Apartment Holdings - February 2013

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FEBRUARY 2013 FEATURED STORY

Negative Online Apartment Reviews

 

By: Jamie Sternberg, Esq. and Stephen Modafferi, Esq. 

Online apartment reviews are a double-edged sword.  Positive reviews can help attract new residents. Negative reviews can have the opposite effect. 

Management should periodically investigate information available online about their property. This can be accomplished by entering a few select search terms (e.g. "XYZ Management," "Ridgecrest Apartments" or "123 Main Street, Sacramento") in one or more search engines (e.g. Google, or Yahoo) and reviewing the results.  Periodic searches can be automated using Google Alert or a similar service. Google Alert will search for new material posted on the Internet based on selected search terms, type of materials to be searched (e.g. news, blogs or discussions) and frequency of reports (daily, weekly or monthly). When the automated searches find the searched terms in new online materials, the results will be automatically sent to the email address entered. Read More.

 

 

IN THIS ISSUE...

 



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LEGAL STORIES OF INTEREST
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Governors in Maryland and New York Propose Affordable Housing Plans
Maryland Governor Martin O’Malley (D) has included $25 million in his capital budget for his affordable housing initiative, Rental Housing Works. The money is expected to fund the construction or renovation of 1,100 affordable rental units. It is also expected to generate $39 million in taxes over 15 years. There is a shortage of affordable rental housing in Maryland, and the state Department of Housing and Community Development indicated that by 2015, the state will be behind on the number of needed units by as much as 124,000 units. Read More.

 

Virginia General Assembly Considers Apartment Industry Bills in 2013 Session
With more than 2,000 individual pieces of legislation to be considered in a short 45-day window, the Virginia General Assembly got off to a fast and furious start on Jan. 9. The Apartment & Office Building Association of Metro Washington (AOBA) is currently monitoring more than 250 bills on behalf of the commercial and multifamily residential real estate industry. Read More.

 

Regulations Affecting Electricity Usage Remain Problematic in Off-Campus Purpose-Built Student Housing
The Apartment Association of North Carolina (AANC) has a number of member firms that operate an emerging student housing type (common in other states) where the property owner has a separate lease for each bedroom within an individual dwelling unit. How electricity usage is measured in this housing type and who pays for it has been under scrutiny by the North Carolina Utilities Commission (NCUC) and others. Read More.

 

 

 

 

90 Seconds with the Employer Counsel Group, Sloppy On-Call Practices Can Significantly Increase Your Labor Costs

 

By: Frank J. Coughlin*

Time means money; in employment, work means wages. There is a broad definition of “work” under both federal and state law. Under federal law, a person must be paid for exertion (physical or mental) required by the employer and pursued for the employer’s business. This definition was later expanded to include all the time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace. States such as California have an even broader definition of work, including where an employee is subject to the control of the employer or all the time he suffered or is permitted to work.  

What constitutes compensable “work” can be difficult to assess when an employee is on-call. This is a critical issue in the multifamily industry, which relies on-call personnel for essential client services based on the unique needs of housing. The costs of a defective on-call policy are staggering-if an employee is found to be working while on-call, it could increase the labor costs for that employee by 400 percent for every day he works a shift followed by on-call. For example, a full-time $10/hour employee ($20,000/year) who was on-call five days a week could be entitled to a total of up to $80,000/year if a court found that his “on-call” time was actually work time.

Not surprisingly, whether on-call is compensable time turns on the extent of employer control over the employee and the corresponding impact it has on the employee’s freedom to pursue private activities. Any control exercised by the employer will have some impact on the employee. Where that impact is minimal, on-call time is nothing more than “waiting to be engaged,” which is not compensable work. However, where the employer’s control encroaches too much on that freedom, and the employee is unable to effectively pursue his private affairs, the employee is in fact “engaged to wait.” And that is compensable.  

To avoid this, it is first essential to have a well-written policy and agreement. Courts give some deference to the agreement between the employer and employee, especially when an on-call employee is required to live on-site. Beyond that, courts look to whether there are unduly restrictive geographical restrictions on the employee’s movements or response time; whether the frequency of calls is unduly restrictive; whether burdens associated with being on-call could be eased by allowing employees to trade shifts with other employees or carry pagers; and whether employees could actually engage in personal activities during on-call time. Where the employee is required to live on the premises, the law gives more deference to the agreement between the employer and employee. There the law requires the employer to pay only for time spent carrying out assigned duties that count as hours worked.

A company’s on-call policies and practices must be evaluated on a case-by-case basis. There is significant case law that will inform policies that each employer should adopt. Therefore, your policies should be developed in conjunction with your employer counsel.

*Frank J. Coughlin, Esq., founder of Employer Counsel Group, practices employment law for the multi-family industry and helps national companies understand and adjust to California’s employment regulations.  He can be reached at 714/558-7886 or by email.  

