Articles in This Edition:

• Take note of the legal winds of change.

• How to bypass and/or downplay the impact of tenant damages.

• The importance of the landlord-police relationship.

• Protect your rights - stay in the loop!

Take note of the legal winds of change.

One thing we try to do in the Landlord Advocate is to keep you informed about changes in the law that directly impact your operations in Connecticut.  Another is to watch what is occurring elsewhere in the country concerning multi-family housing so that you know what the future might hold.  In this article, I will discuss one of each.

The Connecticut Legislature recently passed a new law that will have a direct impact on your daily management operations.  The law, as proposed, and eventually passed, is designed to offer protection to victims of family violence.  While I have no intention of discussing the moral or social aspects of this new law, I will start by saying that the original version of this bill required owners and managers of multi-family properties to shoulder an even larger burden in these circumstances than the final version that passed.  The final bill is a result of efforts to alleviate some of that burden.  Here’s a summary of what’s coming:

The law, whose final language was not available as of this writing, will go into effect for all leases written after January 1, 2011.  It gives tenants claiming to be victims of family violence a right to terminate their lease on 30-days written notice, provided the tenant supplies appropriate documentation in support of their claim.  The bill maintains the tenant’s liability to the landlord for rental arrearage accumulated prior to the termination as well as damage done to the property.  It states that the termination does not relieve any other tenants on the lease from their obligations under the lease.  For example, if one person in a cohabiting couple seeks relief under this new law, the remaining resident would still be obligated under the lease.  And, just in case there are tenants who would attempt to use this law inappropriately, it provides a mechanism for the landlord to prevent a tenant from terminating the lease if they don’t meet the termination requirements.   

Since it still has not yet gone into effect, exactly how this law will be handled by judges as it arrives in their courts remains to be seen.  Be aware of what’s coming, and, if you are proactive, consult with your landlord attorney on what you must do to comply with the law once it is effective.  Also, now is the time to determine how you will protect your lease and the contract obligations of those who attempt to use this law in bad faith.

Now, from outside our border, The New York Times reports that local City Council in New York is considering proposed legislation that would allow the city to file liens against a landlord’s property for their failure to eliminate garbage, mold and vermin from their properties.  Now, at first blush, you are thinking one of two things: 

1. I don’t have to worry about that, I already take care of those problems; or
2. That’s exactly what should happen to landlords who aren’t properly maintaining their properties.  And, you may be correct. 

Here’s the problem.  The rationale reported for this 18-month pilot program is the Council’s hope to significantly curtail the spread of asthma.  That’s right.  The same chronic lung condition suffered by millions of Americans is now the justification for the city’s efforts to enforce habitability laws.

While this legislation has not passed, I point it out not for its substance, but its strategy.  The government, in this instance the City Council, is taking a common health condition that has many wide ranging causes and is using it as the basis for dictating particular conduct by certain citizens.  Because living conditions “have been linked” to asthma, the Council is legislating conduct of those who may or may not be the cause of the living conditions.  With the numerous laws already on the books concerning habitability, this offering would appear to be simply redundant.  It’s not, because of the strategy it is implementing. 

The potential fallout associated with legislation like this is incredible.  Not only would you be faced with current operating challenges, think of the fair housing implications associated with  the link between environmental living conditions and a common health problem.  Think of the liability implications of suggesting that these living conditions are the cause of the resident’s asthma.  If this legislation goes into effect, what is stopping a resident from claiming that any other condition from which they suffer is caused by something in their living environment as long as the two can be “linked?”

How to bypass and/or downplay the impact of tenant damages.

Landlords are often frustrated by the damage some departing tenants inflict (or have inflicted over time) on the unit, and often angered by having to absorb the related repair, maintenance, and/or renovation cost(s).  There is no single solution; rather, landlords must focus on the fundamentals of dealing with tenants – from the start of the landlord-tenant relationship to its end – to minimize and eliminate the negative impact of such tenant actions.

First, landlords can demand the security deposit with the first month’s rent (by money order or bank check) before giving the tenant keys to the unit.  On the residential side, if market conditions allow, landlords should secure the maximum allowable security deposit from the tenant – two (2) months rent for all tenants under age 62, or one (1) month’s rent for tenants age 62 or over.  Remember, landlords must deposit and administer this money in trust account(s) separate from their operating account(s).

