IRS employee attempts to initimidate her landlord

If  you are a landlord, be careful about renting your unit to an employee of the IRS.  From the Philadelphia Inquirer comes the story of a tenant who used her position as an IRS employee to attempt to intimidate her landlord for the purpose of committing identity theft:

Using IRS letterhead, Flowers allegedly threatened her landlord with an audit unless she faxed copies her driver's license and Social Security card to a machine at the IRS which Flowers could access.

The attempt was thwarted by the Treasury Department, but there is a lesson in this story somewhere. It pays for landlords to know where their tenants work (not only for the traditional credit check purposes) and to retain that knowledge in case they receive threatening letters from those same agencies. 

This story also provides additional reasons for the landlords to obey all tax laws.  Had this landlord failed to report income from the property at issue, the tenant might have had a more dangerous basis on which to threaten the landlord and would not have needed to hijack IRS' letterhead. 

Landlord-Tenant Security Deposit claims and disputes; 68 P.S. 250.512; Tenant surrender of leased premises.

I have previously written about landlords that find themselves on the receiving end of litigation because they fail to return the tenant's security deposit (or provide a list of damages) within thirty days of the tenant leaving the property.

The statute provides that a landlord must return the deposit or provide the damage list within thirty days of the "termination of a lease or upon surrender and acceptance of the leasehold premises, whichever first occurs . . . " or the landlord is responsible for double the deposit. 68 P.S. 250.512(a) and (c).

Landlords often say that the tenant did not return the keys and they are not sure when the tenant actually left (thus beginning the thirty (30) day countdown). Don't let your dispute turn on when the tenant actually surrendered the premises. In most court disputes as to when the tenant actually left, the tenant will win. Tenants will lie about when they left and the courts will often believe them. Send the letter as soon as you think the tenant might have left. Don't wait for the thirtieth day. Don't get hung up on whether you received "official" notice or the keys. Courts don't get hung up on those issues. Neither should you.

Landlord-Tenant security deposit disputes; 68 P.S. 250.512; Thirty day time limit;

I previously summarized the factors that cause landlords to get into needless trouble in security deposit disputes. One such factor is deception by the tenant. The basic rule is that a landlord must either (1) provide a written list of damages or (2) return the security deposit to the tenant within thirty (30) days of the tenant leaving the property.

Landlords sometimes get tripped up when tenants tell the landlord to take forty-five (45) days (instead of the statutory thirty (30)). Tenants do this when they know that there is substantial property damage and that the landlord will not voluntarily return the deposit.

Just because the tenant tells the landlord that 45 days is acceptable does not mean that the courts will find it acceptable also. Tenants often know the law better than landlords. Tenants will try to trick the landlord into waiting beyond the required thirty day period so that the tenant can force the return of the security deposit and avoid having to pay for the property damage. Courts will be unsympathetic to the landlord even when the landlord's delay results from the tenant's unsolicited inducement to take more time.

Remember, it does not matter what the tenant says. Provide your written list of damages within thirty (30) days no matter what.

68 P.S. 250.512; Security deposit disputes in Pennsylvania; Thirty day letter; contractor estimates.

Previously I have written that landlords often fall into traps by failing to return security deposits or provide a list of damages within 30 days of the tenant's departure from the rental property.

I have also pointed out the consequences to the landlord from failing to provide the list of damages in a timely manner.

Landlords often say that it took too long to get an estimate of the damages from their contractor. While that may be true, waiting for the actual estimate before sending the "30 day letter" is a bad idea. Many courts will enforce the penalties against the landlord even when the landlord is legitimately trying to get accurate information to provide in the letter.

It is unnecessary for a landlord to lose a security deposit dispute for this reason. If the landlord does not yet have an actual estimate, he can simply list the damaged items in the house in a letter to the tenant. The landlord can inform the tenant that the security deposit will not be returned because the damage exceeds the deposit (provided that is true). The landlord need not provide an exact dollar amount for the actual repair bill. (The landlord will need estimates (and perhaps live testimony) by the time of any hearing, but the rules of evidence do not apply to writing the 30 day letter.) The statute provides such a short response time, it is better to simply write whatever information is available without waiting for further detail.

