VOLUME 1 - ISSUE 2 LEGAL UPDATE
- New Banking Procedures for Clearing Checks
- 7 Day Notice of Noncompliance with Opportunity to Cure
- Bankruptcy and the Landlord-Tenant Relationship
New Banking Procedures for Clearing Checks
Do your tenants ever write you a check before they have cleared funds in the bank? Have you ever “floated” a check? Beginning October 28, 2004 checks will begin to clear at a rate never before seen due to new banking regulations and procedures. The “Check Clearing for the 21st Century Act”, known as “Check 21”, will allow checks to clear within hours rather than days of being presented to the bank. “Check 21” is going to initially result in a massive amount of NSF checks in November of 2004. Property managers need to notify their tenants immediately of this banking change to minimize the resulting mayhem. A sign should be placed conspicuously in the office and/or you should notify the tenants in writing to avoid an abundance of NSF checks. Sample wording could be as follows: Dear Resident, beginning in November 2004, checks will begin clearing at a much faster rate than before. It is imperative that you confirm that there are sufficient funds in your checking account prior to paying your rent to avoid bouncing a check or, in many cases multiple checks. In the event your check is returned to us NSF, you may be assessed NSF charges as per Florida law, you may not be able to pay future rent by check and you may be subject to eviction. (Back to Top)
The Seven Day Notice of Noncompliance
With Opportunity to Cure
by Harry Anthony Heist, Attorney at Law
The “Seven Day Notice of Noncompliance With Opportunity to Cure” is second only to the Three Day Notice as the most common notice that a property manager uses, and is often prepared incorrectly or not given at all. Knowing when and how to prepare and serve a “Seven Day Notice of Noncompliance With Opportunity to Cure” is crucial to successful property management.
When a tenant is in noncompliance, action needs to be taken. Whether the noncompliance is an unauthorized pet, unauthorized occupant, debris outside a door, unsupervised children or any of the myriad problems which can occur, nothing will be solved until the tenant is notified of the problem and told to cease. All too often the property manager writes a letter to the tenant or calls them into the office for a meeting. While this may get the desired results, if it fails, the property manager is now faced with a dilemma and a delay, as in most cases, the law only recognizes “notices”. The classic mistake of property managers is sending “letters” to the tenants rather than using “notices”. Commonly, when you send a letter to a tenant about a problem, the tenant solves that problem and all is well. In a sense, by sending the “letter” you are giving the tenant a second chance. The problem begins when the tenant does not comply with your “letter”. What now? Can you file an eviction? No. An eviction requires “notice”, a legal “notice” such as a “Seven Day Notice of Noncompliance With Opportunity To Cure” for items which are of a curable nature. If the tenant continues to be in noncompliance, a further notice may need to be given called the “Seven Day Notice of Noncompliance Notice of Termination”. If the property manager only gave a “letter” previously to the tenant, a “second chance”, they now need to serve a “notice” which in essence is giving the tenant a third chance. Depending upon the noncompliance, you may be in the process of losing good tenants which are neighbors of this noncomplying tenant as the process is so delayed.
What types of noncompliances are of a curable nature? Here are just a few: improper parking of vehicles, unregistered vehicles, failure to supervise children, barking dogs, unauthorized pets, unleashed pets, failing to pick up after pets, changing locks, speeding in the parking areas, denying access to maintenance, loitering in the breezeways, debris in the common areas, failing to pay a utility, failing to put a utility in one’s own name, grill on the lanai, debris on the lanai, violating pool rules, unauthorized occupants, improperly installed satellite dishes, failure to pay the security deposit, unsanitary apartment; the list goes on and on.
How is a Seven Day Notice of Noncompliance With Opportunity to Cure properly worded? We recommend you always start off your notice by saying “You and/or your guests and/or occupants are in violation of Florida law and/or the lease agreement and/or rules and regulations due to (list reasons)” You should not simply quote a lease clause or name a paragraph number. Your notice should clearly and concisely state what the tenant is doing that is in noncompliance. Many notices we see are legally insufficient in that they are too vague or sometimes actually too specific. You might wonder how being too specific could be a problem. Let’s take a case where a tenant is leaving their bicycle on the lanai in violation of your lease. If you give the tenant a notice just stating this violation, the tenant may get the bicycle off of the lanai, but two months from now be accumulating personal items outside the door in your breezeway, a violation of your lease agreement. Will your notice regarding the bicycle that you gave two months ago be sufficient? Possibly not. We would recommend wording the notice as follows: “You and/or your guests and/or occupants are in violation of Florida law and/or the lease agreement and/or the apartment rules and regulations due to keeping or allowing personal items, including but not limited to a bicycle, on the lanai and or in the common areas of the premises.” As you can see, this is specific enough for the bicycle on the lanai and broad enough to include a later violation in the breezeway. It is crucial that the notice is always specific enough to put the tenant on sufficient notice as to what the noncompliance may be.
How do we calculate the expiration date of a Seven Day Notice of Noncompliance with Opportunity to Cure? You simply must give your Seven Day Notice of Noncompliance With Opportunity to Cure and wait seven straight days. Note that you do not have to exclude weekends or holidays as with a Three Day Notice. Once the time period has expired, if you have not achieved the desired results, you may be able to immediately file an eviction or may need to serve a Seven Day Notice of Noncompliance Notice of Termination. Any time you have a lease noncompliance, you must get into the habit of serving the Seven Day Notice of Noncompliance With Opportunity To Cure, if it is in fact a curable problem.
