The LandLord Advocate Dec 2011

Landlords are often frustrated by the extent of damages caused by departing tenants. Luckily, there are a number of steps a landlord can take to minimize (or possibly even eliminate) this frustration:

1. Take pictures. Landlords should take pictures of the unit:
   • Before the tenant moves in,
   • During an inspection,
   • After the tenant moves out, and
   • After any property damage repair work takes place.
2. These pictures will serve as tangible proof of any damage and/or repairs claimed by the landlord.
   Inspect regularly. Landlords must periodically inspect their units to catch any tenant damage that happens prior to the move-out inspection. In order to be effective, inspections should occur routinely – with not more than six months transpiring between each visit.
3. Collect the maximum security deposit allowable. Whenever possible, landlords should take advantage of state law allowing them to collect a security deposit upon lease execution of up to two months of the rental amount for all tenants under age 62 (state law limits the security deposit to one month of the rental amount for tenants age 62 or older). See our “Security deposits – Know how to hold ’em, know how to fold ’em” for more on the subject.
4. Be sure to handle all security deposits properly. As outlined in the article referenced above, landlords must treat security deposits as fundamentally separate from rent collection. Again, state law provides the guide here – a landlord must keep security deposit funds isolated from the landlord’s operating account into which rent money flows. By keeping these moneys conceptually separate – and by implementing a strong rent collection system – landlords will be able to offset any property damage repair costs with the security deposit – rather than contemplate using it against any back rent owed. See our our accompanying article for more on rent collection strategies.
5. Contact the police when appropriate. When the tenant intentionally or recklessly damages a landlord’s property (without any reasonable ground to believe that he/she had a right to do so), the tenant has committed a crime that ranges from a felony to a misdemeanor depending on the extent of the damage (see CT Statutes 53a-117e through 117g (“Criminal damage of a landlord’s property”) for a full description of the state’s position).

Moreover, a tenant may have committed criminal mischief for certain kinds of intentional, reckless, or even negligent acts that damage a landlord’s property. See the same CT Statutes page for more info. A tenant who acted negligently may have committed the crime of “Criminal mischief in the third degree”. In these instances, landlords should immediately contact their local police department upon the tenant vacating to report the crime(s) and follow-up with the state prosecutor to ensure that any damages not covered by the security deposit are addressed in the tenant’s resolution of the criminal case.

Tenant-related damages are bound to occur. How much it effects your operations and cash flow may ultimately be determined by how well you are prepared for the inevitability and how quickly you take action once the damage is realized. Contact your landlord attorney should you have any questions on the steps outlined above, or if you should find yourself faced with intentional tenant damages.

Quick Tip:

Fair housing guidelines for the holidays.

As you know, there are a number of religious holidays that will be recognized and celebrated before year’s end. And, while you may not be privy to which holidays your residents will observe, you (and possibly your staff) are now deciding how (and if) you will decorate your site and/or management office to acknowledge these holiday events.
Our recommendation to you – proceed with caution. Careless decorating could end up bringing you anything but holiday cheer. The key to effectively managing the minefield is to ensure you are using today’s Fair Housing laws as your guide.
There are very few among us who are unaware that federal, state and local Fair Housing laws all prohibit discrimination on the basis of religion. And while we all know that refusing to rent to someone because they do or don’t adhere to a certain belief is an obvious form of discrimination, Fair Housing laws also forbid landlords and Property Managers from allowing the placement of religious decorations in commonly accessible area of the community – including the management office. Why? Because religious decorations and displays in common areas may be perceived as a direct reflection of not only YOUR personal beliefs, but also those of the rental community – and may suggest to residents and guests that the residents and management favor people of one particular religious affiliation over another.
Now, while I’m sure your purpose in decorating is not to offend, Fair Housing laws don’t focus on your intent, just your actions. If your decorations offend a protected class or make them feel unwelcome, you may find yourself facing a Fair Housing complaint.
Luckily, as with most Fair Housing issues, there is a solution – stick with religiously-neutral decorations. Lights, wreaths, Santa Claus images, candy canes, and decorated trees are generally considered acceptable. Keep your decorations secular and eliminate all religious elements from your holiday displays.
If you choose to honor your residents (and their differences) by intentionally displaying religious decorations for the holidays, ensure you provide equal billing for each holiday and that your displays are proper and accurate. Do your research in advance and involve your staff in the planning and execution of the decoration plan. In addition, you may want to invite members of your community to work collaboratively on a holiday decorating committee. Open participation could very well eliminate any potential complaint, while showing your commitment to respecting all religious beliefs and preferences.
As a landlord or Property Manager, it is your responsibility to insure that whatever decorations used this holiday season are as inclusive as possible of all persons that reside in the community. By simply exercising some sensitivity and basic, common sense, you should be able to easily promote the holiday spirit, while remaining within all Fair Housing guidelines.

Quick Tip:

Don’t become a “Rent Chaser” during today’s job crisis.

