Possible legal issues facing property managers

Property managers are often faced with legal issues that may require assistance from a lawyer. These issues include evictions for non-payment of rent, or for just-cause, breach of contract by suppliers/vendors, premises liability and security deposits to name a few.

Any time you need assistance with the one of these issues get in touch with our knowledgeable and dedicated team. We represent a small number of clients, so you know you’re receiving personalized and focused attention on your needs.

Security Deposits

Under Michigan law, both a tenant and a landlord have duties regarding the security deposit. Understanding the duties and taking action are
crucial. The law requires mandatory notice provisions, written communications, mailings, and strict compliance with time limits. If the duties are not performed precisely, the tenant
risks losing the return of his or her security deposit and the landlord risks losing a claim to it.

Any prepayment of rent, other than for the first full rental payment period established in the lease, and any refundable fee or deposit are considered by law to be part of the security deposit. Michigan law states that a security deposit shall not exceed 11⁄2 times the monthly rent. The security deposit is considered the lawful property of the tenant, until the landlord establishes a right to it, generally by obtaining a judgment in a court of law. The landlord must either: a) deposit the money with a regulated financial institution, or b) deposit a cash c) obtain a bond, to secure the entire deposit, with the Secretary of State. If the landlord does this, he or she may use the money at any time, for any purpose.) The bond ensures that there is money available to repay the tenant’s security deposit.

Once a lease is terminated, the tenant has the right to have the entire security deposit returned unless the landlord can substantiate a claim to it because the tenant:
1. Owes unpaid rent;
2. Owes unpaid utility bills; or
3. Caused damage to the rented property beyond reasonable wear and tear.

Eviction for Non-Payment of Rent or Just Cause

If a property manager wishes to remove a tenant from his or her rental property, the property manager must use the eviction process. The process is called a Summary Proceeding, and it moves quickly to restore rental property to the person lawfully entitled to possession. The process starts with a demand for possession and may involve court appearances and a trial.  An Writ of Eviction may be issued and a court officer may remove the tenant and tenant’s personal items from the rental property.

The court cannot issue an Order of Eviction for at least 10 days. This allows time for the tenant to appeal the decision; it allows time for the tenant to cure by paying the rent owed if that was the reason for eviction, and it allows time to work things out by agreement. Only after waiting 10 days can a prevailing landlord request that the judge issue an Order of Eviction. Michigan law does not allow the landlord to forcibly remove the tenant or the tenant’s property. Only an officer of the court, by a judge’s order, can remove the tenant and tenant’s property from the rental property; and that officer is generally the sheriff or someone from the sheriff’s office.

Under the Servicemembers Civil Relief Act (SCRA), if your tenant is an active duty military man or woman who’s monthly rent is less than $3,047.45 per month, you may not evict your tenant or his/her dependents for non-payment of rent, from a home that is used primarily as a residence during a period of military service, without a court order. If an eviction action is filed, the court must temporarily stay the proceedings or adjust the amount of his/her financial obligation if he/she can show that they have been unable to meet their financial obligations under the lease because of his/her military service.

Generally, landlords may evict a tenant  who has not paid rent or has violated the rules outlined in their lease. If you need to serve a notice to pay rent or vacate the premises, get in touch with our firm. There are certain requirements that a tenant eviction notice must meet, so be sure to consult our law firm prior to serving a notice.

Breach of Contract by a Vendor or Supplier

When vendors or suppliers breach their contracts with property managers it often has an immediate negative impact on the profitability of the property.  In the worst cases, these breaches may even affect the habitability of the property by your tenants, resulting in lost rent and/or tenant dissatisfaction. In addition, withholding payment to breaching vendors could result in a lien being placed on your property. You need to consult with an attorney to determine your best course of action.

