorneys, feeling that mailing is a preferred way of the manager getting notice, draft a reciprocal clause in the lease requiring all parties to give notice by mail. If the lease requires notice by mail, this must be followed, even though Florida law does not require the mailing. While it may seem sensible to require a resident to give the manager notice by mail, unfortunately requiring the manager to do the same is unwise and can result in serious delays.

2. The manager chooses to mail the notice. Managers often choose to mail the Notice to Pay Rent or Vacate if the property is an excessive distance from their home or office. No manager wants to drive a long distance to serve a notice; thus, mailing is often the preferred choice. While we do not recommend it, we know that the realities of a long distance resident, where the manager may not have a local property manager, dictates this method of delivery.

How To Date the Notice to Pay Rent or Vacate if the Notice is Mailed

The expiration date of the Notice to Pay Rent or Vacate is dictated by the date of mailing of the notice and by how the resident is to pay the manager the rent.

Notice is Mailed and Resident is to pay rent by mail: 5 days must be given for mailing time, 5 days must be allowed for the resident to pay rent by mail and 3 business days must be given. The result? The notice has now become a Thirteen Day Notice to Pay Rent or Vacate which gives the resident 13 days excluding Saturdays, Sundays and Legal holidays from the date the manager mails the notice. Since weekends will always fall in the 13 business day period, we must allow at least 3 business days exclusive of the mailing times. As you can see this method of delivery and payment will result in a substantial amount of time for the resident to pay the rent, resulting in a large loss of income for the manager in the event of nonpayment, as no eviction can be filed until the notice expires.

Notice is mailed and Resident is to drop off rent: If the Notice to Pay Rent or Vacate is mailed and the resident is to drop off the rent, the manager must use an Eight Day Notice. 5 days are given for mailing plus the 3 business days as required by Florida Statutes, not including Saturdays, Sundays or legal holidays. Again, mailing a Notice to Pay Rent or Vacate is not the preferred method, as it results in delay.

Mailing AND Posting or Hand delivering the Notice to Pay Rent or Vacate

With the exception of certain properties governed by special federal regulations, a Notice to Pay Rent or Vacate should NEVER be mailed AND posted on the premises or hand delivered, or unless it is (strangely) required by the lease agreement. If the manager posts a Notice to Pay Rent and then mails one, presumably the resident will receive the Notice to Pay Rent by mail between 2 and 5 days after the notice is posted. This causes confusion. In one case you are telling the resident they have a certain number of days not including Saturdays, Sundays or legal holidays to pay the rent, but then the resident receive the notice by mail at a later date, which says the same thing. Which notice applies? The mailed one might not allow enough time, while the posted or hand-delivered one may. This conflict causes confusion and ambiguity. The second notice received may cancel out the first notice, the second notice is possibly short, and the bottom line is that the notice is just legally improper. Never serve a Notice to Pay Rent or Vacate by BOTH mail and posting on the premises or hand delivery. While it may seem logical that this will insure that the resident gets notice, the technicalities will render it invalid.

To Whom Must the Resident Pay Rent?

Typically, a resident pays rent to the same person at the same address throughout the tenancy. The problem arises when this address changes. How is the resident notified that the payment address has changed? Should the resident simply pay to whatever address is listed on the Notice to Pay Rent or Vacate? Due to the increasing numbers of out-of-state managers who are intent on managing their property from afar, situations will arise where the out-of-state manager decides to hire a property manager or designate someone his or her agent for the purposes of collecting delinquent rent. A new address on a Notice to Pay Rent or Vacate is not enough. The manager must notify the resident in writing of an address change or agent change, and often this is not done. Beware of the out-of-state manager who wishes that you “help” them with serving a notice or collecting rent. Proper authorization and direction by the manager is a must.