While the collapse of the housing market (and ensuing mortgage crisis) may have led to higher occupancy rates for landlords, the continuing shortage of jobs in this country has translated into an increasing number of late or missed tenant rent payments. To help keep revenue flowing, our clients tell us that they now find themselves forced into allocating more and more resources toward the rent collection process. However, lucky for them (and you as our readers), we have easy-to-implement strategies to help deflect tenant cash flow problems from affecting your bottom line.

One strategy to keep your rent collection rates up is to establish a policy where you don’t become a “Rent Chaser.” A Rent Chaser is someone who, after the resident fails to pay timely, expends a significant number of hours trying to get that rent check in the door.

Rent Chasers are easy to identify as they routinely send multiple reminder notices, make several phone calls, and sometimes even pay a personal visit or two to the resident, all between the 10th and the 25th of the month, only to be faced with another round of the same after the resident’s repeated promises to deliver the check go unfulfilled. Sadly, the Rent Chaser often finds that they are doing the same dance time after time, month after month.

The core of your relationship with your residents is that they are allowed to live in your unit if they pay you a monthly rent by the first day of each month. It’s that simple. If they live up to their end of the bargain, the only effort you should spend on rent collection each month is completing the deposit slip when you receive their check. Beyond that, your time and efforts should focus on other management functions, like filling any remaining vacancies and handling maintenance needs. No chasing allowed or necessary!

The most powerful tool for ending the rent chase is to enforce your legal rights as they are outlined in the lease. If your lease states that payment is due on the 1st, and it is not received by the 10th, the single effort you should exude is to contact your landlord attorney. Collectively, you can initiate any legal actions necessary to collect the delinquent payments, and/or free up the unit to re-establish a positive cash flow.

The lease you have in place with your tenant outlines all payment responsibilities. There is simply no need (nor business sense) to chase the rent from one month to the next.
As the New Year approaches, take a few minutes to evaluate your rent collection strategy. While doing so, be sure to identify ways to incorporate effective enforcement of your legal rights into that strategy. It will not only free up time for other management priorities, but will also help you eliminate the rent chase.

Quick Tip:

Protecting your assets through inspections.

Landlords share a common goal: Full units, with compliant tenants who not only maintain the premises, but also pay the rent in full and on-time. To accomplish this goal, landlords must juggle a myriad of responsibilities – the least of which is monitoring the condition of not only the grounds, but also the individual units. During the execution of this task, the landlord must make regular inspections and respond to all maintenance and tenant issues (including damages) that may arise.

In our Lease Management 360° approach to property management, we recommend seven essential tools to help execute an effective inspection program. They are:

• A physical, hard-copy file for each unit;
• A digital camera;
• An inspection form;
• An all-encompassing “lease interview”;
• Full knowledge of the landlord’s access rights;
• A well documented and strict policy of unit inspection; and
• Operational and legal processes to enforce tenant compliance

Let’s look at each component individually..

1. An effective filing system is a key component in both tenant and property management. Each unit should have its own file (folder, binder, etc.) that contains everything about the unit, starting with the application and building through the lease, inspection form, ledger card, and any correspondence or legal pleadings involving that tenant as time passes.
2. Digital cameras allow easy taking, printing, and storage of pictures – critical to capturing the physical condition of the unit through all phases of the lease. See our accompanying article “Dealing with malicious tenant damages” for more on the subject
3. Written inspection forms trigger the landlord to review critical infrastructure issues and tenant (mis)use of the unit. This simple tool promotes consistency and clarity of communication between the landlord and tenant.
4. A “lease interview”, utilized at the initial lease signing as well as at each lease renewal, is a powerful tool for landlords interested in protecting their capital assets. During the interview, the landlord can:
   • Review the lease with the tenant, including the tenant’s obligation to care for and maintain the unit, systems, and fixtures.
   • Complete a unit walk-through, utilizing the inspection form and digital camera to establish a baseline of the unit’s status; and
   • Collect the first month’s rent and security deposit (to address end-of-lease damages caused by the tenant) in good funds before turning over the keys.
5. Before entering any unit, landlords must know their access rights as defined not only by the lease, but also by state statute (see Conn. Gen. Stat. § 47a-16 for more on the subject).
6. Any successful inspection policy must be well documented and communicated to the tenant and include a tracking mechanism that allows the landlord to verify every unit has been inspected at least once every six months. Often just a spreadsheet, the report need only list each unit and the date(s) of inspection.
7. Lastly, landlords should always remember that the best defense is a good offense. When faced with a noncompliant tenant, act quickly. Connecticut’s summary process law gives landlords a wonderful mechanism – the reinstatement stipulated judgment – under which a landlord can place the tenant on court-supervised probationary status to address noncompliance issues. If the tenant refuses to accept the reinstatement opportunity, or violates its requirements, the landlord can efficiently seek the tenant’s eviction – sending a clear message to the rest of the community that unit maintenance is a critical factor in their continued tenancy.

Inspections – do them, track them, and enforce them

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.