WAIVER AND ESTOPPEL

 

There are two legal doctrines that every property manager must understand. Those two legal doctrines are waiver and estoppel. Why? The outcome of your case may be decided based on these concepts. In short, they can operate as a “death penalty” to your case. Unfortunately, many property managers hear the words “waiver” and “estoppel” for the first time after they have lost an eviction case. The legal doctrines of waiver and estoppel show up in many landlord/tenant related matters.  In the current economic climate, property managers need to be “on their toes,” as residents are become more desperate and at the same time, more sophisticated, in terms of their knowledge of Florida landlord/tenant law.

 

What Does the Legal Term “Waiver” Mean?

 

Waiver occurs when a person relinquishes or surrenders his rights or privileges. It can be voluntary or involuntary. The “voluntary” waiver situation occurs when a person signs an agreement relinquishing his rights or privileges. Courts will generally uphold voluntary waiver agreements outside of the landlord/tenant context, if the agreement is very specific as to the nature of the rights being waived” by the parties. However, as you will see later in this article, waiver provisions in leases by no means assure you that resident cannot bring forward a “waiver’ claim. By contrast, the “involuntary” waiver scenario takes place when the law deems that you have lost your right to defend a legal action or sue to enforce your rights because of some prior action on your part. The concept of “waiver” is explicitly written into the Florida Landlord Tenant Act. Even in cases when waiver is not addressed in the Florida Statutes, there is law resulting from previous judicial decisions, otherwise known as “legal precedent”. That simply means that a prior legal decision finding “waiver” on the part of a manager or resident, was the basis for a later decision finding “waiver” on the part of a manager or resident. Usually, the facts of the prior case and the later case would be similar, but would not need to be exactly the same.

 

Common Waiver Scenario # 1 (Rent acceptance after seven day notice)

 

Ricardo, the property manager at XYZ apartments, observed one of his residents, Betsy, brandishing a gun on the premises. Ricardo called the police, and Betsy was subsequently arrested for felonies involving firearms, an obvious violation of Betsy’s lease with XYZ Apartments. After receiving the police report detailing Betsy’s arrest, Ricardo instructed his attorney to draft a seven day notice of termination of lease based upon Betsy’s noncompliance with her lease. Ricardo posted the seven day notice, but Betsy failed to vacate. Ricardo was left with no choice but to file an eviction action against Betsy. In Court, Betsy pointed out to the judge that a check for $700 was accepted by Ricardo the day after the seven day notice was posted. The judge dismissed the case on the spot! Why? One only needs to look at Section 83.56 (5) of the Florida Statutes: “If the manager accepts rent with actual knowledge of a noncompliance by the resident or accepts performance by the resident of any other provision of the rental agreement that is at variance with its provisions, or if the resident pays rent with actual knowledge of a noncompliance by the manager or accepts performance by the manager of any other provision of the rental agreement that is at variance with its provisions, the manager or resident waives his or her right to terminate the rental agreement or to bring a civil action for that noncompliance, but not for any subsequent or continuing noncompliance.”

 

In this case, Ricardo in fact, accepted the rent (the $700 check) with knowledge on the noncompliance (the felony firearm arrest). Is this fair? The answer to that question has no bearing on how you should conduct yourself if you aspire to be a successful property manager. Successful property managers do not waste time “second guessing” the law. They make a conscious attempt to learn the law! One of your goals should be to understand how your actions can adversely impact your court cases if you do not understand the law in this area.   

 

Common Waiver Scenario #2 (Rent acceptance after 3 day notice)

 

Samantha, the property manager, issued a valid Three Day Notice to Pay Rent to Esmeralda. The amount owed to the manager by Esmeralda was $2500. Samantha requested that her attorney file an eviction action after Esmeralda’s three day notice expired. Four days after the eviction was filed. Esmeralda dropped off money orders totaling $250. That day, Samantha was understaffed at her management office and mistakenly deposited the money orders. Was there a happy ending to this story from Samantha’s perspective? Of course not! If rent is accepted, whether in full or in part, (notice that only 10% of the amount owed was paid), by a manager subsequent to the service of a Three Day Notice To Pay Rent , then the manager is deemed to have waived its right to evict the resident based on that Three Day Notice to Pay Rent. This is based on the same reasoning as in Scenario #1 above - Section 83.56 (5) of the Florida Statutes. Even though Samantha may argue that she deposited the partial payment without realizing that Esmeralda was out of compliance with the lease, judges will universally consider the deposit into the manager’s/management bank as acceptance, and most will charge the manager with knowledge of the resident’s noncompliance. Some judges will still grant the eviction based upon the resident’s failure to deposit into the Court Registry the remaining 90% rent balance, but don’t count on it.  

 

Common Waiver Scenario #3 (Rental assistance forms)

 

Tim, your resident, is behind in rent for the month of September. “Great news” he tells you. The county housing assistance agency will pay for that month. You gladly sign Tim’s housing assistance application. A few weeks later you receive the September rent check from the housing agency. The October rent, however, is not paid by Tim, and you request that an eviction action commence. At court, Tim’s attorney enters his rental assistance application into evidence. You were so happy that Tim was receiving help back in September that you did not carefully review the agreement. It turns out that the assistance form is rigged with conditions. The housing assistance application stated that, “The manager agrees not institute an eviction action for 45 days from the time payment is received”. Therefore in this case, the manager waived their right to evict Tim, because the eviction action was filed prior to the 45 day grace period expiring. These forms frequently limit the rights of property managers and management and can be very dangerous. Our firm advises our clients not to sign those forms.  

 

Common Waiver Scenario #4 (Partial or Late Payment of Rent)

 

This is the “classic” Estoppel case. Charlie paid rent late every month for 6 months. In fact, he paid his rent on the last day of the month. On the seventh month, the property manager decided that she had enough of this nonsense and instituted an eviction action against Charlie. In court, Charlie’s lawyer asks the judge to throw out the case based on the doctrine of Estoppel. The judge agrees. The same result often happens when the property manager constantly accepts partial payments. As we have pointed out numerous times in this newsletter and in seminars, the resident is actually being rewarded for bad behavior in these cases. Why? Courts will rule that the doctrine of estoppel will apply if:

 

1. Words and admissions, or conduct, acts, or all combined cause another person to believe the existence of a certain state of things

2. In which the person speaking, admitting, acting and acquiescing did so willfully, culpably, or negligently,

3. By which such other person is or may be induced to act so as to change her own previous position injuriously. What does that mean? If the property manager is giving the impression to the resident that the terms of the lease need not be followed, then the manager seriously jeopardizes her ability to enforce the terms of the lease.  

 

This situation also comes into play when you do not act promptly to remove an unauthorized resident (link to our article “authorizing the unauthorized resident) or when the property manager serves notices after a non-renewal notice is issued (link to our article “No more notices after Non-Renewal). You should also be aware that under Florida case law, some judges have ruled that serving a Three Day Notice upon a resident voids all earlier Three Day Notices. You should not give the residents any Three Day Notices while an eviction action is ongoing!

 

Does the “No Waiver” provision in my lease protect me?

 

It may not! Courts will often not allow a manager to defeat potential waiver defenses by including favorable language in their leases. Many courts take the view that these provisions are against public policy. In addition, many judges may determine that such a clause violates Section 83.45 of the Florida Statutes (Unconscionable Rental Agreement) or Section 83.47 (prohibited lease provision) if those judges believe that you are attempting to take away from the residents protections already granted to them by the Florida Landlord Tenant Act (Chapter 83 of the Florida Statutes).