Articles in This Edition:

• Why security deposits should never be used as
  "last month's rent".

• "Just how long will this eviction take?"

• Your tenant skipped town - now what?

• Housing clerks: No red cape - but just as helpful!

Why security deposits should never be used
as "last month's rent".

Despite what many believe, the purpose of a security deposit is NOT to ensure you get paid the final month’s rent. As a landlord, you should expect a rent payment on the first day of the last month of the lease, just like every other month. The actual purpose of a security deposit is to make sure that if your tenant vacates at the end of their lease, the apartment can be returned to ready condition for the next tenant with little or no expense to you.  You should expect that after your tenant vacates, the apartment will be in pristine condition and you will be returning the entire security deposit to the tenant at their forwarding address supplied to you in writing upon their departure.  [See "How secure are your security deposits?" in our February edition].

Unfortunately, the likelihood of you finding a pristine apartment on your move-out inspection is about as good as getting your rent on the first every month, including the last one.  Nonetheless, you don’t want to limit your options at the end of the lease by making uninformed mistakes at the beginning.

As we noted in last month’s issue, collect an entire security deposit as a “security deposit” before your resident moves in.  We have all heard the phrase “first, last, and security deposit.”  This phrase, for most, means first month’s rent, last month’s rent, and security deposit, all of which will be expected from the applicant before they become a tenant.  While the same dollars may come out of your applicant’s hand and into yours, exactly what you must do with them now and how you may be forced to handle them in the future is where things get tricky.

Let’s say you charge $1,000.00 per month for rent.  “First, Last and Security” = $3,000.00.  Right?  You take the $3,000.00, put $1,000.00 into your security deposit interest-bearing account, and deposit the rest into your operating account and go on your merry way.  Not so fast.  Two major problems.  First, the last month’s rent may be considered “security” anyway and so now you have mishandled a security deposit by placing in the wrong account.  And, second, when your tenant vacates and you only account for the $1,000.00 in your escrow account, you may find yourself fighting with the Banking Commission over improper security deposit accounting.

There is a simple fix.  Collect two things before an applicant moves in:

1. The first month’s rent.

2. A security deposit (however much you want within the legal limits).   

Don’t call the security deposit anything else.  Don’t make reference to the last month’s rent.  If the applicant asks whether you are collecting the last month’s rent, you can simply state, “This is a security deposit.  We expect you to pay your last month’s rent just like all other months by the first of the month.”  Take $1,000.00 and deposit it into your operating account.  Spend it at will.  Take the other $2,000.00 (or however much you collected) and deposit it into your security deposit interest-bearing account and prepare to return it in twelve months after your pristine move-out inspection.  This will clear up a lot of confusion and avoid a few other problems that scenario one will invariably create for you.

Security deposit handling and accounting are protected by statute, as we discussed last month [See "How secure are your security deposits?"].  Making things very clear as to what money you are collecting and for what purpose, at the beginning of your tenant relationship, will make your life much calmer and easier upon their departure.

Yet another way to protect yourself, and limit your losses at the end of a tenancy, is to not allow charges to accrue against the security deposit during the lease term.  If your residents are responsible for maintenance charges, damage repairs, or other financial obligations incurred under the lease, charge your resident and demand payment of those during the lease.  Don’t allow them to accumulate over time with the intent that you will apply these charges against the security deposit. Doing so may very well leave you empty handed when that pristine move-out inspection turns out to be not-so-pristine. 

If your resident offers or insists that you  “take the charges out of my security,” you should consult a landlord attorney about your options as you have just witnessed the first symptom of what could turn out to be an expensive disease when that resident skips out on you two months before the end of the lease.  See “Your tenant skipped town - now what?” in this issue.

"Just how long will this eviction take?"

A common question among landlords, it often defies easy explanation due to factors specific to not only the landlord-tenant relationship, but also to the law and operation of the courts.

As always, the key document – and first point of reference – is the lease.  What does it say about any grace period, default, notice, or remedy concepts that would help address the issue at hand?  Remember, landlords can (and often unwittingly do) contract away their summary process (eviction) statutory rights by what’s written in the lease.  For example, on the residential side, a lease that states rent is due by the 10th of the month – usually, an attempt to simplify the 1st of the month deadline plus the 9-day statutory grace period – in reality means that the tenant has until the 19th of the month to pay.  The statutory grace period applies from the lease rent payment deadline as extended by any grace period(s) included in the lease.  On the commercial side, a lease that requires a default notice for nonpayment of rent eliminates the landlord’s statutory right to move directly to a notice to quit on the day after the rent is due. 

