The LandLord Advocate July 2014

In October of 2009, we published an article about “Jim”, a disgruntled landlord, and the lessons we learned from his plight over squatters. This article proved of great interest to our readers. Hence, we have chosen to run it again in this edition.

At the end of our review of “Jim’s” past situation, we’ve thrown in a few additional lessons. Although not directly related, we thought they may also prove beneficial.

Now, onto “Jim”…

“Attention!! Squatters live here.” That’s what the sign says on “Jim’s” front lawn, with a big arrow pointing to the house next door. The Connecticut Post recently ran a story about a landlord, who we’ll call Jim, who is rather angry with the three-year tenants living in the adjacent single-family home he also owns. He is having a difficult time getting the tenants to vacate the home despite a judgment and court order that they leave the premises. While Jim has every right to be frustrated, the article fails to reveal Jim’s own actions that helped him get into this tight spot. Let’s take a look at the circumstances as they are portrayed in the article and tease out some lessons that we can use to avoid finding ourselves in the same situation Jim faces.

Lesson 1: Don’t let your tenants get 10 months behind in their rent.

Jim tells the reporter that the tenants owe him more than $17,000. Question: Could Jim have taken action a little sooner and reached a different result? While not going 10 months without collecting rent may appear to be the obvious lesson here, the real lesson is a little more subtle. Decide how “flexible” you want to be with rent collection and operate within that guideline. Establishing these criteria will require more than just a gut feel for the situation. You will want to know the answers to these questions:

• What are the financial risks of not collecting the rent currently and perhaps not at all?
• How much time and effort am I going to spend chasing the rent before I reach my threshold?
• If I don’t get the rent, am I prepared to take legal action in the most effective and efficient manner?

As most landlords know, you have the right to greatly limit your financial risk while expending no time and effort to collect the rent – all of it – no later than the 10th day of each month. You also have the right to take immediate legal action on the 11th and demand that your tenant pay for such action. What is your threshold? Have you decided to exercise your rights and demand payment?

Lesson 1 (Revised): Establish your tolerance level for delinquent payers, then set and follow your policy.

Lesson 2: Never refuse money from your tenants.

Jim also shares that at some point in the past his tenants offered him $5,000 which he refused to take. This certainly wasn’t payment in full, but it was more than he was getting. Let’s be really clear, I am in no way suggesting that you should compromise the amount you are owed without thoughtful consideration of the circumstances. But, I am suggesting that if your tenant owes you money, take it, document it properly, and ensure your tenant is aware that you expect the balance as well. And, be sure they are offering you money, not a promise to pay. Your tenants already promised to pay you when they signed the lease. Another promise to pay only highlights the fact that the first promise was already broken. Ask them to show up at your office with a money order in hand and a proposal for satisfying their balance. If they fail to show, don’t bring the money, or don’t have a satisfactory proposal, take immediate action. In fact, unless they pay you the entire balance owed, be prepared to take action and formalize their proposal into a court enforceable judgment.

Lesson 2 (Revised): Always take money from your tenants, properly document it, and continue to exercise your legal rights for ensuring the balance is paid (see our Quick Tip “Take the money… It’s yours” in our July 2009 issue).

Lesson 3: Don’t rent to friends and family.

Well, not without careful consideration and forethought. Jim tells our reporter that in the beginning, “It was all friendship and family” with his tenants. Now they show “no signs of good faith.” If you are a landlord, you are in business – period. Now, the question becomes, in what type of business are you? Are you in a business to make money (your specific reason for making the money is not important)? Are you in a business to provide charity? If you are in the business to make money, you aren’t renting to friends and family. That doesn’t mean your friends and your family cannot become your customers, clients, residents – whatever you call them. It means that when they are your residents, they are part of your business. You must decide where to draw the line between your business and your personal relationship and work very diligently to be clearly on one side or the other when dealing with them. As you start to blur the line, your ability to maintain your position from Lessons 1 & 2 becomes more complicated and you may end up like our friend, Jim.

Lesson 3 (Revised): Anyone who rents from you is a customer, client, or resident and you should keep your personal relationship with them as separate and distinct as possible.

