More and more eviction cases are being contested by attorneys specializing in representing residents, and a number of new class action lawsuits have been filed in Florida against major management companies and owners of multifamily housing. Items are of major concern right now, due to the increase in attorneys targeting managers, and particularly a recent court decision which has completely confused what was assumed to be permissible practices. Almost every apartment community in Florida has now become a huge target.

TERMINATION FEES, RE-LET FEES AND LIQUIDATED DAMAGES

Background

Managers have historically had clauses in the lease agreements which impose a penalty, re-let fee or liquidated damages in the event a resident breaks a lease before the term is completed or is evicted. A larger problem is that many managers have been using the lease requirements for a voluntary and agreed upon lease break to impose these fees in the event of a skip or eviction. The recent case out of Palm Beach County has held that these fees or penalties are impermissible and that the remedies provided in Florida Statutes are exclusive and cannot be modified by the lease terms. The main holding of this case states that charging these fees, penalties, or liquidated damages is not allowed by law, and that the ONLY remedy a manager has when the resident vacates voluntarily or involuntarily, and the manager puts the unit back on the market, is for the manager to charge the resident ONLY the rent that was lost at the time of the breach and AS IT BECOMES DUE. You cannot accelerate the rent or charge rent on top of a penalty, as this judge feels that this is charging “double rent”.

IMMEDIATE ACTION PLAN:

1. REMOVE ALL PENALTIES, LEASE BREAK FEES, And RE-LET CHARGES FROM YOUR LEASE NOW.

 

2. If you have charged these in the past to a resident, NOTIFY YOUR COLLECTION AGENCY THAT THESE CHARGES ARE TO BE REMOVED FROM THE RESIDENT’S COLLECTION FILE.

 

3. Recompute only your LOST rent UNTIL THE UNIT WAS RERENTED and REVISE THE AMOUNT SENT TO COLLECTIONS if and only if the revised amount is LESS than what was previously sent to collections.

How will this all be resolved? The law needs to clarified to allow the manager and resident to contractually agree to these penalties and fees as they should be allowed to do, and in our opinion are allowed to do. Unfortunately the Circuit Court Judge in Palm Beach County disagrees. The case is being appealed by the attorneys handling the case.

SECURITY DEPOSIT CLAIMS

Managers are required by law to make a claim upon a resident’s security deposit within 30 days of the resident vacating the premises, if the resident vacates or is evicted owing the manager money that the manager is entitled to per the lease and/or Florida law.

The Security Deposit Problem: Managers are charging amounts that are only wear and tear, amount that they cannot prove in court, accumulated late charges, fees, termination charges, liquidated damages or excessive amounts based on estimates. Residents are disputing these charges, and managers are not notifying the collection agency that the charge is “disputed”. Over the ensuing years, the resident has a black mark on his credit; he retains an attorney and eventually demand that you prove the damages that you charged the resident. This could be YEARS after the manager initially made the claim. Most managers cannot prove the damages in full, and as a result, the manager’s charge now has resulted in a “slander of credit” for which the resident can now sue. Attorneys are now specializing in representing the ex-resident debtor and suing!

IMMEDIATE STEPS TO TAKE WHEN MAKING THE SECURITY DEPOSIT CLAIM

1. Do not charge the fees, liquidated damages, relating charges as referred to earlier in this article.

 

2. Do not charge the resident unpaid or accumulated late charges. Judges hate late charges and attorneys are beginning to set their sights on whether late charges are usury.

 

3. Always perform a DETAILED move in and move out inspection. The resident should not be permitted to make this inspection. The manager makes this inspection

 

4. Document the move in condition with a video and/or photos of the unit, interior and exterior. Leave NOTHING undocumented. Preferably have the resident sign the “Move in Inspection Form, but if you cannot, take the move in inspection seriously, and do it right.

 

5. Document the move in condition with a video and/or photos of the unit, interior and exterior. Leave NOTHING undocumented. If you charge the resident for ANY damage, be prepared to prove this damage in a court of law up to 5 years after the resident vacates. Our clients who videotape units and videotape the damages RARELY have any security deposit disputes.

 

6. If something gets disputed, carefully weigh the risks of insisting upon the charge versus the benefits of settling with the resident. Settlement is NOT a bad word.
7. Never write or call back an attorney who has contacted you regarding a dispute without having your attorney review the situation.

EVICTIONS – LOSE ONE AND GET SUED

The majority of evictions that come into our office have some sort of problem. It may be as blatant as an incorrect Three Day Notice, an error in the lease, an excessive late charge, an unregistered fictitious name or some underlying problem that the manager failed to disclose to us when sending us the case. If the resident gets and attorney and you lose, you will have to pay the resident’s attorney. We recently had 2 cases where the manager lost, and the attorneys are demanding in excess of $4000.00.

IMMEDIATE ACTION PLANS

Prepare and Serve your notices correctly. Us the Three Day Notice Checklist. Let your attorney prepare any Seven Day Notices for you. Do not non-renew unless you have carefully read the lease and have good reasons documented.

 

1. Tell your attorney everything strange about the case. Have you accepted rent late on a regular basis? Have you been accepting partial payments? Has the resident complained about problems on the property? Has the resident given you a rent withholding letter? Are you trying to remove the resident for non-rent reasons but jumped on the resident when she was late on the rent, and refused the rent from the resident before filing the case?

 

2. Is your Fictitious Name filed with the Secretary of State? Do you even know what this means? Get it filed NOW. Click.

 

3. Do not accept rent during an eviction without calling your attorney first and possibly entering into a Stipulation.
4. Once an eviction is filed, do not take any other action without speaking with your attorney first.

 

“Serving the Property Management Professional”

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