It’s The Law – Be careful exercising self-help remedies.

SO YOU WANT TO EXERCISE SELF-HELP REMEDIES?

Be careful!

SINCE MARCH 22, the apartment industry has seen unprecedented restrictions on an owner’s ability to enforce a resident’s obligation to pay rent and recover possession of an apartment. Eviction moratoria, restrictions, complications and delays have resulted in substantial delinquencies and prevented owners from being able to efficiently recover possession of an apartment from a defaulting resident.

This environment has caused owners to think about alternatives to the eviction process to collect rent, recover possession and mitigate damages.

The self-help remedies (those remedies that do not require judicial permission) most often asked about our lockouts and liens.

Self-help remedies such as lockouts and liens are fraught with danger and may not get you what you want. If you attempt to exercise these remedies, but do not do them correctly by following a multitude of requirements, you run the risk of fairly substantial penalties. Even if you perform these remedies correctly, you run the risk of being sued.

Knowing the purpose, requirements and pitfalls of these remedies will help you determine whether you want to take the risk associated with exercising these remedies.

Lockouts (Governed by Section 92.0081 of the Texas Property Code)

Purpose:

• To cause confrontation with the resident who has been unresponsive and unavailable.

• This remedy is not designed to collect rent since a key is required to be provided whether or not rent is paid.

• Note: Pursuant to Section 2306.6738 of the Texas Government Code, the lockout remedy is not available to an owner of a property supported with a housing tax credit allocation.

Requirements:

An owner may not intentionally prevent a resident from entering the apartment except by judicial process, unless the decision results from:

• bona fide repairs, construction or an emergency;

• removing the contents of an apartment abandoned by a resident;

• changing the door locks to the apartment of a resident who is delinquent in paying at least part of the rent.

If an owner changes the door lock of a resident who is delinquent in paying rent, the owner must give the resident a notice stating:

• an on-site location where the resident may go 24 hours a day to obtain the new key or a telephone number that is answered 24 hours a day that the resident may call to have the key delivered within two hours after calling the number;

• the fact the owner must provide the new key to the resident at any hour, regardless of whether or not the resident pays any of the delinquent rent; and

• the amount of rent and other charges for which the resident is delinquent.

An owner may not intentionally prevent a resident from entering an apartment unless:

• the owner’s right to change the locks because of a resident’s failure to timely pay rent is placed in the lease;

• the resident is delinquent in paying all or part of the rent;

• the owner has locally mailed, not later than the fifth calendar day before the date on which the door locks are changed, or handdelivered to the resident or posted on the inside of the main entry door of the apartment not later than the third calendar day before the date on which the door locks are changed, a written notice stating: • the earliest date the owner proposes to change the door locks; • the amount of rent the resident must pay to prevent changing of the locks; • the name and street address of the individual to whom, or the location of the onsite management office at which, the delinquent rent may be discussed or paid during the owner’s normal business hours; and • in underlined or bold print, the resident’s right to receive a key to the new lock at any hour, regardless of whether the resident pays the delinquent rent.

• An owner may not change the door locks on a day, or on a day immediately before a day, on which the owner is not available or on which any on-site management office is not open, for the resident to tender the delinquent rent.

• An owner who changes the locks or otherwise prevents a resident from entering the apartment may not change the locks or otherwise prevent a resident from entering a common area in the community.

• An owner who intentionally prevents a resident from entering the apartment must provide the resident with a key to the changed lock without regard to whether the resident pays the delinquent rent; and

• If an owner arrives at an apartment in a timely manner in response to a resident’s telephone call and the resident is not present to receive the key, the owner is required to leave a notice on the front door of the apartment stating the time the owner arrived with the key and the street address to which the resident may go

Pitfalls:

• The lockout remedy is not designed to get the owner paid. • The lockout remedy is not designed to allow the owner to recover possession. • If the numerous requirements regarding notice and furnishing a key are not done correctly, the resident may either recover possession of the premises or terminate the lease and recover a civil penalty of one month’s rent plus $1,000, actual damages, court costs and attorney's fees, less any delinquent rent or other sums for which the resident is liable. If an owner intentionally prevents a resident from entering the apartment after the lockout occurs, the resident may recover an additional civil penalty of one month’s rent. • If an owner desires to have the lockout remedy, an appropriate lease addendum would need to be signed containing the required lease language.

Purpose:

• To encourage the resident to pay delinquent rent.

• Note: Pursuant to Section 2306.6738 of the Texas Government Code, an owner of a property supported with a housing tax credit allocation is prohibited from seizing or threatening to seize the personal property of any person residing at the property, except by judicial process.

Requirements:

• An owner has a lien for unpaid rent that is due. The lien attaches to non-exempt property that is in the apartment or that the resident has stored in a storage room. • There are a number of items of property that are exempt from the lien. A lien does not attach to:

A. wearing apparel;

B. tools;

C. apparatus, and books of a trade or profession;

D. schoolbooks;

E. a family library;

F. family portraits and pictures;

G. one couch, two living room chairs, and a dining room table and chairs;

H. beds and bedding;

I. kitchen furniture and utensils;

J. food and food stuffs;

K. medicine and medical supplies;

L. one automobile and one truck;

M. agricultural emblements;

N. children’s toys not commonly used by adults;

O. goods that the owner knows are owned by a person other than a resident or an occupant of the apartment;

P. goods that the owner knows are subject to a recorded personal property mortgage or financing agreement.

• A lien is not enforceable unless it is underlined or in conspicuous bold print in the lease.

• The owner may not seize exempt property and may seize non-exempt property only if it is authorized by a lease and can be accomplished without a breach of the peace.

• Immediately after seizing the property, the owner is required to leave written notice of entry and an itemized list of items removed. The notice and list are required to be left in a conspicuous place within the apartment. The notice must state the amount of delinquent rent and the name, address and telephone number of the person that the resident may contact regarding the amount owed. The notice must also state that the property will be promptly returned on full payment of the delinquent rent.

• Unless authorized in a lease, the owner is not entitled to collect a charge for packing, removing or storing property seized.

• Property seized under the statute may not be sold or otherwise disposed of unless the sale or disposition is authorized in a lease.

• Before selling seized property, the owner must give notice to the resident not later than the 30th day before of the date of the sale. The notice must be sent to the resident by both firstclass mail and certified mail, return receipt requested, at the resident’s last known address.

• The notice must contain certain information required by the statute.

Pitfalls:

• The lien right is not designed to recover possession of the apartment.

• The numerous requirements regarding notice and other compliance with the statute provides ample opportunity for errors to be made and claims of violations to be asserted. If an owner willfully violates the statute, the resident is entitled to:

• actual damages, return of the property seized that has not been sold, return of the proceeds of any sale of the seized property, and the sum of one month’s rent and $1,000.00, less any amount for which the resident is liable; and

• If an owner desires to preserve the right to a landlord’s lien, an appropriate lease addendum would need to be signed containing the required lease language.

If these requirements seem onerous and difficult to meet, it is by design. The legislature has made it difficult to exercise lockout and lien remedies, illustrating that these self-help remedies are not favored. They remain legal if you desire to exercise your rights. However, be prepared to defend yourself if a claim is brought after you exercise the remedy.