Articles in This Edition:

• Don't let your tenants muscle you with retaliation claims.

• Identity theft - protect yourself by protecting your tenant.

• Security deposit programs - plan well before you implement.

• Unauthorized occupants and war.

Don't let your tenants muscle you
with retaliation claims.

Just because your tenant complains to you about the condition of their apartment, reports you to the health department, or contacts the code enforcement officer claiming code violations, does not mean they are immune to legal action when they don’t comply with the lease. 

You may have heard horror stories where a tenant made a claim to the health department and then stopped paying the rent.  The landlord took legal action against the tenant for failing to pay the rent only to be told that they could not continue with the eviction because they were retaliating against the tenant for filing a report with the health department.  Whoever told the landlord they could not proceed was ill-informed and sharing lousy advice.

There is a statute that protects tenants from a landlord’s retaliation.  Under certain circumstances, the tenant is protected from the landlord taking legal action.  Those circumstances, however, are very narrowly defined and in no way give the tenant license to ignore all of their obligations under the lease.  In fact, the retaliatory eviction protections under the state statutes are so narrow they would prevent only a scant few landlords from continuing their legal action against the tenant.  That’s because a tenant’s responsibilities to the landlord under their lease contract remain in full force and effect even after a complaint to the health department or any other organization under the statutes.

We get calls all the time where a landlord is having a serious issue with a savvy tenant and the landlord has been “advised” that they cannot initiate or continue their eviction for nonpayment of rent or lease violations because the tenant complained about code violations and so the eviction is retaliatory.  This could not be much further from the truth.  The statutes that provide tenants protection from retaliation are followed by a very clear statute that spells out the exception to this rule.    If you believed you could not proceed with an eviction after someone files a formal complaint against you, you may be surprised by these circumstances where you can still start an eviction case that is not, by statute, retaliation:

• The tenant is using the dwelling unit for an illegal purpose.

• The tenant is using the dwelling unit for a purpose which is in violation of the rental agreement.

• The tenant failed to pay the rent.

• The landlord seeks to regain possession of the unit for its own personal abode.

• The condition complained of was caused by the tenant, a person in the tenant’s household, or a person on the premises with the tenant’s consent.

• The landlord served the proper notice to terminate the lease before the tenant’s complaint.

As may be obvious, most of these situations are the exact reasons why you would initiate a summary process action against your tenant in the first place.  Your tenant can claim that you acted in retaliation as loud as they want.  However, if they use the premises illegally, violate the lease, or fail to pay the rent, their claims will fall on deaf ears.  You may proceed as if they never filed the complaint against you.

On a practical note, because they have claimed you are retaliating, you must now show, through appropriate evidence that you are not.  You will need to provide proof concerning the tenant’s conduct, your attempts to correct it, and the ongoing problem you are trying to remove from your community to show the basis for evicting the tenant – something you must do anyway.  Don’t believe anyone who tells you that a tenant receives a free pass to do as they please if they report you to the health department.  If the tenant believes they got a free pass and they act accordingly, your rights to get them out of your unit remain in full force and effect.  Use them.    [TOP]

Identity theft - protect yourself by
protecting your tenant.

Landlords often collect a large amount of personal identifying information from prospective tenants, such as full name, social security number, credit card number, current and former addresses, employer, and bank account information.  This information is usually found in a wonderfully well-organized and formatted resident application that is a part of every tenant file.  It also exists on random pieces of paper (as you and your staff furiously scribble notes during calls with prospective and current tenants and third parties) and in your mail (whether it is credit or criminal background checks, previous landlord verifications, or rent payments). 

Identity thieves know that landlord offices and records are fertile ground for the information that they need to further their criminal enterprises.  Protect yourself by focusing on five (5) areas – computers, files, mail, trash, and court: 

1.       Computers and Electronic Files and Email

·         Hire an information technology consultant to install a strong firewall to prevent others from remotely accessing your server and office computers, while permitting you to send email, use the internet, and otherwise take advantage of the wonderful world of information technology;

·         Purchase and allow automatic updates to antivirus and adware/spyware software; and

·         Use cryptic passwords that can not be guessed easily (not “password” or your name or phone number) and ensure they are changed on a predetermined basis (e.g., every month or quarter). 

2.       Paper Files

·         Make sure that your paper files are secured and inaccessible to anyone but authorized staff at all times during the day and at night; and

·         Do not leave any prospective or current tenant file on your desk when you leave the office (thereby allowing anyone who enters a free shot at the personal identifying information), or when you are meeting with another tenant, vendor, or sales representative (many people are very good at reading upside down). 

3.       Mail

·         Make sure incoming mail goes to a secure place like a locked box versus being left on the reception desk or at the front door where anyone can access it;

·         Fortify your drop box to eliminate the risk of a cash flow hit with the theft of payments, or the liability exposure to the loss of personal identifying information contained in or on those payments (for example, tenant bank account numbers on their personal checks). 

4.       Trash

·         Contract with a document shredding company to install lockable bins throughout your office;

·         Establish an office policy that all paper with any personal identifying information is placed in the shred bins; and

·         Obtain and securely store the key(s) to these bins, so you can access them when someone inadvertently puts a critical document in the bin, and otherwise prevent anyone other than the shredding company from getting into them. 

