The LandLord Advocate Dec 2010
The Connecticut Appellate Court recently ruled that a commercial tenant who remained in possession after the expiration of his lease was obligated to pay the additional rent requested by the landlord during the holdover period. Because the landlord informed the tenant of the new rent term of the month-to-month lease and requested from the nonpaying tenant confirmation of the new rent term thereafter, the court concluded that the tenant impliedly agreed to the new rent term by remaining in possession of the premises.
This case is great news for landlords here in CT who use holdover clauses with month-to-month charges in their leases. While the recent decision was in a commercial case where the plaintiff was seeking money damages equal to the unpaid rent amount and unpaid tax increases, the logic of the decision applies to any landlord-tenant relationship. The Appellate Court based its ruling on the facts of the case and a 1950 Connecticut Supreme Court case and determined that the implied consent by the tenant was sufficient to establish a month-to-month lease under which the tenant was obligated to pay the landlord the additional rent he sought. This same logic should apply to your month-to-month holdover clauses where the tenant agrees upon signing the lease that should they remain beyond the initial term, they will be responsible for the month-to-month premium listed in your lease.
There may be some additional things you will want to do if you have a tenant heading for holdover status to ensure you close any loopholes they may try to create concerning their new month-to-month rent. For example, a notice highlighting the new month-to-month rent in advance of the lease expiration will be helpful, as well as a follow-up letter to the tenant who remains in possession after the lease expires by fails to pay the new rent amount. With these in place, the Appellate Court believes the tenant remaining in possession thereafter has impliedly agreed to the new terms and is therefore responsible for the new rent amount.
As always, make sure your notices comply with your lease. You don’t want to lose the opportunity you’ve been given my making errors that would undermine your claims.
Reap the benefits of an Annual Company Plan.
A client’s CEO recently invited us to participate in an annual review of the documents controlling the operation of their rental units – for this article; we will call it an Annual Company Plan. Their approach applies to both commercial and residential landlords, because they share – at a minimum – the central importance of a lease and rules and regulations governing their landlord-tenant relationships. In this particular case, the client also manages subsidized residential units, so there are federal and state-mandated policies and procedures that are included in the annual review.
Each fall, the CEO distributes the controlling documents to a small group of subject-matter experts, including their landlord attorneys, for review prior to a short, focused meeting to brainstorm and discuss proposed changes or areas of concern. They identify a project-leader who records the discussion and drafts the first redlined copies for the participants to review and add their own comments, suggestions, and edits. Working with the client and its key staff – and the appropriate expert(s) – the project leader finalizes the proposed changes, and the group meets for a final review of the decisions made to make sure (to the extent possible) that they have identified and addressed all the implications of the changes.
This fantastic process has several benefits (full credit to our client for the ideas and reasoning). First, as the CEO puts it, it “keeps everything fresh.” The project requires the company’s key personnel and its supporting experts to annually review the controlling documents. We firmly believe that – at a minimum – landlords should review their lease, rules and regulations, and policies and procedures annually. Clients who commit to this process typically report that they discovered that their lease and rules and regulations covered subjects that they thought had not been covered, did not cover subjects that they were sure had been covered, and contained provisions that were hopelessly out-of-date or completely opposite the company’s current position. More importantly, they sometimes discover that required policy and procedures (often, those related to the Americans with Disabilities Act and Fair Housing Act) are simply missing.
Second, by making it an annual process, the CEO is able to “inhibit reflexive and impulsive changes.” It is hard for people to face a problem or mistake during the year, and not want to fix it immediately. However, this causes the business to be in a state of constant flux, with documents, policies, and procedures changed in a charged emotional state (you often hear the phrase “there is a problem that must be addressed now” accompanying the situation). Moreover, the changes are often made without the input from other areas of the company that will be affected, or without sufficient consideration to the effect that the change with have on the company’s tenants. Smart companies save such immediate changes for true emergencies or business-critical moments, such as situations where the change is necessary to protect the company’s short- and long-term viability. Knowing that the annual review will occur each fall helps the company to evaluate the situation at hand to determine if it is truly business-critical or can wait until the end of the year to address calmly, dispassionately, and with the key players and experts.
