VOLUME 4 - ISSUE 4 LEGAL UPDATE
- Tenant Surrenders But Continues to Pay the Rent
- Unclaimed Security Deposit Funds Procedure
- Code Enforcement and the Property Manager
- Are You Up to Date?
BUT CONTINUES TO PAY THE RENT
by David Robert Weisse, Attorney at Law
If a tenant who surrenders the rental unit continues to keep the rent current after giving up the right of possession, does the landlord have the ability to retain the security deposit or last monthâ€™s rent? When does the statutory claim letter have to be sent? To answer these questions, it is important to first examine Florida Statute 83.49 in conjunction with Florida Statute 83.595.
Florida Statute 83.49 (3)(a) in part provides, â€œUpon the vacating of the premises for termination of the lease, if the landlord does not intend to impose a claim on the security deposit, the landlord shall have 15 days to return the security deposit together with interest if otherwise required, or the landlord shall have 30 days to give the tenant written notice by certified mail to the tenant's last known mailing address of his intention to impose a claim on the deposit and the reason for imposing the claim.
The following is the full text of Florida Statute 83.595:
83.595 Choice of remedies upon breach by tenant.
(1) If the tenant breaches the lease for the dwelling unit and the landlord has obtained a writ of possession, or the tenant has surrendered possession of the dwelling unit to the landlord, or the tenant has abandoned the dwelling unit, the landlord may:
(a) Treat the lease as terminated and retake possession for his own account, thereby terminating any further liability of the tenant; or
(b) Retake possession of the dwelling unit for the account of the tenant, holding the tenant liable for the difference between rental stipulated to be paid under the lease agreement, and what, in good faith, the landlord is able to recover from a reletting; or
(c) Stand by and do nothing, holding the lessee liable for the rent as it comes due.
(2) If the landlord retakes possession of the dwelling unit for the account of the tenant, the landlord has a duty to exercise good faith in attempting to relet the premises, and any rentals received by the landlord as a result of the reletting shall be deducted from the balance of rent due from the tenant. For purposes of this section, "good faith in attempting to relet the premises" means that the landlord shall use at least the same efforts to relet the premises as were used in the initial rental or at least the same efforts as the landlord uses in attempting to lease other similar rental units but does not require the landlord to give a preference in leasing the premises over other vacant dwelling units that the landlord owns or has the responsibility to rent.
A landlord legally acquires possession of a rental unit three different ways: eviction, surrender or abandonment, all three of which are listed in Florida Statute 83.595(1). Regardless of how the rental unit is reacquired, one constant remains: the tenantâ€™s right of possession is terminated. Does this mean the lease is â€œterminatedâ€? Based on the wording of the statute and which collection remedy the landlord chooses in a lease-break situation, the answer will only be â€œyesâ€ if the landlord takes back the unit on â€œhis own accountâ€. Under Florida Statute 83.59 (3) (a), the landlordâ€™s obligation to send the claim letter is not triggered until the premises are vacated for â€œtermination of the lease.â€
Therefore, if the landlord chooses to retake possession on the account of the tenant, or â€œstand by and do nothingâ€, then the lease is technically not terminated. If a judge accepts this position, then the landlordâ€™s obligation to send the claim letter is not triggered until a replacement tenant is found, or until the lease expiration date occurs. Therefore, if a tenant clears the unit out and turns in keys because of a great new job in California, but continues to keep the rent current, the landlord should be able to keep the deposit in escrow until true termination of the lease occurs, and then make a decision at that point (within 30 days) as to disposition of the deposit. Similar logic would apply to last monthâ€™s rent being held in escrow. It is important that the landlord be able to document reletting efforts, not only to show that the landlord has met its duty to use good faith in finding a replacement tenant, but also to support the landlordâ€™s decision in holding off from sending the claim letter, when there may not be any immediate claim when the tenant vacates early.
