April 2015 LANDLORD ADVOCATE
While awaiting the court mediator one day, I was approached by a woman, whom we’ll call Sharon, with a polite, “Are you an attorney?” Knowing that a yes would prompt, “Can I ask you a question?” (because it always does), I hesitantly nodded and said, “Yes, Ma’am.” Well, it seems Sharon was the mother of a tenant who, along with a roommate, was facing an eviction for failure to pay 6 months’ worth of rent.The rest of the story Sharon related to me is also the same one I hear in many cases that arrive in court. The landlord said this…the landlord didn’t fix that…the landlord won’t help us…the landlord…the landlord.
“What can we do about it?” Sharon asked aloud, with the translation in my head being, “What can we do to avoid paying the landlord any or all of the money since we don’t want to take responsibility for our own actions? We want to hold the landlord responsible but refuse to set the same standard for ourselves.”
Mind you, Sharon relayed that the condition of the apartment was deplorable and that her daughter and the roommate most certainly shouldn’t have to pay rent to live in such conditions. As Sharon further discussed the conditions of the apartment, I asked her how and why her daughter and roommate remained in the apartment under such conditions, and more importantly, why they might expect to do so without having to pay the rent. Not surprising, it wasn’t long after I had challenged her perception that it was the landlord who was at fault, that I learned as much as Sharon was willing to share.
The point of the story is that if the landlord had acted six months earlier, when the tenants first failed to pay the rent, he could have avoided a number of pitfalls including:
- First and foremost, lost income brought on by tenants who are six months in arrears on the rent.
- Second, tenants who don’t believe they should have to pay any of the missed rent and are willing to fight over it.
- Third, tenants who have taken the time to educate themselves on ways to fight the process.
- Fourth, tenants who seek help from local planning and zoning officials to put pressure on the landlord.
I am certain there are more concerns and issues present that were ultimately avoidable, but I think you get my point.
So, this case aside, the questions here are:
- Do I know exactly what this type of scenario will ultimately cost the landlord to resolve (both in time and money)? No. But, I have a good sense that it will be multiples of what it would cost to simply serve a notice to quit after the first missed payment and then to follow that up with an eviction case.
- Do I know all of the liability and cost associated with being scrutinized under a microscope by the local code enforcement authorities? No. But, again, it will be considerably more expensive than addressing a few minor tenant concerns when they arise.
- Do I know how a repeat of this situation will play out in the future? No – no more than the weatherman knows the exact temperature at 12:00 PM tomorrow. But, I know without question that if the landlord had acted promptly, he would have gone a long way to protect his property investment – much better than he would have by doing nothing.
- Consider the long-term impact that your short-term decisions may have. A bandage may stop the bleeding, but if the wound doesn’t heal, you are in for a much longer and costlier recovery.
Get the name right!
In an earlier edition, we recommended that purchasers of commercial or multi-family residential buildings (or the property management company for the new owner) focus on having the property owner’s legal name and appropriate legal designation correct in the master documents for the properties that you own or manage. It is especially important to ensure you are using the appropriate legal name consistently throughout master documents such as the lease, vendor contracts, marketing materials, and legal cases.Since the release of that article, we have experienced firsthand how this issue can arise even where the ownership has “stayed the same.” Specifically, the owners (or at least the principal people or organizations owning the properties) have not changed, but some legal event has occurred that changed the ownership legal name.
Now, a name change can occur for many reasons:
A larger company may decide to reorganize its operating structure – requiring an owner legal name change.
This same large corporation may undergo restructurings, where they shift assets from one ownership entity to another.
A company may move all of its commercial assets into one entity, while using another entity for its residential complexes.
An owner with multiple buildings in one entity may decide to place each property in a unique ownership entity.
Regardless of the reason, owner legal name changes occur often, and it is well worth a few hours of your time to ensure that you have the information correct throughout ALL of your documents. As we mentioned in the previous article, the best way to get confirmation is in writing (or by email) – phone calls are notoriously ineffective for confirming an owner’s legal name.
Contact your landlord attorney if you are having trouble nailing down the correct owner legal name, or if a change to that name was not completely disseminated throughout the organization or master documents, so that you can address these subjects clearly and completely.
The reading of this newsletter does not form an attorney-client relationship. The contents of this newsletter are for informational purposes only and do not constitute legal advice. Nothing in this newsletter is intended to imply or predict the outcome of any legal matter that you may be considering or be involved in. The Landlord Law Firm makes no warranties of any kind regarding the information contained in this newsletter.