 

LOCKED OUT RESIDENT ACCESS PROCEDURES

If you have a policy whereby if a resident is locked out of the premises, he or she is to call a locksmith, you may not have to read any further. In this case, you have no involvement with the situation, and hopefully the locksmith will not have damaged the lock and/or changed out the lock. Hopefully as well, the resident does indeed call a real locksmith rather than simply break the lock to gain access. Many of our clients do have a policy of opening up a locked door for a resident and sometimes will charge the resident for this service. How the manager goes about giving access to a resident can have a serious effect on the manager’s liability.

The Scenario

It is 3 a.m., and your on-call maintenance tech or maybe you receive the dreaded phone call or knock on the door. The “resident” has misplaced his keys and is obviously intoxicated. You are quite familiar with this resident, having seen him at the pool, you have seen him drop off rent in the office, and he plays volleyball on Sundays, uses the exercise room and has even made maintenance requests. You simply grab the keys and allow him access. The problem is that he is not an actual resident, but has been an unauthorized occupant for quite some time. He has now decided; once you grant him access, to take his roommate’s valuables, leave, never to return again.

The Problem

It is quite obvious what the problem is in this case. You failed to see if this person was indeed the resident on the lease, and the ramifications could be severe. Each year we see this scenario unfold, and managers are faced with paying fairly large sums of money to the actual resident who was not home when you allowed the unauthorized person access. You may argue that it was not your fault that the unauthorized person took his roommate’s personal property, as after all they have been living together for quite some time, but the problem remains. You allowed an unauthorized occupant, not on the lease, access to the rental premises.

Creating a Policy

Your first step should be to create a written policy for your company regarding lock outs. All employees who engage in allowing a locked out resident access should be required to read this policy and sign a statement that they have read it and agree to abide by the policy. No exceptions should ever be made to the policy. Your next step will be to provide the lock out access rules or procedures to the resident and make this part of the lease, the Community Rules and Regulations, or a separate addendum to which the resident has clearly agreed.

Lock Out Access Procedure

In the event a resident is locked out, they need to follow certain procedures for you to even act upon this lock out. They should be required to provide you with 2 forms of government issued identification. This identification should then be brought to the office and compared with the copies of the identification you have in the resident’s file. Names should match up completely, and a visual examination of the picture ID you have in the file should match up with not only the ID the resident is showing you, but the resident himself. Once this match is established to the satisfaction of you or the bleary eyed maintenance tech who was just awakened, the identification provided by the locked out resident should be copied, notes made on the copy, and the copy of the ID placed in the file. If the resident cannot provide you with the required ID, the resident should not be given access. If the resident cannot provide you the required identification, there is no doubt that the resident will not be satisfied, and an altercation or argument could ensue. Keep your lock out policy handy in the event the resident is not able to satisfy your requirement, express regret, and tell him he must hire a locksmith.

But, We Know This Resident!

Most of the legal problems we deal with occur when the manager or an employee makes an exception to the rule. Every time an exception is made, the chances of a problem increase dramatically. If an exception is made once, it may be expected that an exception is made the next time. If you make an exception for one resident but not another, you run the risk of being accused of discrimination. People often look alike, especially when related to one another. Most recently, we dealt with a situation where the brother of a resident gained access due to looking similar to the actual resident. Had the maintenance tech carefully looked at the identification and made the comparison, the difference would have been evident, but this was not done and the manager paid the price.

The Inherent Problems With Lock Out Access

1. The person giving access will need to have both access to the keys to the unit and the resident’s file. Due to privacy issues, it is recommended that there is limited access to the resident’s file.

 

2. Some companies fail to keep a copy of the resident’s identification in the file. There is absolutely nothing illegal about keeping a copy of the resident‘s identification in the resident’s file. This is not a fair housing violation. We strongly urge you to keep a copy of the picture identification in the resident’s file.

 

3. Many managers do not have a written policy for the employee who will be engaged in granting access. This is simple. Write one up now.

 

4. Many managers have not provided the policy or rules to the resident regarding lock outs. Create your rules, and distribute them to all residents.