 

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Appellate Division Rejects Due Process Rights for “Occupants”

 

 

By: Christopher J. Hanlon, Esq.*

In an unpublished decision in which the New Jersey Apartment Association and National Apartment Association appeared as amicus curiae, (represented by the author) Newark Housing Auth. v. Melvin, Docket No. A-1475-10, the Appellate Division has reversed Judge Mahlon I. Fast’s ruling that a Consent Judgment entered into by a tenant based upon an alleged lease violation that claimed that her son was engaged in drug-related activity should be vacated and the case dismissed where the complaint was filed without joining a registered, approved occupant as a party to the proceeding.

The trial judge based his ruling on his determination that the occupant was entitled to procedural due process rights. He determined that to be enforceable against the approved occupant, a judgment for possession requires all such occupants be named as parties to the eviction proceeding, and served with the process.

In reversing, the Appellate Division Panel found that it would not address the question of the occupant’s rights to procedural due process since it was not necessary for proper disposition of the case. The correct analysis rather was whether, under the test established by the New Jersey Supreme Court in the case of Estate of Bertha Maglies v. Guy, the occupant was the “functional equivalent of a co-tenant.” If she was the functional equivalent of a co-tenant, then she did have the right to be joined as a party and served with process before the judgment could terminate her possessory interests. 

The court repeated the Supreme Court’s three-part test for whether or not someone is a functional co-tenant, i.e.: the person must be continuously in residence, the person must be a substantial contributor toward the satisfaction of the tenancy’s financial obligations and the property owner must acknowledge or acquiesce to that person’s financial contributions.  

The case has been remanded for fact findings consistent with this three-part test.  

While property owners should be pleased the Appellate Division rejected this attempt to expand due process rights to those who are “occupants,” but not tenants (or the functional equivalent thereof), the question remains: what is the better practice in these type of cases for property owners seeking a Judgment for Possession for any of the reasons provided for under the Anti-Eviction Act where there are known, approved occupants living in the rented premises? They can be identified in the complaint as “occupants and not tenants” and served consistent with service of process rules established by the Court Rule for summary dispossess proceedings – they will be served the same way that the tenancy complaint is served on the tenant. If this approach is used the complaint should clearly state that they are not tenants and the property owner is not agreeing to recognize their rights as tenants.  While adding them to the complaint is not required, paying attention to detail in this fashion might eliminate defenses being raised which can turn what should be an efficient summary dispossess proceeding into a prolonged, and more expensive procedural chess game.

This case does stand for the proposition that joining (naming) them in the tenancy complaint is not required (if they are not the functional equivalent of a co-tenant). Therefore, a property owner continues to have the option to leave them out of the summary dispossess process. My advice in these cases will depend on the facts of each case.

This case is significant in two ways. As in Maglies, we have a high court continue to reject alleged public policy justified expansion of the class of persons protected by the Anti-Eviction Act. In both cases the courts focused on the contractual nature of a tenancy and declined to expand the class of persons entitled to protection under the Act beyond “tenants” in a way inconsistent with contract formation principles.

Second, it reminds property owners who are interested in “occupancy control” to remain diligently focused on their financial relationships with those living on the premises.  In short, do not accept money from (or remain silent about payment by) someone who you, as a property owner, do not want to give “tenancy” rights to.

*Christopher Hanlon is head of the litigation department at Hanlon Niemann in Freehold, New Jersey. A significant portion of Hanlon’ s practice includes representation of residential rental housing providers in matters involving State and Federal Fair Housing compliance, state regulation of water and sewerage systems, zoning and planning, rent control, section 8 issues, lease enforcement, code enforcement and MT. Laurel (C.O.A.H.) issues. He has litigated many alleged Fair Housing violations before H.U.D, the New Jersey Division of Civil Rights and in both state and federal courts.

 

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Issues with Rooftop Wireless Leases

 

By: Benjamin P. Harper*

With recent success of the iPhone and similar smart-phones and tablets, the demand for wireless data service is skyrocketing across the country, especially in high-traffic areas. This means that owners of busy shopping centers and mixed use developments will see more opportunities to lease rooftop space for minicell towers and antennas. The tenants in these deals sometimes pay rent based on the volume of wireless traffic and the leases give property owners a new revenue stream without requiring additional investment in the property. While property owners can make money off of otherwise unusable portions of their buildings, rooftop leases raise issues that property owners should consider on the front end of the deal.

Here are a few questions that property owners should ask when evaluating rooftop wireless leases for commercial projects:

Does the lease restrict the disposition of the property? Many wireless companies try to limit the property owner’s ability to sell the property and assign the lease to a new owner and may even ask for a right of first refusal. This may not be a huge concern for a cell tower site carved out of a corn field, but it can present a serious problem for a rooftop facility in the middle of a larger commercial development. The property owner should weigh the benefits of this new income against the burdens of unwinding or working around this transaction if necessary to sell or refinance the entire parcel.

