When A Tenant Moves Out – Part 2

In Part I on “When A Tenant Moves Out”, we analyzed and discussed the difference between the legal concepts of surrender versus abandonment, the law of abandonment, and also looked at a number of different abandonment scenarios and how to handle them.  This month, we will discuss how a landlord should protect himself when taking possession of an abandoned unit, how a landlord can plan ahead to protect himself even before there is an abandonment, and the consequences if a landlord gets sued for taking possession when the tenant has not abandoned.

PROTECTING YOURSELF WHEN TAKING POSSESSION

Almost on a daily basis we receive calls from landlords wanting to take possession of an abandoned unit, but don’t know how to handle the situation.  The calls go something like this, “I think that my tenant moved out, but he left a bunch of stuff behind in the unit.”  As we discussed last month, the first part of our analysis is to make sure that the tenant has either abandoned or surrendered the premises.  After we have established this fact, we then go on to discuss what to do with the tenant’s belongings.  The key to handling this situation is protecting yourself in the event that the tenant has not abandoned or the tenant has abandoned but sues the landlord anyway for a ‘wrongful eviction’ lawsuit.

In a wrongful eviction lawsuit, there are only two key issues. (1) Did the landlord have the right to remove the property?  (2) And, if the landlord wrongfully removed the property, how much was the tenant’s property worth?  While you can’t prevent a tenant from lying about whether he had actually moved out of the unit, you can prevent a tenant from successfully lying about the value of his property.  In these type of lawsuits, tenants can and do lie about the amount and quality of their personal property.  A couple of lightweight gold chains from Wal-Mart turn into a valuable jewelry collection.  Three old eight-track cassettes turn into a 400 CD collection.  A twenty year old used couch turns into a designer leather sofa.  You get the idea!

You can prevent a tenant from lying about the amount and quality of his property by taking photos or video of the property that was moved, set out, or thrown away.  For this reason, we strongly recommend photographing all tenant property that is moved out.  You don’t need to photograph every item individually.  A few good shots of the pile will do.  You can further bolster your position by taking a written inventory and having those involved in the move sign it.  This inventory can later be used at any trial as an exhibit and to refresh witnesses’ memories.  The photos and/or video and inventory will be worth a thousands words if the tenant brings suit for wrongful eviction!

LEASE CLAUSES

A strong lease clause addressing abandonment goes a long way to preventing or defending a wrongful eviction situation.  It would seem that every lease would have an abandonment clause because the issue comes up so often.  But, we review many leases that don’t have such clauses.  Like almost any other lease clause, the importance of an abandonment clause is that it spells out the parties’ rights and responsibilities.  A good abandonment clause is not the “be all end all” that gives the landlord the right to throw away a tenant’s belongings without taking into consideration the factual circumstances.  But, a good clause explains, for both the landlord and tenant, when abandonment has occurred.  If the landlord follows the procedures in the clause for determining an abandonment, he/she should be successful if the tenant sues for a wrongful eviction.  The following is a lease paragraph that you are free to insert into your lease if you don’t have a similar clause.

ABANDONMENT

Resident covenants to occupy the Premises and shall be in default if Resident does not occupy the Premises on a regular, continuing, and consistent basis unless otherwise agreed to by Agent in writing.  Resident shall have abandoned or surrendered the Premises if Resident turns in all keys or access devices regardless of whether rent is paid or not.  Resident shall have abandoned or surrendered the Premises if any of the following events occur and if Resident’s personal belongings have been substantially removed, and Resident does not appear to be living in the Premises in Agent’s reasonable judgment: Resident’s move out or notice to vacate date has passed; Resident is in default for non-payment of rent for 5 consecutive days; water, gas, electric, or any other service for the Premises connected in Resident’s name has been terminated or disconnected; Agent is in the process of judicially evicting Resident for any reason; and Resident fails to respond for 2 consecutive days to any notice posted on the inside of the main entry door to the Premises stating that Agent considers Resident to have abandoned.  Resident also abandons or surrenders the Premises 10 days after the death of a sole resident. If Resident abandons the Premises or vacates the Premises upon the expiration or termination of this Lease while leaving personal property within the Premises, Resident specifically and irrevocably waives all title and interest Resident has to such property and grants to Agent full authority to immediately dispose of same without notice, court order, or accountability.  Resident shall indemnify Agent, Agent’s employees and representatives against any claim or cost for any damages or expense with regard to the removal, disposal or storage of any property, including attorneys’ fees and costs regardless of who makes a claim against Agent or any other indemnified in connection with Agent’s removal of any property.

