Can I Still Charge Termination Penalties?

This question comes to us from one of the properties that we represent in Shelby County, Alabama:

Question: I served a Notice of Rental Agreement Noncompliance to a tenant that was behind on their rent. The tenant moved out within seven days and we did not file an unlawful detainer action. Can I still charge them termination penalties for failing to fulfill the terms of their lease agreement?

This is an interesting question. As most of you are aware, the language in your Notice of Rental Agreement Noncompliance for nonpayment of rent should include language that states: "Should you fail to cure your default, demand is hereby made upon you to surrender possession of the leased premises by removing all personal property from the leased premises and return the keys to the Landlord."

One of the essential elements of the unlawful detainer statute is that the landlord has demanded possession from the tenant and the tenant has failed to surrender possession to the landlord. Therefore, that language is required in a valid notice. However, tenant's organizations have argued that the landlord is making an "offer of settlement" with that language. The logic tracks as follows: 1) the lease has penalties in place if the tenant "breaches" the lease; 2) the landlord is demanding that the tenant surrender possession; 3) therefore, the tenant is not "breaching" the lease - if he moves out, he is merely complying with the landlord's demand. While it may seem counterintuitive that complying with the requirements of the unlawful detainer statute may waive your right to termination penalties under a lease agreement, this argument has held weight before numerous district court judges if the tenant skips during the seven-day window.

The fix on this is fairly simple: simply add language to your Notice of Rental Agreement Noncompliance Termination that states: "Please note that surrendering the property will not waive the landlord's right to pursue any monetary damages provided for under your lease agreement."

Is your rent drop-box worth it?

How secure is your drop box? How hard is it to reach the payments inside? In my practice, I get numerous calls from landlords who have drop box break-ins. In a drop box break-in situation it is impossible to disprove the claims of the many tenants who allege deposit of cash payments into the drop box.

If you insist on having a drop box, it is very important that you provide your residents with written procedures regarding the use of the drop box. Specifically, inform the residents that use of the box is optional; that they may use it for their convenience, but that there always is a risk of loss or theft. Rent will not be considered paid until you actually receive their check. And of course, never deposit cash.

Also provide the residents with a physical address where they can personally deliver the rent, not a PO Box, if they prefer not to deposit the rent into the drop box. By not requiring the use of the drop box, there is case law support for the principle that the resident will bear the risk of loss. However, if you mandate the use of a drop box, and fail to provide a physical address for payment, or require payment to be made to a PO Box, case law dictates that the risk of loss transfers to you upon their placement in the drop box, or in the mail.

On a final note, make sure that your drop box has a prominent notice stating that the tenant is using it at his own risk.

Final Video

Video 2 of 3

Please excuse the lack of technological ability. :)

The "Sarahviction" - Video One of Three

If you are seeing this video, you have been sent here by my office regarding the "negotiated pay and stay".

Bed Bugs and Fair Housing

An apartment owner was recently walking a prospective resident through his community when an awkward topic came up.  The prospect volunteered that he was looking for a new place to live because the place he was living in had bed bugs. The owner, aware of the nature and expense associated with a multi-family bed bug infestation, was immediately concerned about the risk that this prospective resident would pose to his apartment community if he were approved. What if the prospect brought the bugs with him? At the same time, the owner wondered if he could legally turn the prospect down because of the bugs given the requirements of fair housing. Or perhaps the prospect mentioned that he was moving from an apartment community that the owner knew was battling an extensive bed bug infestation.

These are actually fairly common scenarios but, thankfully, bed bugs are not a protected class under Fair Housing. So while it is an awkward situation as long as a landlord applies the same criteria or policy to every prospect with regards to the bugs there should not be any fair housing implications. According to an article published in the National Apartment Association's Units magazine, a policy could be along the lines of, "If we have reasonably credible third-party information that a prospective tenant is coming from environments with a bed bug infestation, we will require that the prospect have all their belongings sanitized (or encased in plastic, or disposed of, etc etc etc) before they will be allowed to take possession of the leased premises."

As bed bugs are becoming more of an issue in our geographical region, I would remind readers that bed bugs are the ultimate communists: they do not care about rent level or "class" of property.

Form Book For Sale

I used the amendments to the landlord-tenant act as an excuse to update my forms and have assembled them into a book. These forms are Alabama-specific. There are 20 total forms, I believe, including a rental application, residential lease agreement, notice of adverse action under the FCRA, pet lease/pet disclosure, rental insurance addendum, rental access addendum, property management agreement, notice of rental agreement noncompliance, move in/move out inspection form, etc. This form book is available for sale and if you purchase the form book we will also provide you with electronic versions of the forms.