All Forum Posts by: Justin Abdilla

I think it's best to have an LLC if you're going to hold tenants, but the vast majority of what I see people requesting on BP is a lawyer to set up limited liability organizations because they're underinsured against major losses or they have uneasy partnerships. If you have proper insurance, it's usually not a huge benefit to hire a lawyer for your enterprise. I would, however, hire a lawyer if there are other investors besides myself because the conflict at the managerial level is something that should be addressed and prevented ahead of time.

Originally posted by @Account Closed:

Hi, 

I am experiencing a horrible issue with evicting my tenant who refuses to pay rent and has not paid rent in almost 7 months and used legal aid to withhold rent.

1) I sent an order to evict my tenant for non payment of rent in August 2019 and I asked for my keys since she was consecutively late. When I did serve her she showed up in court with legal aid suing me for being an unfair debt collector by charging over 5% of the rent.

Landlords are deemed to be debt collectors under some state laws and this seems pretty reasonable as a fine if you ran afoul of those state laws.  The American legal system does not place a moral judgment on those that breach contract, and you're not allowed to treat people like criminals for breaking a contract.

2) As I was retaining my attorney my tenant destroyed my property after court causing $855 in water damages by using maxi pads and flushing them down the toilet.

This does not seem a proximate cause.  To show liability, one must show that the actions of the party against whom judgment is sought are the direct and proximate cause of your injury.  $855 in water damages sounds like a clog, not a burst pipe or anything truly malicious that you can easily approximate the cause to your tenant.  This one feels like a sunk cost to me as ordinary wear and tear.

3) While on appeal legal aid asked for a discovery which delayed another 30 days. Court was pushed back from 10-18-19 to 11-18-19. Legal aid filed for a continuance which pushed the court date to 1-6-2020.

Your tenant has an absolute right to this discovery in civil procedure.

4) In November I hired a 2nd attorney and explained my case and they advised that since she did not pay October and November that is a separate breach and I could evict her again. I paid his fee and we filed the eviction. While we were at court legal aid said there was a pending case for the same parties in a higher Court and requested that my 2nd attempt to be dismissed. The magistrate sided with legal aid. We appealed it.

This is also a correct ruling. This is a lack of subject matter jurisdiction as the same controversy is pending between the same parties in another court.

5) One summary was denied but another was granted for imposing a rent bond. That was signed off by the judge on 12-30-2019 and it was ordered that she pay the bond by 12-27-2019. She never paid it.

5a) I have an order for a rent bond for the month of December 2019 and the tenant did not pay the bond for December and January. Legal aid said that the judge did not have a right to impose the bond and the only option for her is to go to jail if she does not pay and you can't put someone in jail for a civil matter.

She won't go to jail for not paying a rent bond, but she should be divested of possession when she fails to secure the in rem property with the bond pending adjudication.  The bond is a condition of her retaining possession of the property not a court fine.

6) Our unfair debt collector case was heard on 1-6-2020 and the judge heard all of the testimony and awarded the tenant $1,500 in damages and awarded me $7,295 in rent. That only covered rent up to the day of court.

That seems like a reasonable ruling.  You both did things that were incorrect and there should be a set-off.  The lost-rent through eviction should be done with either an amended judgment or should have been prospectively requested when you calculated her out day.

7) Legal aid said that I am not entitled to possession because I did not check the box that stated I was demanding possession so the judge sided with legal aid and did not grant me possession.

___

You might have hired several lawyers, but whoever worked on this case did a terrible job.  I think if I treated my clients like this, I would get a bar complaint.

It also sounds like you filed your own complaint.  Whenever my client wants to file the complaint herself, I know the case is going to be difficult because the complaint is the only "magic words" document in law.  If you didn't use the right words, you can't be given the thing you want.  I'm sorry to be so harsh with you, but this seems like you're furious at your tenant for asserting her rights as a party to litigation, and that approach will get you nowhere.

@Kenneth Stamps we might need more information to help you.

Are you talking about wanting limited personal liability on this property?  If so, the test for corporate (business) limited liability is whether the corporation is separate from the individual, whether the business holds itself out as the owner rather than the individual and whether the business is properly capitalized to avoid foreseeable loss.

