How to Prove Abandonment, Decide When to Change Locks
Some of your residents may be affected by layoffs and persisting unemployment. These residents may be eager to break their lease if they can no longer afford the rent. But under a written lease, residents are responsible for the entire term of the lease provided that there are no legal reasons to break the lease. Unemployment isn't a reason for breaking the lease with no repercussions.
Instead of arranging something with you, some of these residents may decide to disappear without letting you know where they've gone and whether they're coming back. If they've abandoned their unit, you need to try to re-rent it as soon as possible. Each day you wait, you lose money; and the resident may never come back.
But you don't want to make an impulsive decision to go in, clean up, and list the unit for rent. If you change the locks too soon, the resident may return and sue you for an illegal “lockout.” That can lead to stiff penalties, warns Michigan attorney James Reach.
In these situations, you and your staff need to gather evidence that the resident has “abandoned” the unit. Under most state laws, if residents abandon their rental unit, you can change the locks. And if the resident returns and wants to get back in, you won't be found guilty of an illegal lockout.
To help you assess whether a unit has been abandoned, we'll give you 18 signs to look out for to help you construct the strongest possible case that the resident has abandoned the unit.
Proving ‘Abandonment’ Protects You from Liability
Normally owners can't change the locks unless they win an eviction lawsuit against a resident. But in most states there's an exception to these “lockout” rules. If a resident has “abandoned” the unit, you can change the locks without going through an eviction. The trouble occurs when you change the locks because you believe the unit has been abandoned, and the resident returns. The resident may claim that he had no intention of abandoning the unit and sue you for locking him out.
To avoid liability, under most states' laws, you can show that the unit was “abandoned” if certain conditions are met even if the resident didn't actually intend to abandon the unit. It may be enough just to show that you “reasonably” believed the unit was abandoned before changing the locks.
18 CHECKLIST ITEMS TO PROVE ABANDONMENT
Whatever your state's legal standard, you shouldn't change the locks of units you suspect have been abandoned without doing some investigating and gathering of hard evidence to support your belief. Use the following checklist as a guide as for what to write down in the household's file. It will help you organize your evidence and create a paper trail that can protect you from liability claims if residents return and sue you for locking them out.
Also, keep in mind that proving “abandonment” or “reasonable” belief that a unit has been abandoned isn't an exact science. So while there are 18 items to look for, you don't necessarily need all 18 of them to prove your case. How many you need depends on the strength of the evidence you've collected and what your state law requires. “Whether you have enough evidence to justify changing the lock is a judgment call,” says Reach, one you shouldn't try to make without consulting your lawyer. If you and your attorney have any doubts about an abandonment, go through a formal eviction rather than changing the locks, advises Reach.
Use the abandonment checklist only when residents are missing and are behind in the rent. If rent is paid, according to most states' laws, the unit can't be considered abandoned—even if the resident is missing, says Reach. So if you change the locks of residents who have paid rent for that month, you'll probably be found guilty of an illegal lockout.
[ ] Rent Past Due
The first and most important item to note if you suspect abandonment is whether the resident's rent has been paid up-to-date. Write down the date rent was last paid so that you will have a record. Some states have specific time periods such as 14 days that rent must be delinquent before you can consider the unit abandoned.
[ ] Efforts Made to Contact Resident
Always try to call the resident at the unit or at work. A court may consider reasonable efforts to contact delinquent residents to be knocking on the door of the resident's unit at different times of day, attempting to phone the resident, and conducting phone interviews with the resident's employer or references listed on the rental application. List the dates of attempted contacts and the results.
If you reach the resident, ask whether he has left the unit. If you can't reach the resident, don't think you're free to change the locks. This isn't enough by itself to prove abandonment.
[ ] Resident Comments About Leaving
The resident may have mentioned moving—perhaps during an argument with you over rent payments. You may also learn about these comments when you interview neighbors and employees. This can be a key piece of evidence, says Reach.
[ ] Whereabouts of Car Unknown
If the resident's car isn't in the designated parking space, write that down. If your building has no assigned parking, check around the parking lot. You'll probably know the car and/or have a description of it on file.
[ ] Utilities Disconnected
Call the utility company to see if the resident has had electric, gas, or water service turned off. If so, get the shut-off date. If you can't get this information from the utility company, note whether the services are on when you go inside the unit.
[ ] Phone Service Disconnected
Try to call the resident at the unit phone number. In addition to discovering whether the number has been disconnected, you may get a forwarding number from a recorded message.
