The LandLord Advocate Jan 2014

Our twelfth most popular article was How to avoid a “Show me the money!” scene. I really enjoyed writing this and believe it is as applicable today as the day we first ran it…

We all remember the famous line where Jerry Maguire is screaming into the phone with Rod Tidwell on the other end dancing to Jerry’s rant, “Show me the money!” And, sometimes, as the 10th of the month rolls around and you have a repeat contingent of residents who have not yet paid their rent, you may want to get on the phone and do a little ranting yourself.

Your resident calls and tells you they will be late with the rent and you fight the urge to say, “Stop giving me excuses and show me the money.” After all, they are living in your apartment. Maybe, perhaps, they would prefer you “show them the street.” But, that’s not a great solution either.

What you are really after is getting your money and feeling as though you won’t face this problem again in the future. Occasionally, however, you cannot reach terms with your tenant. They offer to pay, as they have before, but the little Rod inside your head keeps chanting “show me the money.” The tenant had nothing, has nothing, but promises you the moon. It’s time to get the money a different way.

We’ve discuss in various articles how you can get the money through the effective and efficient use of the summary process case in court. In addition, we have also taught this same strategy in our Get the Rent or Get Them Out seminar. We’ve also discussed how, in many situations, you can have your legal fees and expenses reimbursed by your tenant in that same process. This approach still remains an integral part of an overall rent collection strategy. Now, we are starting to see tenants with larger balances owed and landlords who are unwilling to “finance” the obligation for the period of time the tenant seeks to repay the money. While sometimes effective, in-house repayment agreements are often nothing more than a repeat of the lease with more than just the rent owed each month because the tenant is catching up on delinquent payments. When those don’t work, landlords are often looking for other strategies to get their money paid without turning to collections agencies. Here’s one such strategy we have used that some landlords are adding to their overall rent collection efforts.

Start with the same approach as before, including obtaining a court-approved settlement agreement through the summary process case. This can serve multiple purposes, but primarily serves as the tourniquet to stop the debt from growing any larger. But, since you are unable to reach satisfactory terms on the repayment terms of that agreement, either simultaneously with the summary process case, or shortly thereafter, commence an action in court to collect the balance the tenant owes you.

Obtaining a judgment on this balance will take more time, and in some instances, may even postdate your tenant’s surrender of the premises back to you. But, by commencing the action to collect the balance at this time, you obtain some distinct advantages.

1. You know where the tenant is and can make sure they are served with the civil action properly.
2. You are further down the path of getting paid than other unsecured creditors and may get to the available money before someone else does.
3. You have the summary process settlement in place, which will ultimately result in regaining possession of the premises and reminds the tenant of the priority you have placed on their monetary obligations to you for whatever duration they will remain in their apartment.
4. You may be more aggressive with you tenant as you attempt to settle the summary process action if they face a money judgment against them in the pending civil action – you’ve got more negotiating leverage.

There are large amounts of money that evaporates from landlords’ bottom lines when tenants don’t pay and landlords don’t pursue them. Asking a collections agency to find gold at the end of a long rainbow may result is some of that money appearing from the magician’s hat. A more aggressive and comprehensive strategy to collecting your money that even starts before the tenant fails to pay and also continues through the exercise of your rights as the property owner or manager may allow you to recover lost revenues that you have never realized in the past – revenues a collection agency strategy may or may not “find” for your company.
Take control, like Rod Tidwell, and make your tenants “show you the money.” This strategy is one way you can do that.

Quick Tip:

Protecting yourself from mold claims.

Mold is a naturally-occurring situation that is continually causing problems for landlords. Without a preemptive plan of attack, property owners and managers can be exposing themselves to time-consuming and expensive claims and/or court litigation should mold spores take hold within their units.
When we first published this Quick Tip, we focused on two defenses that addressed implicitly both your operations and legal work on this subject. Over the years, we have learned that landlords benefit most from an explicit, pre-planned and developed link between their operations and legal work with their landlord attorney, usually in the form of policies and procedures for management staff. Therefore, we have expanded this Quick Tip from two to five steps that you can take to protect yourself from mold claims, and which focus more on the concept of an operational-legal connection.

Obviously, the most effective way to prevent mold is by eliminating what it needs to survive and grow – water and humidity. Effectively removing available sources of both will go a long way to preventing mold growth.

The second essential defense is proper lease terminology. Adding a mold clause to your lease will force each resident to acknowledge their responsibility to proactively address any water and humidity issues, and prevent and retard mold from accumulating in the unit and/or on the surfaces of the rental unit.

Third, property owners and managers should ensure that they are inspecting the units at regular intervals to evaluate their tenants’ compliance with the mold clause in the lease, and catch any unreported water and humidity source and/or mold growth at the earliest possible stage.

Fourth, you should have a strategy in place to address any tenant failure to comply with the mold clause found during a routine inspection.

Finally, you should have a detailed procedure in place to address any mold claim (or actual mold) in the unit. All mold is not equal – some are common and harmless, while others may be harmful. It is crucial to have a process in place before you face a mold claim, so that you can determine efficiently the kind of mold at issue and its source, and then deal effectively with it and the tenant, particularly if the tenant caused or exacerbated the problem.

Contact your landlord attorney for guidance and assistance in establishing, implementing, executing, and evaluating these five defenses to mold claims to ensure that you have adequate protection from this financial pitfall, and to increase your operational-legal connectivity and effectiveness.

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.