Jan 23

There is a discussion over on theApartment Association email discussion group about sending deposit letters via email.

I would be careful with creative methods of returning deposits or sending notice to tenants. The law is ATCP 134.06(2) Returning security deposits. A landlord shall deliver or mail to a tenant… “ and §704.28(4) Timing for return. A landlord shall deliver or mail to a tenant the …” Email is not in there.

The risk of being on the cutting edge is suffering large legal costs even if you are right. Below is a Wisconsin case that an owner had to take to the Court of Appeals in part because he sent the deposit letter via FedEx. The trail court ruled that FedEx was not mail and therefore the owner was liable for double deposit and attorney fees.

KIDD (Landlord) v. MCMASTER (Tenant)

“DYKMAN, J.[1] Michael Kidd appeals from a judgment awarding Dianna L. McMaster $18,029.93. He contends the trial court erred by finding that Federal Express is not a statutorily approved method of transporting a security deposit to a tenant under WIS. ADMIN. CODE § ATCP 134.06(2)(a).

The majority of the judgement, $15,171.69 was “reasonable attorney fees .” I’ll assume the rest was double deposit. The landlord won on appeal, but at what cost?

Jan 23

Busy good, but still busy.

Oct 30

As many of you know I like data.  Okay – maybe “like” is a little weak.  Perhaps its love, or at least a dangerous obsession.

Our industry, at least in regard to small properties,  shies away from meaningful data collection and utilization.  However, you can do so much with the right data – from setting your rents in the sweets spot between charging too little and losing money to charging too much, having your units remain vacant and … losing money.  What is that house you are looking buying at really worth and how much rent can you really expect to receive? In many neighborhoods paying assessed value is paying two to three times what everybody else is paying.  In a few high valued neighborhoods assessed value is a steal.  Ask the listing broker how much rent you can expect and some will tell you the sky.

Lately we’ve been looking at a lot of data points from rents, to evictions, to city orders, to special assessments, to tax assessments in general, to foreclosures and a ton of other interesting things.

For example we are developing an internal tool for suggesting rents that is using for rent ad data, including rent amount as well as other thing such as how long the ad has appeared, how many times in the past two years has the unit been for rent and mashes that up with property data – age, size, assessed value, date of last sale, how many units are owned by that owner and a dozen other metrics. Then combine this data with city order data, eviction data, tax delinquency and foreclosure information for the subject property.  While we haven’t finalized the algorithm, we are getting close.

Another fun project is trying to identify properties that will fail.  We look at when they were purchased, if they are tax delinquent, if they are on the DNS monthly reinspection list, if there are evictions, if the water bills have been placed on the tax roll, etc.

We started doing this with database tools, Python scripts and a lot of manual acquisition.  We’ve found a lot better methods since.

One of the tools we use for data acquisition is import.io. Today I was in San Francisco for their Extract conference.  The theme was “Data Stories Worth Sharing”  There were 600 in attendance, with what appeared to be an equal distribution of data scientists, data analysts, and application developers. Oh and there was one landlord.

I wanted to attend the last two but either the timing was bad or the event was in London, which is quite a trip for a one day conference.  Today was so great I regret not attending the previous events.

If people thought I was a pain in the butt before with my data obsession, I’ll be downright dangerous now. 😉

If you want to play with the tools I play with, another one to look at is Mirador, a data visualization tool developed by Harvard and others primarily for things like Ebla research.  This is a radically cool tool  for seeing patterns in data.  Before that we were only testing patterns against assumptions.  Mirador points out the patterns for you.  

To visualize the results there is Tableau or for the more adventuresome there is a Javascript library D3

I think I should call this “Big data about small properties.”

If you are interested in data and rental hosung and want to talk about this more, drop me an email at Tim@ApartmentsMilwaukee.com

 

 

 

 

Oct 28

In the case that a tenant owes rent or other easily determinable charges, it is safest to send the letter as soon as practical and bill them separately for other damages.  