Security deposit disputes and forwarding addresses under Pennsylvania Landlord-Tenant law; Landlord and Tenant Act of 1951; 68 P.S. 250.512(e).

In a previous post, I pointed out that many landlords fall into a trap by failing to send a letter itemizing damages within thirty days of a tenant vacating the premises.

Many landlords fail to send the "thirty day letter" because the tenant does not provide a forwarding address. The statute does require the tenant to provide a forwarding address in writing and relieves the landlord of all liability in the absence of such a written forwarding address. 68 P.S. 250.512(e).

Regardless of the above statute, the tenant will lie about having provided a forwarding address and may even backdate a letter for use in court. Courts often believe a tenant when there is a dispute over whether or when a letter was sent.

Most importantly, this issue is so easy to avoid. If the landlord does not have a forwarding address, the landlord should mail the thirty day letter to the rental unit in question via certified mail. If the former tenant fails to sign for the mailing, the landlord will have proof, in the form of the returned mail with the "refused" stamp from the post office, that the tenant left no forwarding address and resisted the landlord's attempts to comply with the statute. While this action goes beyond the requirements of the statute, it would preclude a tenant from succeeding on a falsified claim of having provided a forwarding address.

Pennsylvania Landlord-Tenant security deposit disputes; forwarding address; damage estimates; Pennsylvania Landlord-Tenant Act.

For landlords, the question of what to do with a departing tenant's security deposit might seem minor, but can create unnecessary headaches and expenses.

If you have reason to keep ANY of the deposit, make sure you provide a list of damages to the tenant as soon as he moves out (or as soon as you THINK he might have moved out). Be as cautious as you can. Even though the Pennsylvania Landlord-Tenant Act gives you thirty days and requires the tenant to provide a forwarding address, play it safe and send your letter without waiting. Do not use the following excuses:

• The tenant did not provide a forwarding address.
• It took longer than 30 days to get an estimate of the damage.
• The tenant said that the landlord could wait longer than 30 days.
• The tenant did not give me a key.
• I thought that the tenant was gone, but he did not provide "official" notice.
• The constable said I did not have to send a letter.

In future posts, I will debunk each of these reasons. Remember that courts often are sympathetic to a tenant even though the tenant is lying. Courts often disregard statutory time limitations where such limitations harm a tenant, but will strictly enforce such time limits against a landlord.

It is easy to win a security deposit dispute if you follow a few simple guidelines. Treat every security deposit dispute as if a court will eventually resolve all doubt in favor of the tenant, and you should avoid serious expense and inconvenience.

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Update - click here for more detail on dealing with the lack of a forwarding address and 68 P.S. 250.512(e).
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Update - click here for more detail on dealing with delays in assembling contractor estimates.
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Update - click here for more detail on situations where the tenant agrees to give the landlord more than thirty (30) days.

Avoiding minefields in the purchase of investment real estate.

I previously wrote about hidden landmines in the purchase of investment properties. Unwary buyers often walk into the middle of legal disputes with existing tenants. These landmines can be avoided by obtaining a few simple representations when closing on an investment property.

Many buyers obtain a copy of the leases at settlement, at which time the seller writes the word "assigned" on a corner of the leases. This practice is insufficient.

A buyer must obtain a complete Assignment of Leases at settlement. This assignment must specify the following:

• The identity and unit number of each tenant.


• The monthly rent for each tenant.


• The expiration date for each lease, including a statement as to whether each lease is month-to-month.


• A representation that there are no disputes between the seller and any of the tenants.


• The amount of each tenant's security deposit (which amount should be specifically credited to the buyer).

The parties should include language that the document "survives closing," so the buyer can enforce it later against the seller. This document will be a starting point to discover and avoid future legal disputes with the tenants. If any of this information is inconsistent with the written leases, the buyer can ask questions before settlement is complete.

• If the seller is crediting the buyer a smaller security deposit than is specified in the lease, the buyer might learn at that time that the seller has already used some of the deposit to repair damage caused by the tenant or offset unpaid rent, none of which the seller has previously reported to the buyer.


• If the name of the tenant on the Assignment is different from the name on the lease, the buyer might discover that the original tenant has moved out, leaving a new tenant with only an oral lease.