A related issue occurs if a tenant is evicted. The landlord still has the right under Florida Statute 83.595 to hold the tenant to the lease balance when an eviction occurs. If the landlord elects to find a replacement tenant on the account of the tenant after the eviction is finalized, a very good argument could be made that the landlord can hold off sending the security deposit claim letter in accordance with the above guidelines. Nevertheless, our office recommends sending a claim letter within 30 days of the writ being executed, since after most evictions are finalized, at least the security deposit amount is owed, and some judges may be reluctant to accept an interpretation of the statute which allows the landlord to delay in sending a claim letter after the right of possession has vested back to the landlord. However, the better argument is that termination of the tenantâ€™s right of possession and termination of the lease can be two very different points in time.
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UNCLAIMED SECURITY DEPOSIT FUNDS PROCEDURE
by Harry Anthony Heist, Attorney at Law
Your tenant has vacated, you sent a partial or full refund of the security deposit by certified mail, and it is returned to you unclaimed. What do you do with the funds? Hold them forever? Disburse them to your owner or company? Florida law specifically deals with the procedure a property manager must take with these funds in Florida Statute 717, the Florida Disposition of Unclaimed Property Act.
What type of funds will you be holding
Most commonly, you will be holding the security deposit or a partial security deposit. Other deposits may include but are not limited to the pet deposit, key deposit or a deposit the condominium association may have required.
Are these funds unclaimed?
Typically, you have sent out the Notice of Intention to Impose Claim on Security Deposit, and this has come back to you â€œunclaimedâ€. The refund check is still in the envelope. In other less common situations, there is evidence of receipt of the certified mail, as you have received back the return receipt â€œgreen cardâ€, but for some unknown reason, the check is never cashed, and each month it shows up in your escrow account as an outstanding sum paid but not cashed. This can be an annoyance as time goes on, as this will inevitably occur in property management multiple times.
Since you may not have a forwarding address, you have sent the funds to the â€œlast known address,â€ which is indeed the home or apartment which the tenants were renting. Since many vacating tenants do not put in a forwarding order with the post office, it becomes difficult to discover a new address absent notification from the tenant. This is where some investigation needs to begin, and this investigation can save you significant time and aggravation later. In the first place, you need to send it again by regular mail, unless it was sent back to you with notification that the tenant had moved and no forwarding address is on file.
The â€œCertified Mail Conundrumâ€
It is quite possible that the certified mail did indeed get forwarded to the new address, was refused, unclaimed and still never made it back to you, or was in fact claimed, but the â€œgreen cardâ€ did not show that the mail had been forwarded. There is a strange aversion by many people to claiming certified mail which results in a large percentage of the certified mail never making it to the recipient. Many individuals feel that by accepting the certified mail, something â€badâ€ will occur to them, hence the certified mail is refused. In many other cases, the certified mail is indeed accepted, but the â€œgreen cardâ€ somehow never makes it back to the sender. There seems to be no reasonable explanation for this common occurrence, other than often the postal worker fails to remove the â€œgreen cardâ€ from the back of the envelope, and the recipient then has both the green card and the certified mail in his or her possession. We recommend that you first send the Notice of Intention to Impose Claim on Security Deposit and refund check by certified mail, but if this is returned to you, you follow this up with regular mail of a copy of the Notice of Intention to Impose Claim on Security Deposit and a replacement check; the original certified mail envelope should be left intact (unopened), and the check within that envelope can be voided on your check records. You are not required to send a refund check by certified mail. You are only required to send the Notice of Intention to Impose Claim in this fashion.
Locating the Tenant
In the old days, you could simply find out the forwarding address from the post office if there was one on file. This is not possible anymore. Now comes the time to begin to dig into the file to see if the application gives any clues where the tenant works or worked, emergency numbers, or any other names or addresses you can find which you can call or write to possibly gain a proper address. There is no prohibition on calling any of the numbers you may have in the application or writing to any addresses you may have, since you are now simply trying to return some money, and you are not engaged in any collection activities. You may glean some information by talking to neighbors of the former tenant as to the new address. Remember, you have already sent the Notice of Intention to Impose Claim on Security Deposit out. You DONâ€™T need to send it out again. You simply need to send back the money.
Cutting a new check
If you have previously sent out the refund check and it has not been returned to you, you certainly do not want to cut a new check to the former tenant unless you have stopped payment on the first check, and a significant amount of time has elapsed. We recommend waiting at least three months before taking any action. If you send a new check to the now located prior tenant, and the tenant somehow received or has been holding the original refund check, you could be in for an unpleasant surprise if both checks now are cashed.