THE WRONGFUL EVICTION LAWSUIT

If a tenant believes that he has been wrongfully evicted he may sue the landlord for wrongful eviction.  The whole idea of the lawsuit is that the tenant had not abandoned the unit, was still living there despite the indications that he had moved out, and the landlord is responsible for paying damages.  Even if the landlord has a strong abandonment lease clause, has taken pictures of the junk that was thrown out, and followed all the proper procedures, this will not necessarily keep a tenant from suing.  Tenants will file groundless lawsuits and there is no way to stop them.  But, the better the landlord’s documents, photos and procedures, the more likely the landlord will prevail at trial.

In most any lawsuit the plaintiff (tenant) has to prove two elements in order to win a monetary judgment.  The first element is liability – did the landlord wrongfully evict the tenant when in fact the tenant had not abandoned.  The second element is damages – what is the value of the tenant’s belongings and other consequential damages such as moving expenses.  If the defendant (landlord) is able to defeat either one or both of the elements he will win the lawsuit.  He will argue that he is not liable (first element) because the tenant moved out of the unit and that the tenant’s actions indicated that the he intended to relinquish control of the unit.  The landlord will also argue that the tenant’s belongings had no value (second element), therefore, the tenant did not suffer any damages.  Last month’s article discussed the legal standards of abandonment which go the first element.  The following looks at damages.

If the tenant is able to prove that the landlord is responsible for the wrongful eviction the court determines the measure of damages.  Every tenant and many lawyers that the Firm has fought in a wrongful eviction believe that the measure of damages is the purchase price or the replacement cost of the goods.  This couldn’t be further from the truth.  Under Colorado law, the amount of damages a tenant can receive for personal property is not its replacement cost but rather its fair market value – what a willing disinterested party would pay for the property.  Anyone that has been to the flea market knows that a person’s used personal property has little or no value to anyone other than its owner.  This is why it is so important to take photos/video and make an inventory list because a court is not likely to award substantial damages to the tenant if you can prove the property at issue was used and of little value.

Unfortunately, not all judges follow the law and use the fair market value standard.  We have run into a few judges that will allow a tenant to testify as to the purchase price of the lost items (which should be irrelevant) as an indicator of the fair market value.  For example, Ronnie Resident purchased the sofa ten years ago.  The landlord threw the sofa away because it was 10 years old, looked like it had been through a war, and was left behind.  Of course, Ronnie testifies that the couch was in great shape and he had paid $2,000 for it, so it must still be worth at least $1,000.  In reality, the sofa is only worth $50 (if that) but because the judge considered the high purchase price, he awards Ronnie $500 in damages.  There is no way around bad judges!

In addition to the actual value of the tenant’s belongings, a tenant might be entitled to other damages.  Under Colorado law, the tenant is entitled to all damages that are the actual, natural, direct and proximate result of the wrongful eviction.  Beside the value of the property, this includes the cost of moving and compensation for the time and money spent in pursuit of the converted property.
A third element of damages is punitive damages.  The court has the right to enter an award of punitive damages against the landlord to punish the landlord for his actions.  The amount of punitive damages is limited to the amount of actual damages in most circumstances.  In other words, if the tenant proves $2,000 in actual damages the most the punitive damages can be is $2,000.  In order for the tenant to receive punitive damages, the landlord must have acted in such manner as to constitute wanton and reckless disregard of the tenant’s rights.  The fact that the landlord wrongfully throws away the tenant’s property under a mistaken belief is not enough to establish punitive damages.  The tenant has to prove the wanton and reckless elements.

In one Colorado case, the landlord did not receive rent and instead of filing an eviction, locked the tenant out of the unit and would not return the tenant’s property upon the tenant’s request.  The court found this action to be wanton and reckless and awarded punitive damages.

There is a final issue to consider in a wrongful eviction lawsuit.  Most of the time, the landlord will have an offset against the tenant for failure to pay rent.  Nearly all of the wrongful eviction cases exist because the tenant has moved out before the lease expires and the tenant owes rent or a lease break fee.  The landlord is legally entitled to offset his damages against the damages for the wrongful eviction.  In some cases the landlord’s claim is actually greater than the tenant’s and the landlord comes away from court with a judgment!  The landlord can also use the threat of his claim to try to settle the case before it even gets to court at all.

Even if you had the absolute right to remove or throw away the property, there simply is no guarantee that the judge will rule in your favor on this issue.  Thus, if you are unfortunate enough to lose the liability issue in one of these lawsuits, you can greatly reduce your potential exposure through the use of photographs and/or videos and inventory lists.  In fact, many tenants or their attorneys actually drop these groundless suits when provided with this type of strong and irrefutable evidence.

View Resource »