5.       Court

·         Contact your landlord attorney to make sure that you are not violating new rules effective January 1, 2010 requiring the redaction or removal of certain personal identifying information from all legal documents brought into the court system (for example, pretermination/Kappa notices, notices to quit, complaints, and default motions)

[TOP]

Security deposit programs - plan well
before you implement.

A client recently engaged us to do a comprehensive lease review as their lease had not been updated for a number of years.  While we sat to discuss their business objectives and goals, I learned that the landlord was seeing an ever increasing number of applicants who wanted to take advantage of the landlord’s third party security deposit program.  As I recalled some other conversations with other clients, I realized that this wasn’t an isolated occurrence. 

Many owners and managers who offer these programs are seeing an increase in applicants who would prefer to have a third party agree to protect the landlord instead of doing it themselves.  Today, I don’t intend to focus on how the programs work.  However I do want to raise your attention to an aspect of using these programs that only came to light during the lease review I mentioned before – proper lease provisions.

Traditional security deposits are handled pursuant to Connecticut Statute - or you face some pretty severe consequences (see our February 2009 edition for more on the pitfalls of mismanaging security deposits).  Every lease I’ve ever seen was written to address handling security deposits in this traditional sense.  The applicant gives you funds which you properly maintain throughout the tenancy and against which you may charge amounts due based on the outcome of that tenancy.  You have rights and obligations surrounding that security deposit, as does the tenant.

Enter stage left – the security deposit program.  I am not referring to a Department of Social Services Security Deposit Guarantee (an indepth article on DSS Security Deposit Guarantees can be found in our August 2009 edition).  I am talking about the security deposit programs that serve as a tenant-purchased surety bond designed to protect the landlord’s property at the end of the tenancy.   Property owners and managers who use them say they are attractive to prospects and existing residents in various ways and their popularity is growing.

For those of you who are using or intend to use one of these programs, you are well advised to make sure your lease properly handles this very different approach to securing your property against damage and delinquency.  In the hundreds of leases I’ve seen in the last ten years, I have yet see one whose security deposit provisions contemplate handling these security deposit programs.  If you are truly going to enjoy the benefits these programs have to offer you and your residents, you must make sure your lease does not get in your way, but supports the benefits and opportunities you are entitled to under the program.

By way of simple example: I’ve seen a security deposit program landlord user include the program premium the resident paid as the security deposit amount in the traditional security deposit lease clause.  The unfortunate result of such an arrangement is that the resident, upon vacating has a right to the return of that premium from that landlord, even though the landlord never received a penny of the premium.  And, to make matters worse, if the landlord fails to “return” the premium, the landlord will be liable to the former resident for twice the premium.

Do not eliminate security deposit programs as one of the weapons in your arsenal in this very competitive environment.  If they are attractive and helpful to your business goals and objectives, get signed up as fast as you can.  And, just as fast, make sure this excellent business strategy is not undermined by your outdated or simply innocent lease provisions that are ill-prepared for this sophisticated risk management program.   [TOP]
 

Unauthorized occupants and war.

What do potential unauthorized occupants and war have in common? They are daily issues for residential and commercial landlords throughout Connecticut looking to evict a tenant for nonpayment of rent and/or other lease or statutory violations.  

Federal law provides tremendous protections to active duty military members and their dependants in summary process (eviction) proceedings, and there are criminal (jail time) and civil (money) penalties for landlords who violate that law.

Under governing law, a landlord may not evict an occupant that the landlord identifies in the notice to quit and complaint – and who has not responded to the complaint by filing something with the court – unless the landlord can prove that the tenant is not an active duty member of the military.  Connecticut judges and Clerk’s Offices focus very carefully on this requirement as the country remains at war in Iraq and Afghanistan. 

New clients often instruct us to include a John Doe and Jane Doe defendant on a notice to quit and, later, the complaint “just in case” or because they suspect (but do not know) that there are unauthorized occupants in the unit.  This is often a self-destructive decision for the landlord. 

First, the court will interpret the notice to quit and complaint to mean that the landlord knows that there is a male and female unauthorized occupant in the unit.  This is because the law does not require landlords to be private investigators – it only requires landlords to name those people who the landlord knows are occupying the unit.  Naming the Doe defendants in the notice to quit and complaint is a “judicial admission” that the judge can use against the landlord in that or any future proceeding. 

Second, the landlord will not have the name, social security number, and date of birth of the Doe defendants to enable the landlord’s attorney to obtain a military affidavit from the Department of Defense (otherwise, they would not be Doe defendants).  Accordingly, the landlord will have to engage and pay a marshal or private investigator to investigate the military status of the Doe defendants, and then file an affidavit stating the results of that investigation.  This can become particularly expensive, time-consuming, and potentially fruitless if there are not Doe defendants actually occupying the unit. 

Third, the summary process case cannot proceed to judgment until the landlord obtains the necessary military affidavits for the Doe defendants, or decides to withdraw the case against those Doe defendants.  While the withdrawal option sounds simple, it carries a large risk as the landlord has already told the court that it knows those Doe defendants occupy the unit (see above).  Moreover, if a Doe occupant later claims that the eviction was carried out without his/her knowledge, the landlord is exposed to all the criminal (jail time) and civil (money) penalties under Connecticut statutes prohibiting lock-out and entry and detainer absent a full eviction.  Federal law criminal and civil penalties could also apply, if that Doe defendant turns out to be an active duty member of the military. 

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.