Returning keys may or may not be important in establishing the date the clock starts rolling.  More importantly is when did you know they were out and what was the termination date of their agreement.  

§704.28 (4) (b) was a big change.  Let’s say a tenant on a year lease vacates four months early, depending on when the unit gets rerented, the 21 days could start up to four months after they vacate.  

This also applies to month to month occupancies. If the tenant moved without notice, the notice date is implied to be the date the owner learned they moved out.

I look at (4) (b) as more of a safety net for owners that are sloppy in their response times or did not know the date the tenant vacated.  A far better approach would be to send a deposit transmittal letter as soon as you learn they left before the end of the agreement, stating the deposit is being applied to the rent due and that they are liable for the rent until, for example, Feb 29th, 2016 unless the unit is rerented prior to that date.  Also note that you are attempting to rerent the unit. 

Even if (4) (b) keeps you from losing a deposit lawsuit, it probably does not keep you out of court as tenants still believe the 21 days start the day they left and not the last day of the lease that could be months in the future. 

I feel it is very important when a tenant owes rent equal to or more than the deposit that you limit the deposit withholding letter to the rent with a notation that they are being billed separately for other damages.  If you have late fees in the written agreement those too can be part of the undisputed deposit withholding letter. [EDIT: Attorney Tristan Pettit points out that I was not clear that late fees must also be included in the non standard provision. ] 

There have been a few cases, including an outstate unpublished appellate decision, where the courts have doubled the wrongfully withheld items on a deposit transmittal letter and then applied that to a determination of double damages and attorney fees even though the rent alone exceeded the deposit.  For example the tenant has one month’s rent as deposit and leaves owing a month’s rent.  The landlord, being angry they left in the middle of the night puts $500 charge on the deposit letter for changing the locks. Tenant now is also angry and takes the landlord to court.  Some courts will mistakenly double the wrongfully withheld $500 and then clip the owner for the tenant’s attorney fees on top of that. Had the deposit letter just had the rent due on it and the owner billed the tenant for the questionable charges it would not have made the owner any less of a butthead, but he would have some money left to sign up for meditation or anger management classes.

You should also use the separate bill method for other things that are legit, but cannot be deducted from the deposit such as carpet cleaning if written into the rental agreement.  Note that our company does not change for carpet cleaning, but the WI Attorney General has said you may, as long as you do not deduct the charge from the deposit.

 704.28 (4) Timing for return. A landlord shall deliver or mail to a tenant the full amount of any security deposit paid by the tenant, less any amounts that may be withheld under subs. (1) and (2), within 21 days after any of the following:

(a) If the tenant vacates the premises on the termination date of the rental agreement, the date on which the rental agreement terminates.

(b) If the tenant vacates the premises or is evicted before the termination date of the rental agreement, the date on which the tenant’s rental agreement terminates or, if the landlord rerents the premises before the tenant’s rental agreement terminates, the date on which the new tenant’s tenancy begins.

(c) If the tenant vacates the premises or is evicted after the termination date of the rental agreement, the date on which the landlord learns that the tenant has vacated the premises or has been removed from the premises under s. 799.45 (2).

Oct 24

I recently read a book “The One Thing: The Surprisingly Simple Truth Behind Extraordinary Results” by Gary Keller.  The author is a real estate professional, but the book is not about real estate per se.  The entire premises of the book is:

What’s the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?

While simple, it is a great question.  Perhaps making an entire book out of it is a small stretch, but none the less a great question.

So let’s apply it to our industry.  What is the one thing that would change everything for us?

A few ideas that come to mind:

  • Enforceable tenant responsibility
  • A cooperative rather than confrontational relationship with local governments
  • Superior screening tools
  • Access to labor
  • Reduced cost supplies
  • Software
  • Financing

What is your ONE thing that would change everything – lets decided and then decide to make it happen,  Post your ideas in the comments or over at the ApartmentAssoc Yahoo Group

 

 


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