The LandLord Advocate September 2013

Although we’ve discussed this topic a number of times in the past, recent experiences warrant returning to this subject again. The topic: complete disclosure to your attorney, when appropriate. Specifically, what you need to tell your lawyer when you refer a resident to them for legal action – sometimes.

This topic has resurfaced as a result of some recent cases that, if our clients had made complete disclosures from the start, the time and cost associated with the case resolution could have been reasonably managed and reduced. But, because last minute information was revealed on the eve of trial, and/or each time we talked with the landlord we learned of additional illuminating adverse facts, we now faced significant legal hurdles at 10 to 20 times the cost previously expected to reach a favorable resolution.

As we all know, there are easier paths to resolving a problem, and there are more difficult paths. Certainly when it comes to taking legal action, the easier path is often the preferred path, and more likely the least expensive path. So, let’s first review those times when providing limited information is actually warranted. These will save you time, and possibly money, in the long run.

• First, if you have a typical nonpayment of rent situation with a resident that, for all other situations, is meeting your expectations on the property, a thorough dossier of their life in your community is not necessary.
• Second, if the resident’s conduct has only recently become a concern and it’s been a considerable amount to time since they even caught your eye, the details of their transgressions from the distant past may not be useful at the first conversation with your attorney, although a mention of them is likely to be helpful. If those past concerns become important in your case against them, your lawyer will know there is something worth exploring.
• Lastly, although you are initiating an action against the resident, your ultimate goal is to retain the tenant and simply correct their behavior. In this situation, the specific details of their conduct is likely unnecessary, but the behavior you want corrected is imperative.

Now, let’s review those times where you must absolutely share all facts and information or else you face bigger problems in your near future. In these instances, better preparation and complete disclosure to your attorney can prove very beneficial to your case.

• First, you are resolute in your decision that the tenant must be out of the apartment as the final resolution of the case. With full disclosure of the entire tenant relationship up front, your attorney can best assist you with a reasonable path to achieving this goal.
• Second, your tenant has reported conditions or concerns with the unit to outside agencies, even if you think the report was bogus and your were cleared by the agency. Just the report to the agency may create hurdles you will need to overcome in achieving your desired outcome in the case.
• Third, the tenant’s conduct has been continuous and ongoing for a period of time and the impetus for contact your attorney was the “last-straw” that prompted you to pick up the phone. No matter how many chances you have given the tenant, your “last-straw” may not be considered the last chance by a court if your attorney cannot show the court the entire sequence of concerns that have led you to take legal recourse against your tenant.
• Lastly, your gut is telling you that the information is important, but you are a little embarrassed to reveal it. We all make mistakes. It’s part of the human experience. Letting your attorney in on those little missteps from the outset will allow them to minimize the adverse impact they may have on the legal case you bring. Finding out about them when they can best be exploited by your tenant and their attorney gives your tenant the upper hand in a situation where you’d much prefer to be in control.

If you want your attorney to represent your entire interests and protect you the best way they can, you must share with them the information you have on the entire situation with your tenant from the beginning of the case. It is the only way for them to protect you from exceptional costs, legal liabilities, damages claims, and punitive awards sought by the tenant.

Quick Tip:

The numbers prove it – rental housing is growing.

The National Apartment Association (“NAA”) and National Multi Housing Council (“NMHC”) have issued an interesting white paper on the prevalence of apartment living and its expected growth going forward, along with the need to ensure adequate capital availability at competitive interest rates to ensure its continued viability. The white paper is titled “Key Principles for Preserving Liquidity and Stability for Multifamily in a Reformed Housing Finance System,” and, while its title may sound somewhat impenetrable, the information it contains is encouraging and enlightening.
In this Quick Tip, we will focus on the data that speaks to a growing apartment industry and the exciting business and professional opportunities it creates for those in it.

• First, the apartment industry is a key player in the national economy and a critical avenue for housing for people from young professionals to seniors, families seeking to move up the economic ladder to high-income households, and married couples without children. According to the white paper, one in three Americans rent as of 2011 (the most recent year of comprehensive data) representing 17 million households. The apartment industry and the people who live in them contributed $1.1 trillion to the national economy and supported 25.7 million jobs.
• Second, industry growth is inevitable unless the money is not available to developers and builders to meet the demand for new apartments and refinance the mortgages on existing apartment buildings that mature each year (more on that in our secondary Quick Tip). NAA/NMHC believes that renter households will continue to increase reaching one-half of all new households – a seven million household addition – by the end of this decade. They see this growth as a natural result of population growth, demographic shifts, economic challenges, and changing consumer preferences.
• Third, to meet this demand, the apartment industry will need to build at least 300,000 to perhaps as many as 400,000 new apartment units annually. However, after the capital markets stopped functioning well several years ago, the industry saw two years lost to essentially no new apartment building. Moreover, in 2011, the industry added only 167,400 units, which really only replaced those units lost due to normal industry attrition (the white paper cites destruction, demolition, and obsolescence as reasons for unit count losses). NAA/NMHC believe that almost every state needs new apartments and in communities large and small.

