The LandLord Advocate Jan 2011
Why is lease language important to a landlord? Under the law, if a landlord drafts the lease, all ambiguity will be held against the landlord in litigation about a lease clause. Here is a classic example involving a landlord who furnished an apartment with a flat-screen television, which the landlord addressed with the tenant under this lease addendum:
Tenant shared the financial responsibility . . . of all necessary charges as associated with the television . . . due to misuse, neglect, or removal of said unit. . . . Estimated charges for the replacement of the television begin at $1500/television . . . .
In this case, the tenant locked the apartment door and went to work. Upon returning home, she found the patio door open and television missing (it appeared the thief gained access through a roommate’s bedroom window by breaking the window screen). The landlord sought $1,500.00 in “damages” from the tenant, which she refused to pay, so the landlord sued the tenant for breach of lease in the amount of $1,500.00. Apparently, the landlord did not purchase a new flat-screen television and so relied on the lease addendum to prove its damages at trial.
The trial court and appellate court both ruled for the tenant because “there was no evidence that [the tenant] failed to perform some obligation under the lease.” In short, there was “no evidence that [the tenant] ever misused, neglected, or removed the television in question.” Indeed, the courts found that the tenant was not negligent, because she locked the apartment before leaving for work.
Moreover, both courts held that the landlord had failed to prove actual damages. They refused to rely on the lease clause about “[e]stimated charges” because it did not establish an amount that the parties “agree[d] shall be payable in the case of breach.” It failed two tests – first, it was not a definitive amount and, second, the lease did not state that it would automatically become due and payable by the tenant on breach of the lease.
The landlord wanted the tenant to be responsible for any damage to or loss of the television in the amount of $1,500.00, but its lease did not even come close to establishing these requirements. For example, here are some of the myriad of questions raised by the lease language:
- The tenant “shared the financial responsibility” – with who does the tenant share the responsibility, and how would the tenant’s share be established or calculated?
- The amount owed would be for “necessary charges” – necessary to who, and what are “charges” (versus cost, purchase price, etc.)?
- The cause of liability included neglect or removal – how do you “neglect” a television (it is not a living thing), who could not remove it, and what does “removal” include?
Here are the lessons from this case.
- First, landlords should not use the passive voice in their leases. For example, “due to misuse, neglect, or removal of said [television] unit” is passive, because it leaves the reader (here, the court) wondering to whom the language is directed. Compare that to the active version of “due to the tenant’s misuse, neglect, or removal of said [television] unit” – this is obviously clear, and it forces the landlord to ask itself the question whether the phrase completely captures the landlord’s intent. In this case, the landlord obviously wanted the “removal” by anyone other than the landlord to trigger the tenant’s liability, but that lack of clarity only becomes clear when the landlord uses the active voice in the lease.
- Second, regarding damages, landlords should include specific dollar amounts in the lease, and should do so only when they are willing to accept those amounts to resolve the situation. Otherwise, if they have appropriately established the tenant’s liability with lease language in the active voice, the landlord can simply replace the television with a similar model and use the purchase receipt as its proof of damages, or use the original receipt from the purchase of the television.
- Third, the judge does not know, understand, or assume anything about the case before him or her – the landlord must establish each piece of the puzzle for the judge. In court, the lease can be the landlord’s greatest weapon, or – as in this case – its greatest curse.
Contact your landlord attorney to review your lease language and propose changes that would enable you to create the clarity that a court will require to resolve your tenant’s breach of the lease in your favor.
Achieve this year’s goals with a strong foundation and proper plan.
I write this article as I return from four days of intensive physical training where success or failure could easily turn on whether I took a proper stance. I don’t mean stance as in the sense of political or philosophical position. I mean that I must be standing properly to create a proper foundation. A proper foundation was the first key to performing the actions required and even small variations in my stance could result in failure. In this instance, failure was not an option, so I had to guarantee a proper foundation to continue.
While we’ve written before about the importance of your lease, this physical training got me thinking about leases again. Just as my stance dictated my success or failure, so too does your lease impact yours. Your lease, like my stance, creates the proper foundation from which to function. Many property owners and managers figure they can manage around a poor lease or blame operational procedures when something goes wrong. They spend countless hours and resources focusing on management training or operations instead of recognizing that the foundation of their business, their lease, is really the source of the problem. The ability to see discrepancies in a lease gets even harder when the lease problems are subtle or rarely called into question because there are so many other priorities to address. A perfect stance in my training gave me the proper foundation to perform. A proper lease on your property gives you the foundation to succeed.
Another part of my training focused on taking corrective action when I wanted to, rather than when I needed to. While we practiced emergency responses, their use was explicitly meant as a last resort solution to a problem we could easily have avoided by correcting the problem earlier. As I talk about in the Quick Tip, attending to those items that need correction can become part of your daily ritual rather than an emergency response drill.
As the New Year begins, now is a good time to resolve to focus the appropriate hours and resources on ensuring your company has the proper foundation on which to operate. Whether subtle or screaming, the problems created by a faulty lease will always be more expensive to fix when it is necessary, than when you chose. Right now, you can decide the time and attention necessary to gain an appropriate perspective to identify and correct problems that you can foresee. By doing so, you give yourself flexibility and focus rather than reacting to them as they surprise you.