I want to thank Jim for letting us learn so much from his difficult experience. Before you find yourself making yard signs and throwing in the towel, get good advice on how best to approach the situation you face and what your options are for seeing it through to an acceptable conclusion.

Now for the a few additional lessons we’d like you to consider…

Lesson 4: Writing things down helps people stay organized

I can guess what you’re thinking…you don’t have to read the Landlord Advocate to learn this lesson. Give me a moment. I’ll make it relevant. Lesson 1 talked about setting and following your policy. I hope all of you did that when this article first appeared. Now, write it down. I know that sounds simple, but write it down. It’s not just for you. It’s for everyone who works for you or in some way assists you in managing your property. Since last time, maybe someone else is collecting your rents for you. If they don’t know what your policy is on rent collection, how can they possibly be fulfilling their responsibilities to you. And, as your organization grows and a new person takes on the roll of rent collections, you can be assured that the policy you created and implemented will continue into the future. It will also help you when you evaluate changes to that policy. Everyone in your organization will know where the policy stood and where it now stands. Implementation will be much easier that way.

Lesson 5: Ask questions if you aren’t sure

I recently received a call with a question about security deposits. It wasn’t Jim who called, but it was another frustrated landlord. He had implemented a policy which he had followed for quite some time that we discovered during our discussion had some potential holes in it. Normally, plugging up holes in a policy is no big deal. Sometimes, though, they involve more complex situations – security deposits – and the patchwork needed becomes more complicated. He readily admitted that he just implemented the policy without seeking advice from anyone and that thus far, he had experienced no problems with his policy. But, the reason for the call revealed that the existing holes in his policy created potential legal exposure far beyond just the cost of just asking some questions or drafting some policy documents. Unfortunately, I am sure his following week’s agenda was overrun by the work he needed to do to revise his practices and procedures. And, I hope he gets them revised before any other liabilities crop up. Even the most reasonable and rational sounding idea that you wish to implement may run afoul of some simple or eve archaic regulation or statute and put you in quite a bind. Sometimes, asking forgiveness doesn’t always ameliorate the pain your good intentions has created. Get some assistance and protect your future operations. I am sure our friend Jim could have reduced his legal troubles with a few simple questions at the outset.

Quick Tip:

Retaking apartment demands a solid legal foundation.

Each year, landlords and property management companies have consistently involved us in addressing the legal challenges from a common story – management and/or maintenance staff retaking possession of an apartment by simply changing the locks and disposing of the tenant’s remaining personal possessions, because the “tenants said that they were moving-out.” However, in many of these instances, the staff had not received the keys from these tenants upon their exit. Rather, the staff claimed that they had not seen the tenants on the property for some time after the move-out statement, or that they had seen the tenants with a moving truck. They believed that the tenants had “moved-out” because the tenants then failed to return to the unit for several days and/or left the apartment unsecured as they departed from the property.

As landlord attorneys, we recognize the practical logic to these stories; however, the law does not. We are revisiting this Quick Tip now to reinforce your knowledge of Connecticut law, under which a landlord can retake possession of an apartment only if one of these three conditions is met:

1. The tenants vacate and return all keys;
2. The landlord brings a summary process case, obtains judgment for possession, obtains a court-signed execution, and the marshal “satisfies” the execution via an eviction (which always requires the marshal’s involvement, but does not always require a moving company if the tenant left nothing behind, or only garbage); or
3. The landlord uses the procedures contained in the abandonment notice statute.

Unfortunately, many of the landlords we speak with did not have one of these legal foundations in place to retake possession. Sure enough, the tenants (or their attorney) later contacted the landlord and claimed the exact opposite (i.e. that they had not completed their move-out) and then demanded the return of their now disposed-of personal possessions. Facing claims under state law for actual and other damages, each of these landlords wrote a check to their respective former tenants to settle the cases.

We realize that most of our readers know this law – as did each of the landlords who told us these stories. We recommend that you share this Quick Tip with your management and maintenance staff as a refresher for everyone, particularly for any new hires or other people on staff who may have simply forgotten the rules as they spend the vast majority of their time handling their other main responsibilities.

Contact your landlord attorney if you have any questions about the valid legal foundations for retaking possession of an apartment, or for assistance in bringing a summary process case and/or using the abandonment notice statute.

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.