SUING A RESIDENT FOR MONEY OWED

If our office could collect just a small portion of the lost rents and damages suffered by the managers we represent, we probably could close the doors in a year’s time and live happily ever after in a mansion on a tropical island. The truth is, the money that residents owe when they break a lease, get evicted and/or damage the premises is very difficult, if not impossible, to collect. Every day we get calls from upset managers asking us if we can collect the money owed to them, or if we will file a lawsuit to collect the money. Our usual answer? No. The reasons behind this are many. Most residents who could not care less about abiding by the terms of their lease will not pay you the money they end up owing you. Many are just uncollectible or owe so many people money; you are just not high on their list.

Florida is a “Debtor State”

While Florida is considerably manager friendly when it comes to evicting the resident, the collection laws favor the debtor. It is ironic that residents can be removed in 20-40 days if they fail to pay their rent in the 3 business day time period of the Three Day Notice, but cannot be forced to pay money they may owe. The days of “debtors’ prisons” are long gone.

A debtor in Florida enjoys several significant protections. For example, if the debtor is the head of a household, his wages cannot be garnished (there is a very limited exception for some consumer transactions). Some forms of income can never be garnished, such as disability income or welfare payments. Also, the debtor can protect up to $1000.00 of personal property from seizure for collection (and that’s $1000.00 per person in the household, regardless of age). The process of garnishing wages in the event the debtor is not under an exemption is often cost prohibitive.

Some Collection Alternatives

1. Collection agencies: There are many collection agencies which will vigorously attempt to collect money for you by sending out threatening letters and calling the resident. Additionally, they often have the capability of finding the resident through sophisticated skip tracing and hounding them. Sadly, you are probably just one of many creditors that the debtor has. We recommend that you send the accounts to a reputable (and we stress reputable) collection agency, but be absolutely certain that you can prove the amount owed possibly years later, when an attorney for the resident challenges you. If you are challenged and you cannot prove that the resident owed you the money you stated was owed, you could end up in a nasty lawsuit in which you will end up paying the resident and his or her attorney a lot of money, not to mention your attorney who you will have to hire to defend you.

2. Small Claims Court: Small Claims Court is the place where many smaller lawsuits are filed against residents. You need to file in the county in which the property is located or where the former resident resides. If you can find the resident and have him served with the lawsuit, you can end up in court where the resident may not show up and you will get Judgment against the resident, the resident will show up and you will possibly successfully mediate the dispute, or you could lose the case entirely or in part. Worse yet, an attorney could jump in and represent the resident, and if you lose your case even in part, you may very likely have to pay the resident’s attorney’s fees. These fee awards can easily reach thousands of dollars. For those clients who are retired or have a lot of time on their hands, we tell them that they could go to court, fill out the paperwork and file a case against their former resident. Many of these cases end up with the manager getting some or all of their money. Many more cases result in the manager getting a Final Judgment which is suitable for framing. Getting a judgment is only the very first step in the process.

Should You Use An Attorney?

In most cases hiring an attorney and paying good money to go after bad money is not wise. There are some attorneys to whom we refer clients, such as Troy Lotane of  Vance Lotane and Bookhardt who file a large number of cases in Small Claims Court. Their firm has indeed been very successful at collecting, but they review each case carefully and evaluate the collectability of the debtor before they will help you make an informed decision whether or not to file suit. There are over 90,000 lawyers in Florida. Will many be happy to take your money so you can sue someone out of “principle”? Yes, but our firm is not one of them.

The Resident Has a Business! We Can Collect!

People who own businesses are no easier to collect from than that nice resident who just has no money or got themselves into a bind. In fact, it is often harder to collect from a business owner. Their business is in a corporate name, and they are used to people not paying them. This equates to them feeling it is okay not to pay you.

The Resident Completely Trashed the Apartment -  I Want To Sue!

Think about this. Is a person who goes out of their way to destroy the rental property someone who is going to pay you or show up in court? These people are the last to ever dream of paying their debt to you or anyone else. Clearly, these are people you should just forget about. It always strikes us as funny when the property manager goes through great pains to take pictures and videos of a completely trashed unit. These residents don’t pay. It they did, they never would have trashed the unit in the first place.

Is All Hope Lost?

There are one or two good responsible people in Florida who may actually pay what they owe you. There may be a co-signer involved, which can increase the likelihood of payment, or the resident’s situation may change, and they decide that they have the means to pay. Our recommendation is to give your attorney a call and at least get an opinion. Often an out of state owner of the property does not understand what the laws are in Florida, as they may come from a creditor- friendly state. Your lawyer can give you a quick written evaluation, and possibly your owner will want to then back down or will still want to proceed. Some people are indeed collectable and worth pursuing. Most are not. Sometimes a simple $50.00 letter from your attorney can result in payment. There are many laws governing the collection of debts by collection agencies, lawyers and the original creditor, which may be you! Do you know these laws? Are you ready to take a gamble when you can end up the loser? Do you feel prepared to take on the role of a “collector”? Do you know that you can actually be considered a “debt collector” under Federal law? If your answers to some or all of these questions are “no”, take a deep breath and spend your energies trying to keep your rental property rented with good residents.