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Collections and the Property Manager

Collections and the Property Manager
by Brian P. Wolk, Attorney at Law


The successful property manager should have a solid understanding of the collections process. Not complying with federal and state collection laws can and will subject the landlord to substantial penalties, as there is no shortage of consumer rights attorneys who are will sue landlords if given the chance. These laws must be followed carefully, as any mistake, even if unintentional, can have serious negative consequences. In addition, seasoned property managers also do not have unrealistic expectations about the prospects of actually collecting monies owed by former residents. Those managers are well aware of the lengthy steps needed to obtain a money judgment, and understand that collecting on a money judgment in many cases never happens.

Florida Consumer Collections Practices Act

Many landlords are familiar with or have at least heard of federal laws governing collections, such as the Fair Debt Collection Practices Act. All too often though, landlords are completely unfamiliar with the Florida Consumer Practices Act.

The purpose of the Act

The Florida Consumer Collections Practices Act is a detailed statute enacted by the Florida Legislature to limit a number of abuses in connection with the collection of debts by a collection agency or any business that frequently engages in the collection of debts. Another purpose of the Act was to protect an individual's right to privacy.

the Act and the Original Creditor

The Florida Consumer Collection Practices Act governs not only debt collectors but also original creditors. The landlord and management company would typically be considered the original creditor, unless the account is acquired during an ongoing tenancy. This Act will also apply against successor owners or management companies.


The Act imposes administrative, civil and even criminal penalties on an entity or person that is in violation of its provisions. For example, a collection agency that fails to register properly with the office of Financial Regulation of the Financial Services Commission could face criminal charges.

Civil Penalties

The most common type of penalty imposed by the Act is civil liability. A person who violates the Act is liable for actual damages, court costs and attorney's fees incurred by the plaintiff. The judge has discretion to award punitive damages. A plaintiff may recover statutory damages of up to $1,000.00 for every violation of the Act.

Practices Prohibited by the Florida Consumer Collections Practices Act

The Act lists 19 different types of prohibited practices. Probably the most common violation occurs with respect to willfully engaging in conduct that can reasonably be expected to harass the debtor or any member of the debtor's family. This language is somewhat vague. The more frequent the conduct, the more likely courts will determine a violation has occurred. Courts will also examine the contact to determine if there is evidence that the purpose of the communication was to insult or injure. If such a finding is made, the more likely it is that a court will deem the communication to be a violation of the Act. On the other hand, when the debt collector merely makes phone calls to inform and remind the debtor of the debt and to determine the reasons for nonpayment, courts will most likely allow such communications.

Full list of prohibited practices under the Act

Florida Statute 559.72 Prohibited practices generally."”In collecting consumer debts, no person shall: "ƒ(1) Simulate in any manner a law enforcement officer or a representative of any governmental agency. "ƒ(2) Use or threaten force or violence. "ƒ(3) Tell a debtor who disputes a consumer debt that she or he or any person employing her or him will disclose to another, orally or in writing, directly or indirectly, information affecting the debtor's reputation for credit worthiness without also informing the debtor that the existence of the dispute will also be disclosed as required by subsection (6). "ƒ(4) Communicate or threaten to communicate with a debtor's employer before obtaining final judgment against the debtor, unless the debtor gives her or his permission in writing to contact her or his employer or acknowledges in writing the existence of the debt after the debt has been placed for collection. However, this does not prohibit a person from telling the debtor that her or his employer will be contacted if a final judgment is obtained. "ƒ(5) Disclose to a person other than the debtor or her or his family information affecting the debtor's reputation, whether or not for credit worthiness, with knowledge or reason to know that the other person does not have a legitimate business need for the information or that the information is false. "ƒ(6) Disclose information concerning the existence of a debt known to be reasonably disputed by the debtor without disclosing that fact. If a disclosure is made before such dispute has been asserted and written notice is received from the debtor that any part of the debt is disputed, and if such dispute is reasonable, the person who made the original disclosure must reveal upon the request of the debtor within 30 days the details of the dispute to each person to whom disclosure of the debt without notice of the dispute was made within the preceding 90 days. "ƒ(7) Willfully communicate with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family, or willfully engage in other conduct which can reasonably be expected to abuse or harass the debtor or any member of her or his family. "ƒ(8) Use profane, obscene, vulgar, or willfully abusive language in communicating with the debtor or any member of her or his family. "ƒ(9) Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist. "ƒ(10) Use a communication that simulates in any manner legal or judicial process or that gives the appearance of being authorized, issued, or approved by a government, governmental agency, or attorney at law, when it is not. "ƒ(11) Communicate with a debtor under the guise of an attorney by using the stationery of an attorney or forms or instruments that only attorneys are authorized to prepare. "ƒ(12) Orally communicate with a debtor in a manner that gives the false impression or appearance that such person is or is associated with an attorney. "ƒ(13) Advertise or threaten to advertise for sale any debt as a means to enforce payment except under court order or when acting as an assignee for the benefit of a creditor. "ƒ(14) Publish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts. "ƒ(15) Refuse to provide adequate identification of herself or himself or her or his employer or other entity whom she or he represents if requested to do so by a debtor from whom she or he is collecting or attempting to collect a consumer debt. "ƒ(16) Mail any communication to a debtor in an envelope or postcard with words typed, written, or printed on the outside of the envelope or postcard calculated to embarrass the debtor. An example of this would be an envelope addressed to "Deadbeat, Jane Doe" or "Deadbeat, John Doe." "ƒ(17) Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor's time zone without the prior consent of the debtor. "ƒ(a) The person may presume that the time a telephone call is received conforms to the local time zone assigned to the area code of the number called, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(b) If, such as with toll-free numbers, an area code is not assigned to a specific geographic area, the person may presume that the time a telephone call is received conforms to the local time zone of the debtor's last known place of residence, unless the person reasonably believes that the debtor's telephone is located in a different time zone. "ƒ(18) Communicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the debtor's attorney fails to respond within 30 days to a communication from the person, unless the debtor's attorney consents to a direct communication with the debtor, or unless the debtor initiates the communication. "ƒ(19) Cause a debtor to be charged for communications by concealing the true purpose of the communication, including collect telephone calls and telegram fees.