Third, it “calenderizes everything.” By making it an annual project each December, the company makes any necessary changes to documents, policies, and procedures each January. This is tremendously valuable for communicating such changes (people expect changes with each calendar year), it gives staff and the company’s attorneys, consultants, and vendors time to prepare for and execute those changes, and it helps everyone to recall the effective date of previous changes. It is often a time-consuming process for clients to figure out when, why, and how they changed something, and – with a dedicated annual project – the key players can access files and trigger memories much more easily.
Finally, and perhaps most importantly, it enables the CEO to keep his Board of Directors informed on policy and legal changes, including unfiltered access to the experts in the working group to discuss the proposed (or implemented) changes. It also provides an annual reminder to the Board that the CEO is running the business in the above ways – keeping things fresh, making changes thoughtfully and not reflexively or impulsively, and doing so on a consistent and predictable annual basis.
Decide that you will initiate your first Annual Company Plan this year and engage your landlord attorney for assistance with the lease, rules and regulations, and any other policies, procedures, or documents that are involved in your landlord-tenant relationships.
The importance of setting aside time to think strategically.
We are bombarded with information on a daily basis from more means of communication than ever before – letters, emails, calls (work, home, and cell), texts, tweets, social networking updates, and the list goes on and on. With the holidays comes seemingly never-ending shopping and celebrating, while work still beckons.
It is hard in those moments to set aside quiet time to think about our work and life and decide what strategically makes the most sense regarding how and when to address situations that we face. So, decide today to make one change this month – to give yourself some quiet time to consider the various business and personal situations that you face. Do not schedule a meeting or draft an agenda – simply set-aside time for yourself without interruption to think about what is happening to and around you.
As landlord attorneys, we have learned that our clients who react to situations end up spending more time and money on their landlord-tenant issues and litigation, and find the path to increased revenue, decreased expenses, happier tenants, and fulfilling work much more difficult to achieve. Give yourself the gift of a break – a quiet, uninterrupted break – this holiday season to think and thoughtfully develop considered, strategic responses.
More words of thanks.
Here we are a year later and my last December Words of Thanks still ring true:
“The leaves were falling – now they are almost gone. The air was crisp – now it’s cold. The sun is setting just a little earlier each day as autumn shuffles by. Baseball season is all but over and most snow birds have flown the coop. Our children are anxiously awaiting the day that the sleds and snowboards get their first run this winter.
As we reflect on the past year, we write to say thank you to all of you who are reading this. Our thanks are not for what you mean to our firm, although we thank you for that and look forward to our ongoing relationship. Our thanks for you today are for the tremendous effort, dedication, and resilience you display each and every day providing homes for so many people around our state.
Yours is a difficult, complex, and often thankless pursuit, where people complain instead of compliment, demand instead of request. You are developing, maintaining, managing, and improving one of the most essential parts of people’s lives, all in the face of criticism and ridicule from the people you serve. And, then when one of your residents brings you a legitimate problem, you address it with a smile. You truly are professionals who set the standard for professionals.
We at the Landlord Law Firm wanted to make sure your tireless commitment did not go unnoticed or remain thankless. We appreciate the work you do, the successes you enjoy, and want to say Thank You for all that you do for all the people who reap the benefits of your sweat and tears. Have a wonderful holiday season!”
Now, some more words of thanks. Thank you for reading the Landlord Advocate and sharing your ideas and feedback on how we can make it better. Thank you for attending our seminars and sharing your professional challenges with us so that we can help make them better. Thank you for visiting us and introducing yourself at tradeshows and other social and networking events. Thank you for making the first Landlord Law Firm Client Appreciation Party a smashing success. And, thank you for inviting us to participate in your meetings, strategy sessions, and the management of your property. We hope our input has been beneficial in many ways.
Perhaps most of all, thank you for sharing with other professional managers your experience with the Landlord Law Firm and referring them to us in their time of need. The greatest compliment we ever receive is when a client refers a trusted friend or colleague to us to handle their concerns. It lets us know that we are doing the right things and doing them well and that our efforts are appreciated.
From all of us at the Landlord Law Firm, we Thank You!
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.