Another factor is whether the rental situation in any way benefits from government or private-source funding (this includes Section 8, HOME, tax credits, and municipal bond programs as  examples).  If so, there are routinely operating agreements or laws / regulations that may affect whether and how you can evict a tenant.  Be sure to consider this often-overlooked, yet critical, component if you are contemplating whether to acquire a multi-unit complex - particularly on the residential side.  To avoid additional expense, landlords looking to expand their property portfolio should be sure to put the contractual burden of identifying these agreements, laws, and regulations on the seller, not the buyer. 

Properties or tenants that participate in rent-subsidy programs like Project-Based Section 8 or Section 8 Vouchers add yet another factor as there are usually contracts between the landlord and the Section 8 administrator (or other government agency) that will impact the situation (see the “Section 8 - So many contracts - so little time" in our February 2009 edition for more on this subject).

Luckily, the law is much more straightforward when defining an eviction timeline.  For example, when using nonpayment of rent in a market transaction (i.e. no government program involved) – regardless of whether it’s residential or commercial - your landlord attorney, in most instances, should be able to get you a tenant deadline to file an appearance in court and a responsive pleading to the complaint within approximately twenty-three (23) days. 

From there, if the tenant fails to file an appearance, your landlord attorney can file a motion for default against the tenant, which – by law – the court should grant within one (1) business day.  If the tenant files an appearance but does not plead, your attorney can file a different motion for default against the tenant, which obligates the tenant to file a pleading within three (3) business days or the court will grant default judgment.  Of course, one can never account for the potential backlog of work in the Housing Clerk’s Office [see , which can delay the court’s response to these motions (see the accompanying article and quick tip on Housing Clerks for more details and approaches to help increase the likelihood of timely responses).  Although landlords cannot control how quickly the court responds to such a motion, with the right landlord attorney, they can control the timeliness of the document filings.

If the tenant files an appearance and responsive pleading (and the landlord responds, as necessary), the court will schedule the case for trial or a hearing on the tenant’s pleading.  Depending on the court, this can take anywhere from a few days to four (4) or more weeks (the courts with housing sessions are usually quicker than those without in scheduling the trials/hearings).  How quickly the landlord obtains judgment in this situation is usually a function of how well the landlord and its attorney structured the case, handle the (usually) mandatory mediation and potential stipulated agreement (commonly referred to as a “stip”), and are prepared for and can handle the trial or hearing.

Lastly, after the landlord receives judgment for possession, a statutory five (5) day stay of execution automatically applies, and marshals are required to give at least one (1) calendar day notice to the tenant of the eviction date, which is often defined by when the town/city is available to schedule the eviction.  Again, landlords cannot control the timeliness of the court’s response, but can significantly influence the execution filing (for court processing) and marshal selection (and performance) by working with a landlord attorney well versed in landlord-tenant law and with established relationships with similarly knowledgeable marshals who have good working relationships with the cities and towns in their county.  [TOP]

Your tenant skipped town - now what?

In our February edition, we discussed dealing with the unresponsive resident living on the property at the time of renewal [See It's lease renewal time - do you know where your tenants are?].  This month, we’re discussing “skips” – you know, the former occupants whom (due to nonpayment of rent and a neighbor reporting a foul odor seeping through the walls), you’ve discovered left the unit weeks ago, perhaps in the middle of the night, leaving the fridge open and unplugged - full of old Chinese takeout containers.  Well, perhaps it wasn’t quite that bad.  But, they’re gone, you haven’t received rent and you had a reason to immediately enter the apartment only to find it empty.  Now what? 

Our past articles on security deposits is most applicable in this discussion, first because we reviewed the power of preparedness and second, because we discussed the importance of having funds in an account that you can rely on for damages caused by a tenant upon vacating.  As mentioned, while these funds are not likely to cover everything you are owed when you are faced with a "skip", they will go a long way to easing the financial pain caused by the unpaid rent and, as we will discuss next, if you take action quickly enough, may even cover getting rid of the rotten food smell. 

