The LandLord Advocate November 2013

Many of our clients don’t realize the effect one of their cases can have on the entire landscape for landlords in Connecticut. The long-term impact of a court’s decision, on what seems to be a straight forward legal question, is often hard to predict – and even harder to calculate as a bottom line figure and operational impediment. However, occasionally an issue comes up that is obviously important, not only for the immediate case involved, but for every other case of that nature that may be pursued in the future.

Such a situation currently exists regarding a HUD handbook put together for landlords with subsidized tenancies in their communities.

Now, let me begin by stating that this is no abridged HUD “how-to” manual – the PDF version is 743 pages of guidance – outlining how HUD believes you can best operate your business when it involves subsidized, multifamily housing programs. And while it does cover many topics, it is by no means an operations manual. Nor is it even a complete guide on how to handle many of the situations it addresses. It is rather, an accumulation of suggestions on a wide range of circumstances you may encounter and how you might choose to handle them.

However, while intended as a tool for landlords, it has recently been positioned in some CT courts in a way that could ultimately prove detrimental to its intended audience.

You see, since it’s publication, advocates for subsidized tenants have commenced a campaign in the Connecticut courts, the success of which would result in this guidebook assuming the position of law in the State of Connecticut, thereby imposing on you and your fellow landlords yet another layer of regulatory schema that must be followed precisely in order to keep your nose and your communities clean – by that, I mean, compliant and thus unmarred.

As advocates for landlords, we recognized and identified this campaign from the outset and have unequivocally advised our clients that allowing such a fundamentally flawed position to go unchallenged would result in significant cost and operational adjustments that would ripple throughout their entire company structure. Luckily, a number of our clients have recognized the gravity of the situation, have taken our advice, and have championed a resistance against these tenant advocates.

The first successful rebuttal of tenant efforts to annex an advisory manual onto our mandatory compliance laws was in New Britain. Legal aide lawyers attempted to impose additional requirements on pretermination notices, claiming the HUD handbook articulated those additional elements and that the handbook should be imposed as though it were the law. In a brief, but accurate opinion, the trial judge properly concluded that neither the governing federal laws, nor the applicable state laws, required compliance with the suggestions in the HUD handbook, and ordered that the case proceed further.

Following that success (and that judge’s proper ruling), a Tolland judge reached a similar conclusion on an almost identical challenge from legal aid attorneys. In that case, the court ruled that there was a possibility that the tenant may raise the issue as a defense to the case, but that the tenant could not get the case dismissed solely based on their unsupported theory.

The proverbial third strike in this campaign occurred in the Bridgeport Housing Court, where the judge initially agreed with the tenant’s position and dismissed the case. However, because of the importance of the issue, our client authorized a motion to reargue the issue, which the court granted. After the reargument, the court conducted a survey of the issue around the country and reconsidered its prior ruling. Ultimately, the court concluded in favor of the landlord, ruling that “The common law of the United States has consistently held the HUD handbooks to be unenforceable as a matter of law”.

The most direct impact of these tremendous, landlord-favoring decisions seems to clearly be on those of you who have subsidized units. However, since everyone is a potential Section 8 landlord, the positive outcome is equally important for all.

There are three different courts in different jurisdictions around the state that agree the HUD handbook is not the law of CT. Simply put, the tenant advocates have, at this time, failed to impose on all of you an additional 700+ pages of unpassed laws – laws that you would need to learn, incorporate and follow in order to move forward in the subsidized world.

Now, while I don’t expect this to be the complete end of the campaign, it is certainly comforting to recognize that past efforts in these three courts will likely reduce the pressure and will certainly ease the time and money necessary to thwart the campaign should it continue in the trial courts.

Thanks to those clients who are at the forefront of this resistance. We applaud you. Your courage and efforts are a benefit to all.

Quick Tip:

Act swiftly on nonpayment of rent – even with long-term tenants.

Many landlords struggle when faced with a long-term tenant who has stopped paying the rent. Up until now, the parties have had a good rhythm — the tenant paid the rent each month, and the landlord responded to maintenance needs as they arose. A very profitable arrangement for the landlord — minimum time and investment needed, and a steady cash flow coming in.
Suddenly, the tenant fails to pay the rent, approaching the landlord with a flurry of excuses and/or requests for additional time to pay. Given their long history together, the landlord may be tempted to credit the reason, or grant the requested extra time – offsetting legal action against the tenant.
This is a critical moment that the landlord must not ignore.
We have a “Golden Rule” at the Landlord Law Firm that we recommend all landlords take to heart: The essence of the landlord-tenant relationship is the landlord giving keys and undisturbed possession of a valuable asset (the apartment or commercial space) to the tenant, in exchange for the tenant paying rent on time and in full each month to the landlord. If the tenant violates this fundamental premise (while the landlord continues to meet its obligation), legal action should immediately occur. Indeed, the tenant, having read and signed the lease, will usually expect it, and at the very least understand it.
So, for landlords facing a nonpayment of rent situation — even with a long-term tenant — we recommend you act immediately in the first month of nonpayment by contacting your landlord lawyer and serving the tenant with the first required legal notice (usually a notice to quit in the residential setting, and often a default notice in the commercial setting). Landlords have many options after serving that legal document, but they have none if they decide to wait and hope the tenant will return to paying the rent.
Contact your landlord attorney if you are facing a nonpayment of rent situation with a long-term tenant, especially if you still remain unconvinced of the need, and/or are uncertain on how to best proceed.

