by Harry Heist, Attorney at Law
Your resident left at the end of the lease and did not give any notice. What can you charge? Your lease requires 60 days’ notice, and the resident gave notice that was 20 days too short. What do you charge? These two questions have caused more confusion than almost anything else in dealing with the departing resident. The vast majority of property managers will answer these questions incorrectly, charge the resident the wrong amount and will expose the owner and/or management company to litigation. We have written 2 articles on this already over the years, but it is time to revisit the subject, as it is getting bad out there, real bad.
If you think you know what you are doing when it comes to charging the resident, there is a really high chance you are wrong. The reason you are probably wrong is that the law goes against logic and intuition. It would seem perfectly logical and fair to charge a penalty for failure to give notice or to charge the resident the full 60 days’ notice worth of rent if they only gave 45 days’ notice, but it just is not the case as far as the law goes.
Before we move on with this article, try to cleanse your mind of how you may have been charging the resident in the past. Let us start from scratch here, and look at this with an open mind, realizing that just because you got away with doing something for so many years, or it is your “company policy” or procedure, it probably is wrong.
The whole business about charging a resident for improper notice coinciding with the lease expiration date is governed by law. It is all addressed in Florida Statute 83.575. Rather than look at the law now, we will break it down first in a practical way, and see how we can successfully charge for improper notice or no notice at all. Try to think about the fact that a typical lease has a beginning date and an ending date. It is very simple. The resident moves in on the beginning date and is supposed to move out at as of the ending date. However, the issue is that the property manager wants to know if the resident indeed plans on moving out, or conversely, if the resident plans on staying. This makes sense of course. If you know the resident is moving out, you will begin to market the unit and hopefully get someone to take the resident’s place as soon as possible. If you are kept in the dark about the resident’s future plans, this inconveniences you and may result in you losing money. You are not able to properly plan and market the unit when you have no idea what the resident will do, and you assume, sometimes incorrectly, that the resident will simply stay or renew. What do you do to that resident who does not give you any notice or gives you short notice? Well, you want to punish that resident, and you hope that the threat of this monetary punishment will result in proper notice being provided. So far so good, and we all agree.
Now comes the law. The law changed a number of years ago after a major lawsuit put a big damper on charging any sort of penalty to a resident. The “new” law allowed a penalty, BUT special procedures had to be adhered to carefully. You MUST know them, and they are tricky.
Prior to the law changes, it was a free-for-all regarding charges to a resident in the event of improper notice. Property managers would simply charge the resident whatever the lease agreement allowed, or the property manager would see how many days were required, and if the resident gave a short notice, the resident would be charged until the end of the notice period. Some judges and legislators just did not like this. Residents would often forget to give the notice required by the lease, and then they would be hit with a big penalty or be required to pay rent for days past the day they vacated. The result was a change to the law. NOW, the property manager MUST do something special in order to enforce the notice requirement of the lease. It is not hard.
REMINDING AND INFORMING THE RESIDENT
The laws now states that the property manager must “REMIND” the resident of when the lease expires, inform the resident exactly what the notice requirement of the lease is, AND DETAIL the penalty that the resident will be hit with if the resident does not give the proper notice. Keep this in mind for the rest of this article: “REMINDING” AND “DETAILING”. The purpose of the law and the procedure set out is to make sure that a resident is not charged a burdensome penalty for something that the resident “FORGOT” to do. It is more about being fair to the resident who may forget to follow the lease and forget to give you notice.
WHEN MUST YOU “REMIND” THE RESIDENT?
You cannot remind the resident too far out in advance, because the resident may forget. You have to remind the resident in the “reminder window”. The “reminder window” is the period of 15 days BEFORE the notice period begins. Read this a couple more times!
Let’s look at some examples:
Scenario #1: The lease requires the resident give 60 days’ notice prior to the end of the lease. The property manager does nothing, the resident does not give any notice, and she leaves at the end of the lease.
Result: The property manager CANNOT charge the resident for failure to give notice. Why? Because the property manager did not REMIND the resident in the proper “reminder window”. In fact, the property manager did not tell the resident anything at all. It does not make a bit of difference what your lease provides.