With the time and resources focusing on your foundation and how it affects the outcome of your management and operations, you will be able to bring all three (your lease, management, and operations) into harmony so they are working with and not against each other. Having a lease that is unmanageable, an operating procedure that undermines your lease, or a management challenge that violates your operation philosophy, will only frustrate you and your purpose as multifamily housing owners and operators. If you look at your lease only in a time of crisis, you may not recognize the interplay between it, management, and operations and thereby end up proverbially chasing your tail.
Even after four days of intense training, I watched other students in my class fail to achieve their goals – not because they didn’t want it enough or because they weren’t performing properly – but because they still hadn’t established and committed to a proper foundation. Every action they took with a faulty foundation produced faulty results. Our instructors advised them that if they wanted to get their desired results, they had to fix the faulty foundation and do it when they wanted to, not in an emergency.
After years of experience and frustration with your lease, take the time now, when you want to, and correct it. You have a better chance of correcting the problems and achieving your desired results.
CT-IREM – A strong and valuable landlord organization.
We are pleased to introduce you to the Connecticut Chapter of the Institute of Real Estate Management (“CT-IREM”), a fixture of the Connecticut real estate management industry since 1966, and are proud to announce that CT-IREM has awarded the Landlord Law Firm its 2010 Friend of the Year award.
CT-IREM is a Five Star Chapter of IREM, a national organization that serves real estate professionals who manage all property types, and is dedicated to delivering leading-edge networking, educational offerings, and professional development opportunities. IREM’s core purpose is “to advance the profession of real estate management while helping real estate managers prosper and add value to their companies and the properties they manage.”
IREM members manage $1.5 trillion in assets consisting of 9.4 million residential units and 8.4 billion square feet of commercial space. Indeed, IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors. IREM recognizes and involves the professionals that serve the real estate management industry through its Friends of IREM designation. The Landlord Law Firm has been a Friend of IREM for years.
Our clients and readers know that we are also strong supporters of the CT Apartment Association (“CTAA”) – a member of the National Apartment Association (“NAA”), which focuses exclusively on the residential housing market. IREM and NAA have collaborated on many projects, including their joint development and sponsorship of a Fair Housing training program.
We have been pleased to be the facilitator of the Fair Housing training program for CT-IREM since the program’s creation, and we have presented many of our seminars to CT-IREM, including:
- Get the Rent on rent collection strategies;
- The Appropriately Meddling Landlord on the application/screening process, lease renewal, and unit access rights and responsibilities; and
- Getting Rid of the Problem Tenant on the property management operation and legal options available to the real estate professional.
We offer these seminars to all interested organizations and real estate management companies. You can learn more about them, and find when we are next presenting a seminar, at our website at http://landlordlawfirm.com/events.html.
We align ourselves with strong organizations like CT-IREM because we share its core purpose and mirror its slogan – “Education. Ethics. Excellence.” – with our clients in the real estate management industry. We have always been impressed by the level of experience and professionalism of IREM members and their companies.
IREM provides three (3) levels of accreditation for its individual members –
- Certified Property Managers (“CPM”),
- Accredited Residential Manager (“ARM”), and
- Accredited Commercial Manager (“ACoM”)
Real estate management firms can pursue the IREM designation of Accredited Management Organization (“AMO”). Property management professionals and companies can find more details about these accreditations and designation at the CT-IREM website at http://www.irem-ct.org.
CT-IREM holds monthly lunch meetings for members, friends, and guests with three main components:
- Seminar or educational topic presentation;
- Organization business; and
- An opportunity to connect, address topics of common interest, and network with one another.
Contact CT-IREM Association Executive Ashley M. Lodovice by phone (860-442-0189), fax (860-499-5006), or email (email@example.com) for more information about upcoming meetings, events, and educational opportunities.
Please call us if you would like more details about our experience with CT-IREM and whether it makes sense for you and your company.
The value of ritual in your workday.
While I don’t normally share other people’s writing, this one struck me as really relevant and so, in case you haven’t already seen it, I share it with you here. Enjoy!
“The Value of Ritual in Your Workday”
by Peter Bregman in the Harvard Business Review [published online 2010-Dec-08 at http://blogs.hbr.org/bregman/2010/12/the-value-of-ritual-in-your-wo.html]
I recently saw the movie The Last Samurai for the second time. Set in Japan in the 1870s, it tells the story of an American civil war veteran who was captured by samurai fighters and, over time, learned to honor their ways.
The first time I saw the movie, when it came out in 2003, I was enthralled by the beautifully choreographed fight scenes.
But this time, I was most moved by a scene I don’t even remember seeing the first time: a samurai drinking tea.
Sitting at a low table, he moved deliberately, singularly focused on his tea. He contemplated it. Then poured it. Then sipped it, tasted it, and, finally, swallowed it.
This, I realized, was the source of the samurai’s strength.
His acrobatics were impressive, but they were merely a demonstration of his strength. The source was this tea ritual and many other rituals like it. His power as a warrior came from his patience, precision, attention to subtlety, concentration, and his reverence for the moment.