Charging the Resident For Giving Access

After reading this article, you may have decided to take the route of telling the resident that he must call a locksmith, but some of you may have decided that you will assist in lock outs and should be compensated if you grant access. We agree. The extra work involved and the increased liability on the manager justifies a reasonable charge to the resident. Some of our clients require this to be paid before the access is granted; others charge it as additional rent which must be paid with the normal rent at the next payment period. If you are going to charge the resident for anything, it must be clearly agreed to by all parties involved. Managers often create charges upon a whim and expect that they can force the resident to pay the charge. Clearly state the charge in your lease or whatever is incorporated in your lease, such as the community rules and regulations.

 

LETTERS OF PROTECTION

 

A “Letter of Protection” is a lawyer’s representation that his client has agreed that an amount, which is owed to a creditor by the client, will be paid to the creditor by the lawyer from the client’s share of a proposed monetary recovery.

 

Commonly Used For Medical Providers

 

This letter is commonly given by lawyers on behalf of their clients to medical care providers. Personal injury lawsuits and workman’s compensation claims are types of lawsuits in which letters of protection are often used. When a client has suffered a physical injury, he may not have sufficient money to pay for his medical care. Doctors, hospitals, and others who provide the medical care are promised payment from the client’s monetary recovery. They are more willing to render the medical care if they have some assurance from the lawyer that they will be paid before the money is distributed to the client. However, letters of protection can be given to any creditor of the client in the hope that the creditor will forego payment, accept the letter of credit and rely upon the possible recovery for payment.

 

Not Much Protection

 

The problem is that such a letter is not much protection for the manager. If and when the resident recovers any money in his lawsuit, he has instructed his lawyers to pay his manager an amount owed from the resident’s share of the recovery. The key words are “if and when” a recovery is made. If the resident loses his lawsuit or his workman’s compensation claim, than there is neither recovery for the resident nor payment to anyone. If a recovery is made, when it will be made is another question. The resident’s legal action or claim could take months or years.

 

What is Covered by the Letter?

 

It is important to understand how much a letter of protection is actually “protecting”. The resident may tell the manager that the letter will cover the past and future rent. Whatever the resident is saying, it’s the wording of the letter of protection that is important. Some letters are promising payment only of the amount owed at the time the letter is received, not future amounts owed.

 

No Guarantee of Full Payment

 

A resident’s recovery doesn’t guarantee full payment to his letter of protection creditors. The attorney fees and costs of the lawsuit are first deducted from the client’s recovery. It’s possible that after payment to the letter of protection creditors, the balance to the client will be little or nothing. Despite having given letters of protection, a lawyer is unlikely to make distribution from the client’s recovery without the client’s final consent. A client, who is receiving nothing or very little from his recovery, may not be disposed to give final consent. The lawyer might then ask the creditors to agree to accept only a percent of their amount owed, so that the client can receive more. If an agreement cannot be reached that induces the client to consent to distribution, the lawyer is likely to deposit the client’s recovery into court and let the court decide who gets what.

 

Significant Risks

After reading this, I am sure you understand why our law firm advises its clients that reliance on letters of protection poses significant risks. Managers invest in rental units, not in lawsuit recoveries. Foregoing collecting rent to rely on a letter of protection is a voluntary act by the manager. The manager is not required to do this. If the manager is unwilling to rely on a letter of protection, the manager should write a letter to the resident, with a copy to the law firm, indicating that the manager will not accept and rely upon the letter of protection. The rent must be paid timely and in full.