Scenario #2: The lease requires the resident give 30 days’ notice prior to the end of the lease. The property manager sends out a Renewal Offer Letter two full months before the end of the lease. The renewal offer tells the resident when the lease expires, how much notice must be provided if the resident is not planning to renew, and the penalty for failure to give notice. The resident does not respond with any notice and leaves at the end of the lease.
RESULT: The property manager CANNOT charge the resident for failure to give notice BECAUSE the property manager reminded the resident TOO FAR IN ADVANCE.
Scenario # 3: The lease requires the resident gives 60 days’ notice prior to the end of the lease. The property manager sends a Renewal Offer Letter detailing the terms of renewal, the notice requirement and detailing the penalty for failure to give notice. The property manager sends this out 50 days before the end of the lease. The resident leaves at the end of the lease, giving only 10 days’ notice.
RESULT: The property manager CANNOT charge the resident the insufficient notice penalty of the lease, because the property manager did not send the Renewal Offer Letter out in the proper “REMINDER WINDOW” period.
Scenario #4: The lease requires the resident gives 60 days’ notice prior to the end of the lease. The property manager sends a Renewal Offer letter 70 days before the end of the lease offering a renewal, confirming when the lease is set to expire, detailing what notice is required under the lease and reminding the resident what penalty exists under the lease for not providing proper notice. The resident leaves at the end of the lease, only giving 30 days’ notice.
RESULT: The property manager CAN charge the resident the insufficient notice fee of the lease, because the property manager gave the resident “PROPER NOTICE WITHIN THE “REMINDER WINDOW”” period.
What is the “REMINDER WINDOW” PERIOD?
It is the period “WITHIN 15 DAYS BEFORE THE BEGINNING OF THE NOTICE PERIOD REQUIRED OF THE RESIDENT”.
This means that besides containing terms of the renewal offer, confirming when the lease expires, detailing the lease provision of what notice is required of the resident, AND the lease penalties for failure to give notice, this correspondence is delivered within a special 15 day window. Focus on that “window”.
A PROPER “RENEWAL OFFER LETTER”
The “RENEWAL OFFER LETTER” should contain the following to cover all bases:
1. The terms of renewal you are offering the resident. For example, the rent amount. 2. A deadline for the resident to accept the offer of a renewal and sign a renewal lease. 3. When the lease expires. 4. The AMOUNT OF DAYS’ NOTICE REQUIRED BY THE RESIDENT UNDER THE EXISTING LEASE IF THE RESIDENT DOES NOT WANT TO RENEW. This can be up to 60 days. 5. The PENALTY AMOUNT UNDER THE EXISTING LEASE if the resident fails to give you proper notice of an intention to vacate.
Note that we recommend that the penalty for improper notice not exceed one month’s rent. The MAXIMUM amount of notice you can require of the resident is 60 DAYS.
CHARGING THE RESIDENT FOR SHORT NOTICE
Suppose the resident is supposed to give you 60 days’ notice according to the terms of the lease, BUT the resident only gives you 15 days’ notice and leaves on the last day of the lease. You never bothered to send them any kind of reminder notice, or maybe your Offer to Renew Letter that you sent out did not properly list the penalties for not giving enough notice. Can you charge the resident for 45 more days rent? NO!!! But why not? The resident’s notice was short! Well, you just cannot do it. The ONLY time you can charge the resident a “penalty” is if you follow the statute.
Conclusion
Confused yet? Many people are. You need to understand this law and the procedures extremely well, or your company can get in a lot of trouble. When you charge a resident improperly, this amount often ends up on a credit report, and if a lawsuit is filed against you years from now, the mistake will come back to haunt you. The key is to understand fully that if a resident does NOT give you notice or gives you short notice, you cannot automatically charge the penalty contained within the lease. You must go back and see if you followed the law. The key is to have a system in place to make 100% sure that your Offer to Renew Letter is delivered in the 15 day “reminder window”, and the offer to renew has the proper wording in the body of the document.
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