Quick Tip:

Another year, another great show.

Thanks to you, the CTAA Tradeshow & Conference was once again a HUGE success! For those who attend regularly, you know how much our firm and the CTAA enjoy this event and how much we collectively look forward to making the next show even better than the last. Well, this year, you helped us pull it off yet again.

With record breaking attendance and tremendous educational seminars, the stage was perfectly set for another great day. Given all the offerings, including the incredible pre-show bowling party and mind-blowing keynote speaker – we couldn’t help but succeed!

For those of you who missed this year’s keynote, it was out of this world and will have people talking for quite some time. If you unfortunately did miss it, it’s probably worth your time to grab Janine’s book. I’ve already got mine and have begun my further study of how we communicate with our body language.

On the personal side, as this year’s Platinum Sponsor, the firm would like to applaud you for the excitement and energy you brought to this year’s show. And, we can’t thank you enough for stopping by our booth for a little bit of skeeball.

Well, I’m off to LLF’s first planning meeting for the 2014 show. We hope we see you there!

Quick Tip:

Ending a long-term tenancy with a lapse of time approach.

In our first Quick Tip this month, we discussed the challenge faced by landlords with a long-term tenant who has stopped paying the rent. In this Quick Tip, we address the less-clear situation where the landlord chooses to end a long-term tenancy (or, really, any tenancy after the lease term has expired), but does not have a nonpayment of rent situation or any other lease or statutory violations to use against the tenant. How best to proceed?

For this discussion, we will look at the situation where the original written lease has been allowed to expire, however the long-term, landlord-tenant relationship has continued on its own momentum on a month-to-month basis. While to date, the arrangement has seemed beneficial for all, the landlord, for whatever reason, now wishes to bring an end to the tenancy.

When faced with this situation, landlords can take advantage of the lease lapse and start a legal action against the tenant for lapse of time, simply meaning that the lease has expired and the landlord is unwilling to continue with the landlord-tenant relationship. This process begins with a notice to the tenant of the landlord’s decision, which can be as formal as a notice to quit (instructing the tenant to vacate by the end of the current month), or as simple as a blunt letter from the landlord forewarning of the impending legal procedure.

Now, as a landlord, there are two key points that you need to be aware of before moving ahead with this strategy:

• First, you are not stuck with a compliant tenant forever, unless they meet one of the statutory exceptions to the lapse of time rule (for example, a tenant who is disabled – although there may be other factors that permit you to evict such a tenant).
• Second, it is often better to start sooner-than-later with a lapse of time case, because such legal action does not mean that the tenant will be out of the property quickly. Lapse of time is basically a “no fault” legal matter, and state law gives tenants (assuming they are compliant with their rent/use and occupancy obligation and their legal obligations to the landlord and other tenants) the opportunity to find a new place to live even after losing a lapse of time summary process case by the landlord. In short, the law authorizes the court to give the tenant up to six (6) months after judgment in a summary process case to find a new location. Granted, the tenant must meet some other statutory tests to get that extra time post-judgment (such as demonstrating a search and inability to find something comparable), but the court usually defaults to giving the tenant the extra time.

Contact your landlord attorney if you are facing a long-term tenancy that you want (or need) to end, particularly for guidance on doing so in the most cost-effective and timely way possible.

Quick Tip:

Small adjustments can make a big difference.

At the Landlord Law Firm, we are always searching for enhanced ways to serve our clients. For example, we recently decided to test a new means of handling the information needed in the courthouse when representing our client during an eviction case. The change wasn’t anything drastic, just a simple adjustment in methodology and processing. However, almost instantly, we started seeing an increase in efficiency and effectiveness.

Why are we pointing this out? Because, aside from the increased service enhancements we now provide, there is a universal lesson in this change that can be applied throughout your business.

Just like in our firm, any small process change you may decide to implement has the potential to valuably impact your entire organization. Whether you finally take the time to template that letter you’ve been rewriting over and over, or you change the greeting you use when you answer the phone, you may find that little modifications can have a huge effect (especially over time) on your overall operation.

Most people are averse to change and many even to the idea of change. But, as long as the modification is small and positive, being willing to flex your comfort zone just enough to impose that change, may ultimately result in big improvements in your office.

Why not give it a try!

DISCLAIMER:

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.