A word of caution: Judges are not apt to want to evict someone on a small noncompliance. Make certain that the noncompliance is fairly serious before you think that you can evict the individual. Proof is a very integral part of success in these cases, so your documentation, witnesses, police reports, videos, etc. will be crucial. If you have a weak case but really want the tenant to vacate, there is always the option of offering to let the tenant out of the lease agreement and making a mutual agreement on the tenant vacating at a fixed date. If a problem is not cured, we recommend that you call your attorney first to see if you have sufficient grounds to serve a “Seven Day Notice of Noncompliance Notice of Termination”, and get the proper wording straight from the attorney. The Law Offices of Heist, Weisse and Lucrezi P.A. provides a free “Seven Day Wording Service” to all clients. Please do not hesitate to take advantage of this. (Back to Top)
BANKRUPTCY AND THE
by Harry Anthony Heist and David R. Weisse,
Attorneys at Law
It is the 5th of the month and you have not received the rent for one of your tenants. You are carefully preparing the Three Day Notice when the mail arrives. An official looking document from the Bankruptcy Court is addressed to you. Upon opening the envelope, you see that it is a “Notice of Commencement of Bankruptcy”, naming your tenant as the debtor. Unfortunately this scenario is becoming quite common, as bankruptcy filings are on the rise, with many of the bankruptcies being filed by renters. Can the tenant live there for free now? Can you evict that tenant? Can you cancel the tenant’s lease?
Once you receive notice from a tenant that he or she has filed for bankruptcy, you are prohibited by federal law to take certain actions. You are not allowed to attempt to collect the rent owed to you or seek possession of the rental premises without first obtaining permission from the bankruptcy court. If you had already served the tenant a Three Day Notice, you cannot file an eviction. If you had already served a Three Day Notice and filed an eviction, the eviction comes to a screeching halt. Even if you already received a Final Judgment of eviction from the County Court Judge and the Sheriff has served the Writ of Possession scheduling a lock out within hours, the lockout will be “stayed.” We have had tenants file bankruptcy minutes after the judge signed a final judgment of eviction in court. The bottom line is that a bankruptcy filing stops all collection and eviction proceedings cold. Any time you give a tenant a break or voluntarily delay finishing up an eviction, you run the risk of the tenant filing bankruptcy. If you violate the bankruptcy laws and attempt to continue collect the debt or regain the rental premises, you could incur serious penalties and sanctions. Is all hope lost?
Immediately upon receiving a written suggestion of bankruptcy, or even if the tenant verbally tells you that he or she has filed for bankruptcy, you should immediately call your attorney, who will check with the Federal Bankruptcy Court to see if a bankruptcy has indeed been filed. If it is verified that a bankruptcy has been filed, your attorney can prepare a motion to “obtain relief from the automatic stay” of bankruptcy. Since the bankruptcy filing “stays” or “stops” everything, you must petition the bankruptcy court to allow the “stay” to be lifted for the purposes of collecting your debt or continuing to pursue your eviction. The procedure of petitioning the bankruptcy court to successfully lift the stay will typically take 30-45 days with regard to a Chapter 7 petition, and 45-60 days with regard to a Chapter 13 petition. If the delinquent tenant in bankruptcy actually attempts to make payments to the landlord within the bankruptcy proceeding, the above timetables will be expanded, but in most cases, payment will not be forthcoming.
The most common bankruptcy filing you will see is what is called a Chapter 7 petition. This is also called a "liquidation” and often occurs when a tenant has mounting credit card debt, car payments, and hospital bills and just cannot get out of the proverbial debt trap. Most of the creditors, including you, will probably never see a dime of money once the bankruptcy is completed, but thankfully, the law has carved out a niche that at least allows you to prevent the tenant from living on the premises until the bankruptcy is completed. A typical Chapter 7 bankruptcy petition takes a few months and sometimes over a year to be completed, but a swift call to your attorney the moment you receive the dreaded Suggestion of Bankruptcy will usually result in about a month’s delay in removal of the tenant, in addition to the normal eviction timetable.
The tenant in bankruptcy can often buy more a little time when a Chapter 13 debt reorganization is filed, or in the rare event you rent to a corporation which subsequently files for Chapter 11 business reorganization protection, you could be looking at bigger delays. If you take no action in bankruptcy court as landlord, horror stories abound, since the tenant can occupy the premises for literally years with you having no legal recourse. Whether a Chapter 7, 11 or 13 petition is filed, if the bankruptcy is eventually followed through to the point of discharge, your collection will be limited to your security deposit retention and/or proof of claim filed with the bankruptcy court. The remainder of the tenant’s debt will be legally wiped out forever.
Suppose an applicant comes to you, and the credit report shows that the applicant is currently in a bankruptcy proceeding. Should you rent to that person? Technically, the lease with your company would constitute a “post-petition” transaction, and the automatic stay should not protect that tenant. However, that tenant could potentially seek to amend the bankruptcy petition to include you. Even if the tenant makes no attempt to amend the bankruptcy petition, if the tenant informs the sheriff of the bankruptcy at the end of the eviction, the sheriff is not likely going to make the legal distinction that your lease transaction is “post-petition”, and you will still often be required to obtain official authorization from the bankruptcy court before completing the eviction.
Be very leery of applicants who have a history of filing bankruptcy, but who do not actually follow through to the point of discharge, (known as serial filers). That pattern suggests an applicant who has no qualms about living rent free for a few months before moving on to another landlord to share the same treatment.
The next time you receive a “Suggestion of Bankruptcy” on behalf of a tenant or see any information regarding bankruptcy on an application to rent, call your attorney and get some advice. Not all attorneys are admitted to practice before the bankruptcy courts in Florida and have to “farm” the bankruptcy proceedings out to another attorney. In the Law Offices of Heist, Weisse & Lucrezi, both attorneys Cathy Lucrezi and David Weisse are admitted to practice in the Florida Middle District Bankruptcy Court and can assist you with your legal issues. (Back to Top)