Pulling another credit report or skip tracing
If the tenant originally gave you permission to pull a credit report in the application process, it is permissible to do this again in order to potentially find a new address. After some period of time, a new credit report will most likely contain information on the current tenant address. Many companies offer reasonable skip tracing services as well, and the small amount of money spent could save time and money later.
You have exhausted all your resources but cannot locate the former tenant. Now What?
If the refund is for more than $10.00, you are required to hold the funds in your escrow account for 5 years. Yes, you read that correctly. Florida law requires this extremely long time period to safeguard the funds from the time the funds were due to the tenant and provides a means to dispose of these funds upon the end of the 5 years.
What Florida Law Requires
The Florida Disposition of Unclaimed Property Act requires you to exercise due diligence in attempting to locate the former tenant. This means the use of â€œreasonable and prudent means under particular circumstances to locate apparent ownersâ€. The exact requirements are listed in the Act and include using the Social Security number if you have one, using nationwide databases, mailing to the last know address unless you know for sure it is inaccurate, or engaging a licensed skip tracing company. You are required to send in a report to the State of Florida on the forms that they provide prior to May 1 of each year, or you could be subject to a penalty imposed upon you. You must send a final letter to the former tenant no more than 120 days and no less than 60 days prior to filing the report with the State informing the tenant that you are still in possession of the unclaimed refund. When you finally file the report, you must include the refund money with the report, and upon payment and delivery to the State, you will have no further liability to anyone and can remove the amount from your escrow account records.
The Moral of the Story?
A diligent property manager tries on a regular basis to keep updated information on his or her tenant, including updated emergency numbers, addresses of emergency contacts, new phone numbers, new work numbers and addresses. By doing so, it will be easier to locate the tenant and get the money OUT of your account!! When was the last time you updated your tenant information?
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Code Enforcement and the Property Manager
by Harry Anthony Heist, Attorney at Law
There will come a time when the property manager and/or owner of the property receives a notice of a code violation from the municipality where the property is located for something the tenant is either doing or not doing. This may be for something as simple as parking on the lawn, failing to cut the lawn, or not taking in the garbage receptacles from the street in a timely manner. The violations could be more serious, such as failing to maintain the exterior of the property, engaging in a business activity, or allowing mountains of personal property or debris to accumulate on the front lawn. How the property manager deals with the issue can make the difference in the property owner receiving a fine or notice of hearing, or instead getting a serious break cut for them by the code enforcement official. The key is the property manager must deal with the problem, deal with it swiftly, and keep code enforcement fully aware of the actions which are being taken to rectify the situation. The Catch-22 is that the time period for compliance given by code enforcement is seriously at odds with the actual time it can take to get compliance or eventual removal of the problem tenant.
The Property Owner Receives Notice
Usually, the property owner will receive notice by mail at the address that code enforcement has for the owner. This is usually the address where the tax bills are sent. The owner may live in a distant state or be absent on vacation when this letter arrives, and there is thus a major delay in word of the problem getting to the property manager. This is the first in a series of problems that can occur.
The Property Manager is Notified
Once the property manager is notified, action needs to be taken immediately. There will most likely be a time deadline which may be close to passing, or in some instances has already passed. This is when the property manager must immediately notify the code enforcement officer by phone and in writing, acknowledging receipt of the citation and expressing a strong willingness to deal with the problem fast.
Can the problem be solved immediately?
If the situation can be solved immediately, for instance by having a lawn person go out and immediately cut the lawn, this should be done, and the tenant should be billed for the expense incurred. If getting compliance requires the property manager do any self-help removal of the tenantâ€™s personal property, the property manager should NOT attempt this at all. Self-help removal of items or the towing of vehicles can lead to serious litigation. If the property manager cannot easily rectify the problem, a dialogue must be opened with code enforcement.