The power of ritual is profound and under-appreciated. Mostly, I think, it’s because we live in a time-starved culture, and ritual is time-indulgent. Who can afford the luxury of doing one thing at a time? Who has the patience to pause and honor an activity before and after we do it?
We all should.
Religions understand and leverage the power of ritual. In Judaism, blessings are as plentiful as iPhone apps. Wake up? There’s a blessing for that. Wash your hands? There’s a blessing for that. Experience something new? Eat a meal? Go to the bathroom? There’s a blessing for each one. Every religion I know has similar practices to make our experience of the world sacred.
Which might be why we avoid ritual in the business world. Religion is so loaded, so personal. But ritual doesn’t have to be religious; it’s just a tool religions use. Rituals are about paying attention. They’re about stopping for a moment and noticing what you’re about to do, what you’ve just done, or both. They’re about making the most of a particular moment. And that’s something we could use a lot more of in the business world.
Imagine if we started each meeting with a recognition of the power of bringing a group of people together to collaborate and an intention to dedicate ourselves, without distraction, to achieving the goals of the meeting. Perhaps even an acknowledgement that each person’s views, goals, and priorities are important and need to be heard. Of course, that would require that every meeting have a clear goal, an agenda, and a purpose. But those are just nice side benefits.
What if every performance review began with a short thought about the importance of clear and open communication? If every time we worked on a spreadsheet someone else created for us, we paused to acknowledge the complexity of the work she did and the attention to detail she brought to it? If at the beginning of the day we paused to honor the work we are about to do and the people with whom we are about to do it?
Here’s what makes it easy to get started with this: no one needs to know.
Start with just yourself. Sit at your desk in the morning, pause before booting up your computer, and mark the moment. Do this by taking a deep breath. Or by arranging your pens. Whatever it is, do it with the intention of creating respect for what you’re about to begin. Do the same before you make a phone call. Or receive one. Or before you meet with a colleague or customer.
Each time we pause, notice, and offer respect for an activity, it reminds us to appreciate and focus on what we’re about to do. And by elevating each activity, we’ll take it more seriously. We’ll get more pleasure from it. The people with whom we work will feel more respected. And we’ll feel more self-respect.
Which means we’ll work better with each other. And produce better results.
That focus will help us accomplish our tasks more carefully, more proficiently, and more productively, with fewer distracting under-the-table BlackBerry texts. And all the research shows that that kind of singular focus will make us far more efficient.
In other words, that time-indulgent ritual thing? It might just be the perfect antidote to a time-starved world.
New CT law allows domestic abuse victims to break lease.
Effective October 1, 2010, specifically with leases entered into or renewed effective January 1, 2011, a new CT state law now allows a tenant to terminate a lease without penalty or liability for the remaining lease term when the tenant is a victim of family violence (as defined by statute) and reasonably believes that it is necessary to vacate the apartment due fear for the tenant or the tenant’s child’s personal safety because of the family violence.
This makes good public policy sense, because we do not want to force the victim(s) of domestic violence to remain subject to that violence simply because they have a lease that has not yet expired.
Importantly, the statute establishes several requirements to protect landlords from tenants who may attempt to abuse or misuse this new statute:
- The tenant must give the landlord a thirty (30) day written notice that meets the statute’s very specific requirements, including documentation of involvement by the police, court, a victim services organization, the Judicial Branch’s Office of Victim Services, or a medical or other licensed professional from whom the tenant or the tenant’s child has sought assistance regarding the family violence.
- The statute does not relieve the tenant from liability for any rental arrearage incurred before the lease termination date, or for any property damage caused by the tenant.
- Finally, it permits the landlord to bring an injunction action in housing court seeking to prevent termination of the lease if the tenant does not meet the statute’s requirements.
Landlords should contact their landlord attorney to discuss this new statute and plan for its implementation and clarification as the courts face specific cases brought pursuant to it. In particular, landlords should:
First, evaluate the effectiveness of their application screening processes;
Second, establish policies and procedures to implement the statute within property management operations; and
Third, review their lease language to ensure that correlative effects of a tenant terminating the lease do not prejudice the landlord (for example, by forcing the landlord to continue the lease with the abuser and/or with tenants who cannot or will not comply with the lease provisions in the absence of the abused tenant).
Ritually review your lease.
Articles in this issue talk about the importance of ritual in your workday and fixing lease problems when you want to rather than when you are forced to. I thought this tip would synergize the two ideas a bit.
If you take time to inject workday rituals that allow you to look to the future, focus on the big picture items, and address them at your leisure, you may find that these two ideas working together make for a very productive and enjoyable work environment.
Too many of us spend most of our time in a crisis management mode rather than handling things with clear heads and complete information. Throw some ritualistic time into your workday where your total focus is on things that [in the words of Stephen R. Covey, author of The Seven Habits of Highly Effective People] are Important but Not Urgent (Important items are those things that will have the largest, immediate and long-term impact on your productivity).
You can make a big impact on your workday and your company if your attention to the Important but Not Urgent items becomes a ritual in your workday. As we suggest in our accompanying article, your lease is a great place to start.
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.