Wednesday, July 14, 2010

Some landlords and lawyers contribute to confusion over new rent collection law.

I received a call the other day from a woman who is renting a condominium unit in central Florida. She had done her due diligence and tried to find the most convenient location, in a well-kept community at the best price possible. What she had not counted on was receiving a letter from a law firm advising her that her landlord owed the association over $10,000 in past due assessments and that she should now tender rent directly to the association.

Here is where the story starts to get complicated. The woman’s landlord (who owns two other units in the community and is delinquent on all three of them) contacted her to advise that she should ignore any letters received from the association or its lawyer as “they can’t do anything” but warning her that he would evict her if she stopped paying rent to him. Unfortunately, the lawyer’s letter did not do a lot to allay this woman’s fears and created a few unnecessary problems as a result of its wording. By inserting a specific dollar amount owed, there might be fair debt collection issues since the debt is being disclosed to a third party and by doing so, this tenant became immediately frightened that SHE was going to be held responsible for this amount of money.

This tenant’s first question was,” If I stop paying the landlord and start paying the association pursuant to their demand, can my landlord evict me?”

The answer is that the landlord cannot evict the tenant for complying with the association’s demand for payment. The lawyer’s letter should have clearly stated this and put her mind at ease on this point.The landlord’s advice to ignore the association’s demand could result in her swift eviction so thank goodness she questioned the wisdom of that advice.

The lawyer’s letter did clearly specify that the association would not become her landlord as a result of accepting her payments. My caller’s next question was “Who should I call to fix my dishwasher as my landlord is certainly not going to be running to help me if I’m not paying him rent?” That is a pertinent question and one which associations in this situation should mull over. The goal for most associations will be to keep these tenants in the units as they represent the ONLY source for money coming from those units. As such, the rent collection approach must be thoughtfully planned and sensitively applied. In fact, in some instances, the association may ultimately wind up owning the unit and getting off on the right foot might result in having a built-in tenant at the time the association takes title.

Any demand letter must (a) comply with all applicable federal and state statutes (b) should clearly spell out that the tenant’s peaceful enjoyment will not be disturbed so long as he or she complies with the demand and (c) spell out in plain, understandable language what is happening and why. Even better, a nice phone call to the tenant in advance of that letter from either the manager or a director advising that a letter is on the way and the reason for it would go a long way towards calming any tenant fears. Of course, prior to the phone call the director or manager should run through their proposed message with legal counsel first to ensure the tone and content is appropriate.

The legislative reason behind allowing associations to collect rent from tenants in delinquent units is simple; why should delinquent owners be allowed to pocket money received from renters while their neighbors are forced to make up for them not, in turn, paying their assessments? However, having a statutory right and effectively exercising it are entirely two different things. Some of the attempts to utilize this new tool will undoubtedly miss the mark, a few will do so badly. This tenant was prepared to pack up and leave the week after receiving the association’s demand. She had not thought, however, about losing her security deposit, being subject to a possible breach of lease suit, and the inconvenience of relocating. Interestingly enough, the landlord cannot evict the tenant for paying the association but could sue the tenant for breach of lease if he or she abandoned the unit prior to the natural lease termination.

At the end of our call, this tenant had made up her mind that sending her rent check to one party or the other did not make much of a difference; it was just a different address on an envelope. However, she was very definite about looking for another unit when this lease was up. It really is an ironic turn of events when tenants start investigating their potential landlord’s credit before signing on the dotted line!

3 comments:

  1. I have been trying to find this law and the specifics of it for weeks.
    I have a few questions.
    What is you are not paying rent? What is the owner is just allowing you to stay at the dwelling for no cost and there is no agreement/lease?
    For instance. My neighbor is in the midst of forclosure and has stop paying her Condo assessments. She offered my boyfriend one of her bedrooms to use (mostly to store his stuff since he sleeps over my condo most nights) and she sleeps in the other room. He has no mail going there, and all of the bills are in her name still. How would a situation like that be dealt with in court?

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  2. There are rogue associations in Florida that do not wish to work with owners in resolving dues issues and mismanage HOA funds. They rather abuse this rent collection statue to support their lavish contracts. What is the recourse if the HOA demand rent from tenant while the owner has been trying to resolve HOA dues issues along with mortgage payments?

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  3. Unfortunately, there are some rogue boards out there. The bottom line is, however, that they can only exercise this new right to collect rents IF the owner/landlord is delinquent in payments to the association. It is usually in the association's best interest to enter into a reasonable payment plan with an owner with stipulations that prevent any ground from being lost if the owner breaches such plan. If a payment plan has been worked out, the association foregoing the collection of rents would be one item I would want to see in there if I were the owner!

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