Communication with Code Enforcement
The property manager should call code enforcement immediately to see exactly what the problem is. Often the citation is vague in describing the offending activity or condition, and this will allow the property manager to get a better idea of what exactly is wrong and what needs to be done. By calling immediately, the property manager can explain to the code enforcement officer that she is on top of the problem and will be taking every legal step possible to rectify the problem. Most code enforcement officers will appreciate the call and indicate to the property manager that the main purpose of the citation is to get compliance, rather than impose fines or other penalties. The property manager will then be led to believe that the code enforcement officer is a nice person and that there is an actual extension given. It may be a correct assumption that the code enforcement officer is indeed going to work with the property manager and give an extension of time to deal with the problem, but can the property manager be sure?
Did the Property Manager Get an Extension of Time?
The property manager immediately will serve the tenant a Seven Day Notice of Noncompliance with Opportunity to Cure, which probably is the proper notice to be given in most code violation situations. Your attorney can assist you here. Will the code enforcement officer sit back and wait? We are not sure. Next week, there may be another code enforcement officer assigned to the case, as the original one is on vacation. Was the extension properly communicated? Did the property manager get something in writing, or will he or she simply depend upon the phone conversation with code enforcement, one of many phone conversations the code enforcement officer had that day among many other people? We recommend that you immediately follow up any phone conversation with a letter to the code enforcement officer by regular mail and certified mail such as this:
Dear Officer Smith:
Today I received the notice of violation on 125 Main Street and will be taking immediate action. As per our phone conversation, you have agreed to hold off on taking further action against the property owner during this process. We have contacted our attorney and have served the tenant with a Seven Day Notice of Noncompliance with Opportunity to Cure which is attached to this letter as â€œAttachment #1â€. This is required by Florida law before we can terminate the tenancy, if he or she fails to cure the problem. If the problem is not cured within seven days, we are required by law to serve a Seven Day Notice of Noncompliance Notice to Terminate. Once this notice expires, we can then begin an eviction action, which takes between 20 and 45 days on average. Please use me as your contact person, as I am the person directly responsible for managing the property. My phone number is 555-1212. I will be doing everything legally possible to either get compliance or have the tenant removed. Please feel free to call me or my attorney at 555-1313 if you have any questions about the progress or the procedures which the Landlord/Tenant Act requires.â€
The result of such communication will usually buy extra time for the owner of the property. Code enforcement often has no idea how the compliance and eviction process occurs, and they need to not only be informed of the procedure to understand your dilemma, but keeping them informed of the progress will help insure a cooperative experience with code enforcement and help in future occasions when another one of your tenants may be in noncompliance. Developing a keen and cordial working relationship with code enforcement is one of the traits of a successful and effective property manager.
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Are You Up to Date?
by Cathy L. Lucrezi, Attorney at Law
The federal Fair Housing law was enacted on April 11, 1968. Thatâ€™s why April is â€œFair Housing Monthâ€. There are no parades or parties or commemorative plates for the event, but you can still celebrate by doing a quick â€œcheck upâ€ to make sure the fair housing language in your lease is up to date.
When the law was initially enacted, there were five protected classes: race, color, religion, sex, and national origin. In 1988, the law was amended to add two more: familial status and handicap.
Many leases and applications, not to mention posters and promotional materials, contain a statement that is something like the following: â€œOur property does not discriminate on the basis of race, color, religion, sex, national origin, familial status, or handicap.â€
The problem? Many forms have not been updated since 1988! Some materials have been through the old â€œcut and pasteâ€ so much that one of the protected classes has been dropped!
The solution: Pull out your lease or management agreement or other written material, and see if there is an â€œanti-discriminationâ€ clause. Count the number of protected classes. If there arenâ€™t seven of them, then you are omitting somebody.
In the worst case scenario, someone from the â€œomittedâ€ group files a fair housing claim. To HUD or a plaintiffâ€™s attorney, the absence of one of the protected classes will look like you intended to discriminate against the particular group, OR that you are way out of sync with what the fair housing laws require of you. Neither perception is good for a landlord.
A lease does not have to contain an anti-discrimination clause. If there is no anti-discrimination clause in the lease, the landlord is still obligated to follow the law. He canâ€™t avoid fair housing just by leaving it out of the lease!
Lastly, depending on where the property is located, there may be additional protected classes. In some Florida localities, the protected classes include sexual orientation, marital status, veteran status, age, politics, ancestry, and place of birth. It is acceptable practice to not include the local protected classes in your anti-discrimination clause, particularly where a lease is used in more than one locality.
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