If you have good insurance, that's basically the same thing as being properly capitalized to avoid foreseeable loss, but you have to realize that any injury over the $1mm mark is probably coming out of your assets.  That's your risk profile for legal recourse and recovery.

As far as any risk profile that you will have for blight violations or quasi-criminal proceedings like property code regulations, you won't be as protected as an individual as you would be in a business entity structure.  You will need to play very "by-the-book" to make sure that you don't accrue code violations and fines in your personal name as they will be substantially easier to prosecute against your individual person vs a corporate structure.

This is a really wonderful answer.  I think if the lease happened after the PSA and after attorney review, this might be a material change in the liens on the property that allows you to back out.  When the seller gives someone an interest in the property during the pendency of sale is something that you, as the buyer, probably have to ratify for it to be effective. 

If the lease is for far below market rate, this is probably an exception as the lease is not a bona fide lease.  Bona Fide leases need to be done at market value and at arm's length, and usually need to be done without notice of divesture (the landlord can't make a new lease with the knowledge that he won't be the one enforcing it because he's losing ownership).  We see these often in foreclosure where we ask the court in a declaratory judgment action to hold that the leases aren't valid and to strike the agreement between the parties because it's not good faith and fair dealing.

There's likely precedent to that effect in your state, but it's so much harder to cure a bad lease than to not buy the property with a bad lease on it.  I second the idea that you want to tell the seller to fix it or find a new buyer, but I wanted to let you know that real estate attorneys might be able to help you in the future with this kind of deal.

I'm one of the attorneys the title company uses.  I think it's better to go through a title company because they have more resources and they're a neutral party that can request better cooperation than an attorney that you hire.  Attorney closings are perfectly fine and happen all the time, but they have a bit more lag-time after the closing to see all the documents filed are typically just as expensive.

If you're going to invest in any heavily populated area, pay for a consultation on landlord-tenant regulations if you're looking to keep and rent.  If you're looking to fix and flip and you're not in a really big city like NYC, LA or Chicago, you probably don't need a real estate attorney for that.

Originally posted by @Stephen Foltin:

Hello All,

I am located in Southend Charlotte NC, I have purchased a new townhouse and will be looking to rent out my one bedroom condo come June 1st. This will be my first time being a landlord, I was hoping to get the best tips on where to get a rental contract and the must have items I should include in it. 

Try reaching out to your local bar association's real estate section.  Many bar associations have template contracts that they put out for their new members so they don't have to draft everything from scratch.  In Charlotte, I'd call the Mecklenberg Co. Bar Association and see what they can do to help you.  I actually just called them yesterday and they were extremely helpful.

Aaron, I think the best way to do this is to ask the attorneys what they offer for consults.  If you can't find an attorney who can facetime you, skype you, google hangouts, snapchat conference... whatever... then maybe that attorney isn't right for your business model.  Most attorneys I know have the ability to do videoconferencing (because we can use it to avoid going to court sometimes).

I think a great place to start is by contacting the local bar organization of the county you're in and asking for the real estate section.  All of us real estate lawyers have accountants we team up with, so I'm sure your attorney can recommend someone for you locally.

As an attorney, I have little else to say on this matter, but I would stress this.  Flat rents are lost money, and are huge concessions to your tenant.  For all we know, inflation could be 3% next year with the growth in the stock market, and you need to manage the risk of the $17.20/ft2 being worth less than $17.20 in 2020.  You need to manage the risk of the property or the neighborhood appreciating.  I would not give a 10 year lease for a flat amount unless they are already paying a big premium for year 1.  A flat rent lock-in with rent reduction is foolish.

If the property is still in the divorce process, you will probably need to contact the divorce attorney to get the sale approved.  If you're offering anything close to a fair price, that's likely not going to be a big issue.  Divorced couples usually just want to move on and get money, which is exactly the opportunity you're offering them.  The court has to approve the sale as a precaution because a sale to you will be a liquidation of marital property that changes the character of an asset.  The wife's attorney would very much be interested in this transaction and would probably be troubled if the husband did not involve her.  It's best to get everyone on board.