[ ] Mail Uncollected
If the resident's mailbox is overflowing with mail or newspapers, this may be a good indication that he has moved.
[ ] Information from Postal Worker
Catch the postman on his rounds and ask if the resident left a forwarding address form with the post office—even if mail is piling up in front of the box. “A forwarding address is strong evidence that a person has moved,” says Reach.
[ ] Information from Neighbors
Ask neighbors when they last saw the resident. If a next-door neighbor who normally sees the resident every day says he hasn't seen the resident in more than two weeks, this is good evidence that the resident has left. Also ask the neighbors whether they've heard the resident say that he was moving. And ask if they've seen the resident moving his furniture or clothing, says Reach.
[ ] Information from Employees
Ask your employees when they last saw the resident and whether they heard him talk about or noticed any signs of moving.
[ ] Children Not in School
Call the school where the resident's children attend to ask if they're still enrolled, says Reach. If residents have pulled their children out of school, chances are they've moved out.
EDITOR'S NOTE: The foregoing items don't require you to enter the resident's unit. The next seven items do. Ask your attorney what your state law says about this. In some states, for example, you can enter a resident's unit without consent if your lease requires residents to notify you of extended absences and a resident has been inexplicably absent for seven days without notifying you.
It's a very good idea to get the assistance of a police officer when entering a unit you believe to be abandoned. The law may require the assistance of a police officer, or your management company policy may require it. There are good reasons for doing so: You could be entering a crime scene, or there could be someone in the unit even though it appears to be abandoned.
If, for any reason it's necessary to enter without police assistance, it's imperative that two or more of your employees enter to provide collaborative witness in case of a legal problem.
[ ] Furniture Removed
If all of the furniture is gone, the resident has probably left for good. Conversely, if furniture remains, even in bad condition, it may be evidence that the resident is coming back, says Reach, and you should not assume an abandonment.
[ ] Clothing Removed
If clothing has been removed, you have yet another indication of abandonment. But if clothing remains, it may mean the resident is coming back.
[ ] Items Removed from Storage Areas
Check to see if residents have removed personal belongings from storage areas, says Reach.
[ ] Toiletries Removed
Believe it or not, says Reach, toothbrushes, hairbrushes, shampoo, deodorant, etc., give a very strong indication of whether a resident has left. These are things a lot of managers overlook as trivial, he says. So carefully write down what, if any, toiletries are left in the unit.
[ ] Food Remains
Note whether the resident has left food in the cupboards or refrigerator. Also note the condition of the food—that is, whether it's rotting.
[ ] Missing Pets
If you know the resident has a pet and it's gone, this is another indication that the unit has been abandoned.
[ ] Unit Not Sanitary
Make a general assessment of the condition of the unit. Certain sanitary problems, like a musty odor or mess, are strong indications that the resident hasn't been around for a while.
Consult Attorney When Handling Abandoned Property
If the abandoned unit contains the resident's personal property, and you've decided that the unit has been abandoned, carefully proceed with removing the property. It will generally be legally necessary and good practice to make an inventory. You may then need to send a letter informing the resident that the personal effects will be disposed of according to law unless he claims them within a specified number of days.
Ask your attorney about the correct procedures for handling abandoned personal property for your jurisdiction. It may be necessary to place the personal effects in storage for a specified time, a process that can be costly. The next step may be the sale of the personal effects. The local law may require that the items be sold by the sheriff's department or that the items be advertised and sold at public auction.
You may be allowed to deduct expenses from the proceeds of the sale with the balance, if any, being managed in accordance with legally prescribed procedures. The court may hold the balance, if any, for a specified time and, if unclaimed by the resident, deposit the funds into the city or county treasury. In some jurisdictions it's possible to avoid the formal disposition of the tenant's personal effects if those personal effects have a very small estimated dollar value.
Comply with Vacant Unit Rule
Be sure to keep records to comply with the vacant unit rule. Write a memo for the household's file that specifies the exact date that you found the unit vacant. You may also include a brief description of how you came across the vacant unit. You should do this because the tax credit program's vacant unit rule lets you continue to claim tax credits for low-income units that are unoccupied. But it's still important to know when a unit has been vacated. That's because, although the IRS permits you to continue claiming tax credits for vacant units, you must:
Make reasonable attempts to rent the vacant unit (or other available units of comparable or smaller size) to another qualified low-income household; and
Not rent any other units of comparable or smaller size to nonqualified households as long as the unit is vacant.
James Reach, Esq.: Reach Law Firm, 106 N. 4th Ave., Ste. 100, Ann Arbor, MI 48104; www.reachlaw.com.