Legal or Not September 2017
LEGAL OR NOT by Brian Wolk, Heist, Weisse and Wolk, P.A.
Q: I moved to Florida from Montana last month. I am very unhappy with the marketing efforts of my apartment community. When I lived in Montana, we used very creative marketing tools to get prospects in the door. For example, we offered large discounts to our residents if new residents told us that an existing resident referred them to our office. This plan worked like a charm, and we were always at or close to 100% occupancy. Are we able to institute the same referral incentive program in Florida?
A: It is always wise to make sure that your proposed program is in compliance with Florida law. Sadly, a property manager who relocates from another state very often assumes that the way things were done elsewhere in the United States will also hold true in Florida. That could not be further from the truth! Those property managers will have residents that contest their evictions, and those residents will sometimes obtain an attorney to represent them, causing the landlord to be liable for substantial attorney’s fees and costs. It is very important to keep in mind that each state has its own unique set of laws dealing with property management operations. Never assume that Florida law mirrors the law of your former state! With respect to your question, Florida law places very strict limitations on your plan. The Florida Statutes permit a property management company or apartment community owner to pay money to or give something of value not to exceed $50.00, such as a gift certificate or rent concession to a current resident who refers another person to the apartment community. The last sentence does not contain a typo with regard to the maximum amount: $50.00 is the limit! You should also keep in mind that this limit does not apply if the fee is being paid to a licensed real estate broker. We strongly recommend if you do have a referral plan, that you have it all in a detailed written format to avoid confusion.
Q: Our management company just took over an apartment community through an ownership change. When we went to file our first eviction, our attorney informed us that the “fictitious name” was no longer valid and in fact had been expired for 15 years. The attorney warned us that the case could get dismissed or delayed. If the fictitious name has been expired for so long, how did the prior owner file evictions before? Is my attorney making a big deal out of nothing? Is there much risk here?
A: Under Florida law, a company that operates under a name different than the actual name of the ownership entity must file this name with the Florida Secretary of State. For instance, “John Doe Apartments” may be owned by the “YTZ12 Apartment Partners, an Oregon Limited Partnership”. The ownership entity is operating and holding itself out to the public as “John Doe Apartments”, which is considered a fictitious name. The reason for this law is to prevent an ownership entity from deceiving the public while hiding itself behind another name. A fictitious name expires after five years, and often renewing the name is forgotten, or the Secretary of State has an old address for the entity on file, so the renewal notice never makes it to the right person. Additionally, in the event of an ownership change, the new owner is required to file for a fictitious name, as the one on file with the Secretary of State will be wrong, if it had even been filed in the first place. It is important for the apartment community manager to verify compliance, as this registration requirement is often forgotten by the largest of law firms handling huge transactions. There is a simple explanation why the expired fictitious name did not apparently cause any problems with the prior company. Most likely, no tenants that were under eviction looked into this issue or were aware of this law. However, many attorneys representing residents will check the apartment community’s fictitious name filing right away. If it is incorrect, expired or not filed, they assert this defense and delay or cause the eviction action to be denied. Keep in mind that the prior company was very lucky. Make sure that your regional manager files the fictitious name immediately. It is inexpensive, quick and easy, and can be filed without an attorney.
Q: We just received a nasty email from an attorney stating that our company violated federal bankruptcy laws. According to the attorney, her client is a former resident who left our apartment community four years ago, and she is claiming that our collection agency called her client up demanding payment after the bankruptcy had been filed. I emailed the former resident’s attorney and informed her that we had no idea the resident was in bankruptcy, and she stated that we were sent notice of the bankruptcy from the Bankruptcy Court. What is going on here? Did we do anything wrong?
A: Most likely your office did receive a notice from the Bankruptcy Court; this scenario occurs frequently. Apartment managers receive this notice, do not recognize the person’s name, and it ends up in the trash can. Whenever you receive any correspondence from the Federal Bankruptcy Court, you need to take it seriously. Your first check will be to see if it pertains to a current resident. If so, you will cease any type of collection on your end. For example, a 3-day notice may not be served. There must be no more collection notices! If the resident is under eviction, the eviction is halted. If you discover that the notification concerns a former resident, as is the case here, notify your collection agency immediately by phone and in writing, and make sure you can prove you notified them. There are harsh penalties which can be imposed if you or your collection agency continues to attempt to collect a current or old debt if the resident is in bankruptcy. Going forward, if you receive anything from the Bankruptcy Court directed to your apartment community, take it very seriously, as the notification will almost always pertain to a current or former resident. When someone files bankruptcy, that person will include everyone to whom money is owed. The fact you received the letter from the Bankruptcy Court shows that the individual believes money is owed to you, and someone, perhaps the collection agency, may be attempting to collect from that person.