RESIDENT SKIPS AND YOUR OPTIONS

 

Residents are “skipping” at a record rate. Skipping of course is the common name given to the act of simply walking out on a lease. The lease is signed, the residents move in, live in the unit for a while, and then for whatever reason, decide to pack up and move. Can you stop them? Of course not. Just like you cannot force a person to pay the rent or prevent them from moving in unauthorized occupants or getting those 5 pit bulls, a resident who is desirous of leaving will do so. It is that simple. Since the resident has decided to leave and does, you are now faced with the dilemma of an empty unit and rent owed to you. What can you do? Suppose you are managing a unit for another. The property owner who is often out of state is baffled and cannot understand how this can be. Often we hear them say, “But they have a lease!” or, “Why did we even have a lease? It is worth nothing”. What do you tell this angry and baffled property owner? How do you handle it when it happens to you? This article will examine some of the harsh realities of the resident “skip” and how you can deal with the problem. Notice I said, “deal with the problem”, not solve the problem. If anyone knows how to solve the problem of the resident skip, you call me right away! This article will examine the three simple paths you can take when a resident skips out on you.

 

Sue the Resident

 

When a resident skips before the end of the lease term, the resident will owe rent until the unit is re-rented or until the end of the lease, whichever occurs first. This statement assumes that no other document is in place, or the resident has not signed an early termination addendum which may liquidate the amount owed. What does the resident owe? You will not know until the unit is re-rented or the lease expiration date.

 

Now the big question: should you sue the resident? In most cases we will advise you to do a careful cost/benefit and risk analysis when deciding whether to sue the resident. Before you can even think about suing, you must know where the resident is, so he can be served with the lawsuit. In many skips, the resident disappears and cannot be found. If you cannot find him, you cannot sue him.

 

a. Cost: Unless you can find an attorney who will file a lawsuit on a contingency basis where you pay nothing unless or until you win, using an attorney to file a lawsuit is often cost prohibitive. Many managers are under the impression that the resident will be responsible for their attorney’s fees and costs, and this is true in most cases, but just because you “win” in court does not mean you will collect a dime. Most attorneys will not take a case like this on a contingency basis.

 

b. Benefit: By suing the resident you may be able to get a judgment against the resident, allowing you to lien any real property the resident owns, and also may be used in attempting to garnish wages, another expensive, cumbersome process full of exemptions. Will you collect your money even if you win? Probably not. People who skip do not care much about getting sued, because if they did, they would not have skipped in the first place. They are usually what we call “judgment proof”.

 

c. Risk: The risk involved in filing a lawsuit against a resident may come as a real surprise. Why would there be risk? The resident owes you money after all. The risk arises when the resident claims there was a “legitimate reason” why she skipped out. She may claim you failed to maintain the property, felt unsafe, was told she could leave early, you name it. There are a thousand reasons that a resident who is being sued can come up with to justify why she broke the lease, and the judge in the case might believe the early departure was justified. If the judge finds for the resident, YOU will have to pay the resident’s attorney’s fees PLUS your attorney’s fees, if you hired a lawyer to fight the case.

 

If the property owner has a lot of time on his hands and wants to file a small claims case without a lawyer, there is probably nothing wrong in giving it a try, UNLESS an attorney pops into the picture and defends the resident. If you are managing the property and the owner asks you to do it, just say NO. Property management agents should not be acting as the attorney for the owner.

 

Settle With the Resident

 

Once you know how much the resident owes, if you are able to get in touch with the resident, writing a demand letter or having your lawyer write a demand letter at minimal cost is not a bad idea. A demand letter may open up some dialogue and result in an offer by the resident to pay all, something or possibly set up a payment plan. Settlement is not a bad word. It is often the smart thing to do. Your attorney can provide you with the proper form to use when settling with the resident, as everything should be in writing.

 

Forget About the Whole Thing and Move On

 

Your final option is to do nothing. Direct your energies into getting the unit rerented. You can always decide to sue at a later time, and you have up to 5 years to do this.

 

Conclusion

If you are a seasoned property manager or owner, you probably understand everything you have just read. The problem is your out of state owners who just doesn’t understand how Florida law works, and that Florida is what is known as a “debtor” state. If you are managing property for them, you will often get unreasonable demands about collecting the money. In many states, the creditor has significantly greater rights in pursuing the debtor. Florida is known for its lenient laws as they pertain to collecting money from a debtor. There are head of household exemptions, personal property exemptions and although not unique to Florida, bankruptcy protection. Does this mean that it is impossible to collect a debt? Absolutely not. In many cases people will pay. Most cases? Probably not. The best approach is to have your lawyer take a look at your the situation or send your property owner to the lawyer for a quick look, and have the lawyer give the advice necessary for you or the owner to make an informed decision. Exercise care in what lawyer you may send the owner to as some lawyers may not be completely honest and will choose to take a case AND you or your owner’s money knowing full well that the chances of collection are slim.