Second, landlords should own and use digital cameras or video recorders – in property management and maintenance, a picture is indeed worth a thousand words.  The first set of pictures for the tenant file should reflect the unit’s status before the tenant moves-in, which will establish the baseline against which all future pictures can be compared (see below).

Third, in our experience, the leading indicator of tenant damage to the unit is nonpayment of rent.  Landlords must have a rent collection policy and procedures in place.  The fundamental relationship between the landlord and tenant is “I give you the keys to valuable real estate in exchange for payment of rent” – nothing more, nothing less.  If you do not enforce stringently your rent collection policy, the tenant (and other tenants) will not take any other portion of the lease or governing statutes seriously, and tenant damage to the unit will likely occur.

A strong and adhered to rent collection policy will allow the landlord to treat the security deposits as fundamentally separate from rent collection in practice, and not just in theory.  Indeed, state law provides the guide here – as discussed above, a landlord must keep security deposit funds separate from the landlord’s operating account into which rent money flows.  By keeping these moneys actually separate and implementing a rent collection system, landlords will be able to offset any property damage repair costs with the security deposit rather than have to use it to collect back rent owed.

Fourth, landlords must periodically inspect their units to catch any tenant damage before the move-out inspection, and not allow more than six months between unit inspections.  Again, the landlord should use the digital camera during each inspection to document any problems.

Fifth, landlords should call the police and press charges when the tenant intentionally or recklessly damages a landlord’s property without any reasonable ground to believe that he/she had a right to do so – this behavior is a crime that ranges from a felony to a misdemeanor depending on the amount of damage.  Moreover, a tenant may have committed the crime of criminal mischief for certain kinds of intentional, reckless, or even negligent acts that damage a landlord’s property.  The landlord can work with the police and state prosecutor to ensure that the court addresses any damages not covered by the security deposit in the resolution of the tenant’s criminal case.

Landlords must be prepared and plan for such a call to the police and to press charges against the tenant, because landlords will often encounter skeptical police officers who do not realize that the tenant’s behavior is, in fact, criminal.  Moreover, as a practical matter, any delay between discovery and reporting the crime will likely result in no tenant arrest. 

Sixth, the landlord should take pictures after any property damage repair, maintenance, or renovation takes place, and after the tenant moves out.  These pictures will serve as proof of any damage and/or repairs claimed by the landlord.

Last month’s articles on establishing policies before procedures and creating Standard Operating Procedures (“SOPs”) also provide helpful roadmaps for landlords looking to accomplish these objectives.

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The importance of the landlord-police relationship.

We recently asked our Landlord Advocate subscribers for stories that revealed an interesting lesson for landlords.  Here is the first set of several that we will share in future newsletters, which identifies the powerful role that police and other governmental investigators can play to support your community if you consciously, or unconsciously, offer them a vacant unit.  Remember, access and intelligence are the key ingredients for law enforcement to stop criminal activity and break-up criminal enterprises.  Police and other governmental investigators can act (whether by arrest or citation) when they see and learn about illegal activity firsthand.  They certainly value hearing about problems, but the investigator must still be able to observe to move definitively against the criminals.

Story #1: We had a drug distribution problem with some (residential) tenants in a garden-style apartment complex.  The drug dealers had established good intelligence collection, and always disguised their activities whenever a member of the management or maintenance staff was around, and when the police patrol would come near.  It was very frustrating because of the negative impact these criminals were having on the community.  We then realized that we had a vacant unit that overlooked the drug dealers’ unit and distribution operations, and we offered it to the police department for surveillance.  They accepted and, weeks later, the drug ring was arrested and jailed and eviction actions took care of any remaining occupants – an excellent result for the community and the landlord.

Story #2: We had an excellent small (commercial) tenant.  He was very cordial and always paid the rent on time.  At the end of a short-term lease, he did not choose to renew.  We asked why, because we hated to see him go.  We learned that he was an undercover federal agent, who had completed his investigation of the business-dealings of others at the property and in the area, and that it was simply time for him to move-on to his next assignment.