• If the rental amount listed on the Assignment is different from the amount specified on the lease, the buyer might discover unwritten oral arrangements between the seller and tenants (or at least that the seller has raised the rent since the lease was signed).


• Before signing the Assignment, the seller often "remembers" that one of the tenants hasn't yet paid this month's rent (yet he will expect to be reimbursed for a pro-rated portion of this month's rent since the buyer will undoubtedly collect it soon).

As I wrote, this document is only a starting point. It helps identify issues that the parties can then resolve prior to completion of settlement. There are additional documents for the tenants to sign, particularly in the case of commercial real estate purchases and particularly in cases where the Assignment of Leases has raised red flags.

Investment properties come with ticking time bombs.

Given the state of the economy, it is more likely than ever before that you will be stuck with bad tenants and pre-existing disputes when you buy an investment property.

• Sellers will fill their properties with bad tenants just to show occupancy in anticipation of a sale.
• Sellers are less likely to evict delinquent tenants when they expect to complete an imminent sale.
• Financially distressed sellers are more likely to commingle and make use of tenant security deposits that should otherwise be segregated and turned over to the buyers and/or returned to the tenants.
• Financially distressed sellers are likely to ignore maintenance issues, thus causing disputes with tenants and local governments.
• Financially distressed sellers are more likely to make oral agreements with tenants for reduced rent in exchange for labor.
• Sellers often have made promises to tenants (especially commercial tenants) regarding lease extensions (or options to purchase) at rates that are well below what the market will bear.

Sellers rarely disclose these issues to buyers unless the buyers exercise due diligence and force the issue. Each of the above issues can create litigation and/or eviction issues for the buyer after settlement. Disgruntled or delinquent tenants are likely to force the new owner to bear the cost of these problems with no consequence to the former owner. (These disputes would be, of course, in addition to problems related to undisclosed defects in the physical condition of the property.) But there are ways to discover and avoid each of these problems by taking action before settlement.

Check back for further updates.

update - 12-11-09 - Click here for solutions to these problems.

MSN's top 13 tenant excuses.

MSN posts what it calls "13 outrageous tenant excuses" for tenants' failure to pay rent and other lease violations.

The stories are interesting, but successful landlords try not to focus on excuses. If they get stuck on each excuse offered by the tenants, they will go broke.

US flag banned at Oaks Apartment apartment complex in Albany, Oregon

From KATU in Albany, Oregon comes the story this week of an apartment complext that has ordered residents to remove all flags, including the U.S. flag, from windows and other visible areas.


KATU photo - flag banned from motorcycle at Oaks Apartment complex in Albany, Oregon












According to KATU:

Resident[s] we talked to who had been approached to take down their flags all told us the same thing: that management told them the flags could be offensive because they live in a diverse community.

Would such a ban be upheld in court in Pennsylvania? It depends. If the landlord refuses to renew a tenant's lease at the expiration of the term, the landlord generally does not have to provide a reason. The landlord can refuse to renew a tenant's lease even if the reason is the tenant's display of an American flag. [This analysis would be different if the real reason involves discrimination against minorities or other protected classes.]

If the landlord seeks to terminate a lease during the lease period solely on the basis of the American flag display, the landlord would probably lose in court, as long as the American flag was the only violation. But that is only speculation, as the real answer would depend on the judge and whether the judge believes that an American flag display constitutes a material violation and whether a ban on such displays can be lawful or enforceable.

Inflation adjustment clauses in leases.

Ever since the "stimulus" bill was passed in February by Congress, we have been waiting for the inevitable inflationary results. We do not know how bad the inflation will be. We do not know how fast the government will force the new money into the economy.

In any case, real estate investors should prepare for the worst. If you own property and lease it to tenants, it would be wise to include a clause in your lease that allows the rent to be adjusted to keep pace with inflation. Otherwise, you will see your expenses skyrocket while your rents will be locked in by the term of your lease. This is especially true in commercial leases that last longer than one year. Over the course of a year or more, inflation could skyrocket more than we have seen in our lifetimes, depending on how fast the government lets the new "stimulus" money percolate through the system.