Leases

Michigan law establishes rights and obligations for parties to rental agreements. This agreement is required to comply with the Truth in Renting Act. Leases differ
somewhat in terms, but a written lease agreement should include:
1. Name and signature of the landlord;
2. Name and signature of the tenant;
3. Rent amount to be paid, how frequently, and when and where it is to be paid;
4. Address of the rental property;
5. Starting and ending dates if it is a fixed term tenancy;
6. Landlord’s mailing address;
7. Amount of the security deposit, if any;
8. Name and address of the financial institution holding the security deposit;
9. Notice of the tenant’s obligation to provide a forwarding address to the landlord within 4 days of terminating the tenancy;
10. Who is responsible for paying utilities;
11. Repair and maintenance responsibilities;
12. Eviction procedures;
13. Any other terms and conditions that the landlord and tenant agreed to; and
14. This statement must be provided in a prominent place in the lease, in at least a 12-point font size:

The Michigan Truth in Renting Act regulates residential leases, prohibiting certain clauses or provisions and prescribing penalties. A provision or clause in a lease that violates
the Truth in Renting Act is void. In particular, a written lease shall not include a provision which:
1. Waives or alters a remedy available to a party when the rental property is in a condition which violates the covenants of fitness and habitability;
2. Waives a right established under the laws that regulate security deposits;
3. Unlawfully excludes or discriminates against a person in violation of the laws relating to civil rights;
4. Provides for a confession of judgment, e.g., requiring a person to give up certain legal rights in advance;
5. Relieves the landlord from liability for the landlord’s failure to perform a duty or for negligent performance of a duty imposed by law (however, the landlord’s duty could be waived to the extent a tenant was able to recover under an insurance policy for loss, damage, or injury caused by fire or other casualty);
6. Waives or alters a party’s right to demand a jury trial or any other right of notice or procedure required by law;
7. Provides that a party is liable for legal cost or attorney fees incurred by the other party in excess of costs or fees specifically permitted by statute;
8. Provides for the landlord to take a security interest in any of the tenant’s personal property to assure payment of rent or other charges, except as specifically permitted by statute;
9. Provides that rental payments may be accelerated if the tenant violates a lease provision unless the amount is determined by the court;
10. Waives or alters a party’s rights with respect to possession or eviction proceedings;
11. Releases a party from the duty to mitigate (or minimize) damages

12. Provides that the landlord may alter a lease provision after the lease begins without the tenant’s written consent, EXCEPT: with 30 days’ written notice, the landlord may make the following types of adjustments, as long as there is a clause in the lease allowing for the adjustments:
■ changes required by federal, state, or local law, rule, or regulation;
■ changes in rules relating to the property meant to protect health, safety, and peaceful enjoyment; and
■ changes in the amount of rental payments to cover additional costs incurred by the landlord because of increases in property taxes, increases in utilities, and increases in property
insurance premiums.
13. Violates the Consumer Protection Act (Act 331 of 1976, MCL 445.901 to 445.922), which lists 34 unfair trade practices; or
14. Requires the tenant to give the landlord a power of attorney.

If more than one person signs the lease as a tenant, the lease may state that their obligations are “joint and several.” This means that each person is responsible not only for his or her individual obligations, but also for the obligations of all other tenants. This includes paying rent and performing all other terms of the lease.

If you have a question about the interpretation or legality of a provision of a lease, you need to seek assistance from an attorney.

Premises Liability

Premises liability is based on the legal status of the claimant as an invitee, licensee or trespasser. The owner/operator of property owes the highest degree of care to an Invitee, who enters land with the owner’s knowledge and for the mutual benefit of both. A Licensee is a person who is privileged to enter or remain on land only by virtue of the possessor’s consent and thus is one who enters with permission of the landowner, but does so for his own convenience or on business for someone other than the owner. The owner/operator of property owes the lowest degree of care to a Trespasser, who enters land with the owner’s knowledge or permission.

Property owners are subject to liability for physical harm caused to their invitees by a condition on the land if, but only if, they: (1) know of, or by the exercise of reasonable care would discover, the condition, and should realize that it involves an unreasonable risk of harm to such invitees; (2) should expect that they will not discover or realize the danger, or will fail to protect themselves against it; and (3) fails to exercise reasonable care to protect them against the danger.

Whether an owner/operator of property has a duty of care based on the natural accumulation rule and the open-and-obvious-danger exception is a question of law that the courts normally determine. A proprietor is not considered negligent for allowing the natural accumulation of ice due to weather conditions where he has not created the condition; conditions created by the elements, such as the forming of ice and falling of snow, are universally known and there is no liability where the danger is obvious or is as well known to the claimant as the property owner.

 

In addition to property management law, we handle cases in the areas of admiralty law, product liability and warranty law, and healthcare law. Please call our office to discuss your case with one of our friendly staff members.

 

Get the personalized attention you deserve for all your legal issues by getting in touch with our office today.