Interplay between security deposit disputes and disputed debts

When a resident vacates, the landlord is required to send the resident the Notice of Intention to Impose Claim on the Security Deposit. The required notice is the largest cause of disputes between the resident and property manager. If the resident disagrees with the amount that the landlord is claiming is owed, including but not limited to amounts claimed against the security deposit, and so notifies the landlord in writing, then for purposes of the Act, the debt is disputed by the resident. Although not a recommended practice, it is perfectly legal for a property manager to respond in writing to the resident and explain in more detail why the charges were incurred. It is even legal for a property manager to threaten to send a resident's disputed debt to collections. The trap for the property manager is to threaten to send the account to collections without notifying the resident that the debt will be reported as a disputed debt, when the resident has previously given written notice of a reasonable dispute. Many property managers make this mistake. Also, when sending a resident to collections, the collection agency should be informed that the debt is disputed. A smart approach would be to send the collection agency a certified letter and place a copy in the resident's file.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law which regulates the collection practices of collection agencies and collection attorneys and any other individuals or entities that are considered debt collectors. Unlike The Florida Collection Practices Act, The Fair Debt Collection Practices Act does not regulate the collection activities of the original creditor, assuming the original creditor uses its own name when collecting the debt.

Purpose of the Fair Debt Collection Practices Act

The United States Congress intended to curb deceptive and abusive activities by debt collectors. The original version of the law was intended to protect consumers, not business entities. The Federal Trade Commission has the power to administratively enforce the Act. Congress actually wrote into the Act that abusive debt collection practices contribute to personal bankruptcies, marital instability and loss of jobs.


A violation of the Fair Debt Collection Practices Act may result in a penalty of $1000.00 per violation, and there can also be liability for the reasonable attorney's fees of the plaintiff, an amount which often is substantial.

Required warning

The Fair Debt Collection Practices Act requires the debt collector to inform the debtor that it is attempting to collect a debt and that any information gathered can be used in furtherance of collection. The warning must be given when the debtor is first contacted. All future correspondence must state that the communication is from a debt collector.

Requirement of a validation notice

After a collection agency initially contacts the debtor, the debtor must receive within five days of the initial communication, a detailed written notice. The Act spells out all the required information that must be contained in the validation letter. Essentially, the validation letter advises the debtor of the nature and amount of the debt, the identity of the original creditor, which would be the landlord, along with the right to dispute and request documentation supporting the debt.

Prohibited conduct under the Act

The following are some but not all of the prohibitions under the Act: false representation that the communication is from an attorney, false representation that the consumer committed a crime, false representation as to the amount or legal status of the debt, threatening to deposit a post dated check, and communicating by post card.

In-House Collections

Often it is tempting for the property manager to take on the role of the collector. More often than not, this activity will turn out to be counterproductive. The apartment manager may want to avoid paying a fee to the collections agency. In reality, the collections process is very time consuming. Moreover, costs are incurred, and the apartment manager likely will not have the most advanced skip tracing software. What makes in-house collecting even more dangerous is that that the property manager, although an original creditor, still must comply with the Florida Collections Practices Act. One mistake by the property manager can lead to expensive litigation.

Collection Agencies

There are many collection agencies that will attempt to collect debts owed from former residents to apartment communities. It is important that the property manager select an agency with a good reputation. One benefit of using a collection agency is that the property manager will not incur costs and time tracking down the former resident. A good collection agency will have sophisticated software and skip tracing programs that will locate the former resident. The reputable collection agency will then vigorously pursue the collection of the debt and will make sure to comply with federal and state collection laws.

Reporting to collection agencies

The property manager must be very careful in reporting to collection agencies as to what amount the resident owes. In addition, the property manager should retain the proper back up, as the former resident could sue years later. Also, collection agencies will report the information provided to them by the property manager to consumer reporting agencies. If that information is erroneous, then the landlord could be subject to a lawsuit by the former resident. In addition, the landlord could be sued by the collection agency, if it is held liable for attempting to collect the inaccurate debt. It is recommended to wait until the resident has had a chance to dispute the debt before sending the account to collections. Usually this means waiting at least 15 days after the resident received the Notice of Intention to Impose Claim on the Security Deposit. If not, then it is much easier for the manager to mistakenly not alert the collections company that the debt is a disputed debt. Also, one common error that property managers make is that they accelerate the rent owed under the lease when they should only be reporting the rent owed as it comes due.


  • The Curable Noncompliance Examined PART 1