Typically, “skippers” will wait until the last day of the month - or in the case of the more sophisticated ones, the last day of the rent grace period - before they disappear into the midnight fog.  Then, they rely on your humanness and compassion (evidenced by your routine acceptance of late rent payments) to get a head start against your collection efforts. 

The key when dealing with a "skip", as you will hear us say in many different situations, is to take action at the first sign of a problem.  While not perfectly applicable, I think you will find one common trait among "skippers" is their poor payment histories.  Perhaps not that they failed to pay, just that they were consistently late, causing you you spend a great deal of time chasing their rent while racking up late fees.  So, take action with the chronically late payer and you may just avoid a near the end-of- lease "skip" as well as the collections chase thereafter. 

Another simple strategy is to routinely inspect units of tenants who are chronically late with their rent.  It seems that residents with no respect for rent deadlines often have little respect for other obligations under their lease.  If you make it a habit to inspect the units of delinquent payers more frequently, you may stumble on that "skip" before the General Tso's chicken and pork fried rice become a penicillin factory.  What you find may also provide cause to discuss their ongoing tenancy and demand behavioral change long before the move-it-yourself truck sneaks away with the morning dew. 

Unfortunately, you won’t catch every "skipper".  If planned right, however, your last line of defense started at the beginning of your relationship with an applicant.  Insisting on complete application information, including social security numbers, will go a long way when you must run to catch up with the "skipper".  When, not if, you send these accounts to collections, every bit of information – including employment, bank accounts, social security numbers, former addresses, and references – will be important if you expect to recover some of the losses you have suffered.  The application and the application renewal process become your window into the "skipper’s" world and may be the yellow brick road you were looking for to get what you are owed.

So, by gathering the right application information, collecting a full security deposit, being diligent about timely rent payment, and increasing the inspection rate on residents who aren’t paying on time, you should find that not only is chasing down a "skipper" easier than you believed, but that you still have the deposit in hand to not only cover the missed rent, but also help pay for the clean-up of that nasty refrigerator!   [TOP]

Housing Clerks - No red cape - but just as helpful!

A housing clerk’s office is the operational arm of the court, particularly the judge, and plays a key role in the administration of justice in housing cases.  It's not only the court’s front line, but also the back office in charge of processing and handling every aspect of summary process (eviction) cases, as well as all other civil cases involving housing (e.g., collection cases), both commercial and residential.  They represent the court, often including the judge, to parties outside of a court hearing or trial, and therefore can not advocate for either side. 

However, what is less known is that unlike other clerks, Connecticut law and procedure requires housing clerks to provide procedural assistance to all requesting pro se parties, a fact that appears on the complaint documentation received by all defendants.  Most judges presiding over the housing court will inform pro se parties of this rule, placing responsibility on the clerks to deal with requests for help. Unfortunately, this translates into a tremendous burden on housing case flow as it demands extensive time and attention from the clerks. 

To deal with this reality, most housing clerks tend to not waste time or words dealing with parties.  Landlords wishing to separate themselves from the masses who appear before the housing clerk should simply be nice and listen (see accompanying Quick Tip).  This includes understanding and working with the clerk should they be facing a particular pleading situation (e.g., the tenant filed an appearance after the deadline but before your motion for default was processed) or challenge in a case (e.g., scheduling a hearing with a tenant claiming medical issues or family emergencies). 

This is particularly true in CT courts that do not have a housing session (a separate court that includes a clerk’s office and judge dedicated entirely to hearing only housing cases – currently found in Norwalk/Stamford, Bridgeport, New Haven, New Britain, Hartford, and Waterbury).  In instances where there is no housing court, the clerk is part of a larger clerk’s office that also handles criminal and civil cases; a situation that often causes housing matters to get “lost in the shuffle”.  This extended focus adds an extra burden on the housing clerk, who may have very little influence to change the larger clerk’s office or court’s priorities and approach.  All the more reason to be nice and listen. 

In short, housing clerks are professionals who often have a thankless job.  While you may not get special treatment simply by acting professionally; you will significantly increase the likelihood that your case will be resolved efficiently and effectively.  Moreover, in those areas where the law, procedure, or the judge give the clerks discretion, your odds of receiving prompt attention, the benefit of the doubt, or the opportunity to correct an oversight in your case, increase if you have shown the clerks professional courtesy.
[TOP]

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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.