The key for landlords is to prove through words and action that they are interested in eliminating criminal (or other damaging) activity from their properties, and will extend company resources to make that happen.  Whether a conscious or unconscious arrangement, it will only result from a long-term effort to build a relationship with the town or city.

As we discuss in our seminar Getting Rid of the Problem Tenant, landlords must first establish a relationship with the local police, fire, and building/health departments.  At the very least, they should meet the police chief, the patrol sergeant(s) for their community, and the patrol officers; the fire chief, marshal, and the professionals in the firehouse that would respond to an emergency in their community; and the building and health code officials and investigators.  Landlords are generally a large taxpayer for the communities in which they operate, and the local government will almost always be agreeable to these meetings, particularly if the goal is to make the community (and, hence, the town or city) a better place to live.

What should the landlord ask for during these meetings?  Nothing.  Instead, they should make sure that day-to-day contact is between officers and staff who have met one another – long-term beneficial relationships cannot exist without human interaction.  Next, landlords should ask the police, fire, and code officials what the landlord can do to assist them.  All of these government personnel serve, interact, and (sometimes) take action against your tenants and their guests (residential) or business invitees (commercial), and landlords can facilitate those interactions.

If you have a conference room, offer it for occasional use to write-up reports – heat in the winter, and air-conditioning in the summer, make a big difference for the men and women who must work on the street each day.  If you have a community room, perhaps the department will ask the landlord to sponsor a question-and-answer session, seminar, or meeting for the department to interact with the community.  Alternatively, as noted above, you can offer a vacant unit to address a particular investigatory need.

Having said all this, landlords must remember that they should not agree to every request by government officials.  For example, in the arena of sex offender registry information, landlords do not have the same statutory immunity that police departments have in communicating the sex offender information to the community.

Protect your rights - stay in the loop!

As the dust settles in Hartford after our most recent state legislative session, it dawned on me how many property owners and managers there are in Connecticut that are not having their voices heard at the Capitol.  Every time our state lawmakers enter a legislative session, there are numerous laws proposed that impact how you operate, and how profitably you operate. 

Whether it be one group’s attempt to get clotheslines installed in all multifamily communities or another group’s attempt to give certain people the right to terminate their lease on 5 days notice, there is always something in each session that lawmakers are hearing about and which will affect your daily operation.

Question:  Is your opinion on all of these proposed laws or changes being heard?

Answer:  Not unless you are involved in the process.

Now, I know for certain that the time it would take to research proposed laws, prepare written and oral presentations concerning those laws, provide them to lawmakers in Hartford and follow up on how things are going would not fit well into my hectic schedule.  I am sure you suffer from the same challenge.  Luckily, that doesn’t mean your input is unnecessary or useless.  In fact, your input and involvement has never been more important. 

It is already a challenge to own or manage multi-tenant property in Connecticut.  Since many of the recently proposed laws would make it even more difficult, you must participate in the process or your voice will go unheard.  The best way to do that is to join a landlord organization with strong, active membership and a familiar presence in Hartford.  These organizations will make sure that your input on these important issues is presented timely and professionally and will keep you informed about what to watch for and the final outcomes.  Many of them hire professionally lobbyists to keep the organization’s agenda on the tops of lawmakers’ minds.  While there are many such organizations, two that stand out in Connecticut are the Connecticut Apartment Association (“CTAA”) and the Connecticut Institute for Real Estate Management (“IREM”).

Besides advocating for landlords at the Capitol, these and other landlord organizations provide wide ranging education opportunities for owners and managers, extensive networking with peers and vendors, and a chance to learn about trends and changes in the multi-family industry throughout the country.  These groups offer education on leasing, rent collections, fair housing and many other topics.  You will get to meet property management professionals from some of the largest management companies in the country, to the multi-family owner in your local town, and hear about the challenges they face and how they handle them effectively.  You will meet locksmiths, landscapers, plumbers, and roofers, along with other products and services representatives that can make operating and managing your property much more effective.

Additionally, many of these organizations have a national affiliate that supports the local efforts to ensure your active participation in these groups proves to be a worthwhile investment of your time and money.  These national reps work with you and the vendors who service the industry to make sure everyone has the most current information and resources at their fingertips to make better daily decisions.

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.