This is an exciting time for the apartment industry, and the Landlord Law Firm is pleased to be a partner with landlords as they seek to make the most of it. Remember, industry growth and apartment demand bring both the opportunity for profit (and, for non-profit landlords, a stronger operating platform) and for operational and legal challenges. Contact your landlord attorney as you look to the future and its opportunities to build a strong foundation for success.

Quick Tip:

There’s gold in your data.

We’re all busy individuals. However, as business professionals, there are few of us who fail to appreciate the value of tracking data. We see it every month in budgets, in our marketing data, in our operations efforts. As managers, much of our day is spent reviewing data, analyzing its message, and converting both into real action items meant to improve some part of our business operations. Often times, we are performing these functions without even realizing that’s what we are doing. Our data is truly the blood running through the veins of our operations, keeping us marching toward our ultimate goals.

Now, take a moment and consider the same about yourself. Do you put a similar amount of effort into tracking and analyzing the data that directs your own life? If you are like most people, you don’t, mostly because data tracking is a “work function” and on your own time, you’d like to take it easy, relax, and forget about data for the rest of the day. Unfortunately, the reciprocal effect is that you probably spend quite a bit of time wondering why you can’t achieve your personal goals.

I’ve recently had this experience myself and it practically took a slap in the face to realize that what I face personally is no more daunting than what I face in the office. The difference – I don’t look at personal data the way I look at professional data. Well, at least I didn’t…

For my exercise program, I was forced to track everything I consumed for three days. Only three days. What I learned from that experience will not only change my food habits, it will actually allow me to remove one of my tallest obstacles to achieving my personal goals. All of this insight on only three days worth of data. Just think what more data might allow me to do!

Whether it’s personal or professional, the data in our lives will always be worth more than its weight in gold. Open yourself up. Collect it, analyze it, and be willing to use it to reach your goals.

Quick Tip:

Trends unearth financial issues.

As we discussed in our first Quick Tip this month, NAA/NMHC’s white paper on multifamily housing makes a compelling case about the industry’s need for adequate capital availability at competitive interest rates to ensure its continued viability. This money is needed not only to finance the construction of new units needed annually to meet unit replacement and increased demand for rental housing, but also to refinance the mortgages on existing apartment buildings that mature each year.

NAA/NMHC report favorably on the impact of multifamily housing programs from government-sponsored enterprises (“GSEs”) like Fannie Mae and Freddie Mac on such capital availability. While those entities operated with an implied government guarantee of their operations before the meltdown of capital markets several years ago, the government has since placed those organizations under conservatorship making that guarantee explicit. As Congress looks to move beyond the conservatorships, the need for lawmakers to distinguish multifamily housing mortgages from residential mortgages is critical.

According to NAA/NMHC, thousands of properties over the past 20 years have benefited from the GSEs’ multifamily programs, which have operated successfully over the years. GSE programs for the multifamily industry were not part of the meltdown and created a $7 billion profit for the government from the beginning of the conservatorships through the third quarter of 2011. Indeed, NAA/MMHC cite a serious delinquency default rate of 0.51 percent for the GSEs’ multifamily programs versus 8.7 percent for single-family mortgages, which it attributes to strong credit risk management practices by the GSEs in the multifamily programs.

Accordingly, it makes little sense for lawmakers to turn to a private sector only financing environment. Rather, NAA/NMHC advocate for these reforms to the housing finance system:

1. Ensure mortgage liquidity in all markets at all times;
2. Ensure capital availability for the wide range of properties, sponsors, and renters;
3. Expand private capital participation;
4. Limit/mitigate market disruptions; and
5. Insulate the taxpayer from losses.

We recommend NAA/NMHC’s white paper to you for reading and for communication with your elected representatives. Contact your landlord attorney if you have any questions about the white paper and potential impact of current legislative initiatives on the multifamily housing industry, and how you can help support your industry’s financing needs.

Quick Tip:

Register now for the 2013 CTAA Tradeshow and Education Conference.

Landlord Law Firm is thrilled to be named a leading sponsor of the 2013 CTAA Tradeshow and Education Conference. This year’s event will be held at:

Foxwoods Resort and Casino – Friday, November 8, 2013

And not to disappoint, this year will be yet another year of fun and excitement at the LLF booth, as we’ve been planning and preparing for the 2013 show since last November. We hope you won’t have any trouble finding your way over to visit and will swing by to some fun.

If you haven’t already registered for the show, you can do so on the CTAA website.

If you are, or know of a vendor that you’d like to see at the show, ask them to join us as well. Vendors can also register online. However, urge them to act soon as the tradeshow grows yearly and space will likely run out!

Lastly, although free, registration for Thursday night’s Pre-Show Party is now required. This year, it will be a red carpet affair at Foxwood’s High Rollers Luxury Lanes that you don’t want to miss. Be sure to check that you will be attending when you complete your online registration.

See you at Foxwoods!

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.