 

LEASING BONUSES AND REFERRAL FEES

THE BACKGROUND

Florida Statutes section 475 governs the ability or inability to receive or pay compensation when engaging in real estate related services. Real estate related services include things such as appraising, auctioning, selling, exchanging, buying, and most importantly for this article, renting of real property. Only a licensed broker, a person who holds a real estate broker’s license in Florida may receive and pay compensation for these services to other licensed brokers or salespersons. Certain exceptions to the requirement of licensure have been carved out by the legislature, which allows compensation to be paid and received for a real estate related service without the need for a license. For instance, FS 475.011 exempts any “salaried employee of an owner or of a registered broker for an owner, of an apartment community who works in an onsite rental office of the apartment community in a leasing capacity”. Note that the key word here is “salaried”. Through the efforts of the Florida Apartment Association, another exemption was added which allows a referral fee or finder’s fee to be paid in an amount up to $50.00 in cash, a rent reduction or something of value to a resident who refers another resident to the apartment community. Unfortunately, apartments are limited to paying their employees only a salary for leasing activities and paying residents the $50.00 referral fee cap. Many companies knowingly and unknowingly violate this law. There has been little to no enforcement by the Florida Real Estate Commission until very recently, and a number of apartment communities, in particular the licensed real estate brokers of those companies, have come under fire. The penalties are expensive and severe and there are criminal felony implications.

COMPENSATION WHICH AN UNLICENSED EMPLOYEE OF AN APARTMENT COMMUNITY CAN LEGALLY RECEIVE

FS 475.011 exempts on-site employees from the legal requirement of having a broker’s or sales person’s license to receive compensation for leasing. Specifically, it exempts any “salaried employee of an owner, or of a registered broker for an owner, of an apartment community who works in an onsite rental office of the apartment community in a leasing capacity.” From the language of this section, it would appear and has been interpreted by the Florida Real Estate Commission that nothing other than a “salary” can be paid to the property manager or leasing staff. Paying a bonus or giving anything extra of value to the employee when he or she leases an apartment is considered illegal and violative of FS 475. Can the property manager or leasing agent receive a performance bonus each week or month, just as in many other professions where the hard working employee can receive a bonus? It appears that the answer is no, if that bonus is based on the “leasing” or the number of leases which are consummated through the effort of that employee. It our opinion that this prohibition by FS 475 is ridiculous and the law needs to be changed. No harm is being done to the public by paying a leasing agent or property manager a “bonus”; many on-site property managers and leasing agents have far more experience then the majority of property managers who hold Florida real estate licenses, and almost no training or testing in property management is performed or required by Florida law in order to obtain either a sales person’s license or broker’s license. This is not a situation where unlicensed persons such as on-site property managers or leasing agents are in any way infringing upon the livelihood of a licensed person. With all that said, it is our firm’s view that if an apartment manager, leasing agent or any employee of an apartment community is paid anything other than a salary, they risk prosecution by the Florida Real Estate Commission. You have been forewarned and enforcement has begun.

REFERRAL OR FINDERS FEES TO CURRENT RESIDENTS

FS 475.011 specifically allows the payment of a referral fee or finder’s fee to a current resident for referring a new resident to the apartment community. The law exempts “Any property management firm or any owner of an apartment complex for the act of paying a finder's fee or referral fee to an unlicensed person who is a resident in such apartment complex, provided the value of the fee does not exceed $50.00 per transaction”. This means that no license is required by either party to give or receive this finder’s fee or referral fee. The amount given cannot exceed anything valuing more than $50.00 so a $100.00 reduction of rent off to the referring resident, a $100.00 gift certificate to a local restaurant or anything that exceeds $50.00 in value is clearly prohibited. Examples the law gives include a “fee paid, credit towards rent, or some other thing of value provided to a person for introducing or arranging an introduction between parties to a transaction involving the rental or lease of an apartment unit”. The penalty for paying a referral fee in excess of $50.00 is severe, and the person making the payment could be charged with a third degree felony, and the person or corporation making the payments fined up to $5000.00 per occurrence.

OUR RECOMMENDATIONS

You should immediately speak with your corporate attorney if your company has been paying employees anything other than salaries for leasing activities, or you have been giving resident referral or finder’s fees in excess of $50.00, and get advice on how to proceed. We urge you to actively get involved with the Florida Apartment Association, which is continuing its effort at trying to clarify the law and lobbying for the ability of the apartment community employee to be rewarded for a job well done.