What services and equipment are permitted? To take pressure off the cell tower networks, cellular companies are deploying multiple technologies, including cellular service and Wi-Fi facilities that are capable of handling both cellular calls and data service. Property owners should be clear about which kind of facilities are included in the lease and any exclusives for certain kinds of facilities need to be spelled out. Additionally, property owners should consider whether the tenant will be permitted to sublease to multiple service providers and if there will be additional compensation to the property owner for those facilities.

What does the lease say about interference? Property owners may seek assurances that the cellular facilities are not going to interfere with electronics or telecommunications equipment used by the other occupants of the property. Improved cellular service can make the property more attractive, but owners cannot jeopardize more important rent streams by allowing interference with the daily operations of other tenants at the property.

Will the lease restrict future development or alterations? Just as property owners would not want to hinder the future sale of the property, property owners should not tie their hands for future development and alterations to existing structures. They should negotiate relocation provisions or termination rights in order to retain flexibility for future development and alterations.

What kind of access is required for maintenance? Wireless companies expect to have 24/7 access to their equipment. If the facilities are located on the roof of a shopping center or other property with multiple occupants, the property owner will probably need to limit access and may require the owner’s personnel to be present while the technicians are on the roof.

Does the agreement protect the roof and other equipment? Property owners need to take care that the rooftop equipment is properly installed and does not damage the roof or any mechanical equipment or other property located in the vicinity. They should also review existing leases to make sure that the equipment will not conflict with any rights that other tenants may have in portions of the rooftop.

*Benjamin P. Harper, an associate of Husch Blackwell and accredited LEED Green Associate in Chattanooga, Tenn., focuses his practice on real estate development matters including commercial real estate transactions, development, acquisition, financing and leasing. This article was originally published in the firm’s Real Estate Blog, Real Estate & Development Law Update.

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Informz for iMIS

 

Negative Online Apartment Reviews Continued.

If negative information is posted, the first step is to review the website’s review guidelines, and determine if the website operator provides any options to management.

  • Some websites such as Craigslist and ApartmentRatings.com have a "report abuse" feature that may result in deletion of the posting if the posting doesn’t comply with the website’s guidelines.
  • Some websites allow reviewed businesses to respond to, delete and/or edit reviews.

If the website allows the reviewed business to respond to a review, consider whether a response is a good idea. There are two trains of thought.

  • Some managers choose to ignore negative reviews, under the theory that negative reviews won’t affect their property, and/or that they are unlikely to win an online "war of words," and/or that by responding they are lending credence to the complaint.
  • Other managers choose to be more proactive, reasoning that prospective applicants are likely to use an online search to investigate the property before entering into a lease, and that a negative review may "turn off" a prospect. Before choosing to respond, the surrounding circumstances should be considered.
  • If the negative reviewer is an irrational resident who has a long-existing personal vendetta against a property, and ranting on his or her personal homepage, management may choose to ignore it, feeling that (1) it is unlikely to be found or read by prospective residents if it isn’t highly ranked by a search engine, (2) prospective residents won’t give much weight to a review by an obviously irrational reviewer and/or (3) there may be no reasonable or cost-effective way to placate the negative reviewer or have the negative review removed or modified.
  • If the negative review appears on a highly ranked, "neutral" third party review website, a thoughtfully crafted response may be the most effective method of damage control.

If management chooses to respond to a negative review, there are at least two reasons for the response, and both should be kept in mind when formulating it.

  • One reason to respond is to try to convert an unhappy reviewer into a happy resident, who once happy, may renew his or her lease and/or post a follow up statement reflecting that the problem has been resolved.
  • The second reason to respond is to show prospective residents that management is dedicated to resident satisfaction, and will work to resolve resident concerns whenever possible.
  • Management dealing with negative reviews need to understand the legalities of negative statements. Local laws may differ. A false statement of fact published on the Internet may be actionable, including as libel (harmful to a person’s reputation), trade libel (harmful to a person’s business reputation), interference with contracts (e.g. interfering with leases with current tenants), or interference with prospective business relationships (e.g. interfering with prospective applicants for tenancy). However, many negative postings are expressions of opinion (which are not actionable), as opposed to false statements of fact (which are actionable).

In the United States, we have first amendment rights to speak, which includes the right to express our opinions, whether they are logical, well-reasoned opinions, or illogical, ignorant, biased rantings. A property owner has no right to pursue claims based on an expressed negative opinion with which the property owner disagrees, but is legally allowed as free speech. A property owner may have the right to pursue claims based on a false statement of fact. As examples, "Magnolia Grove Apartments is a horrible place to live" is an opinion, and is legally allowed. On the other hand, "East West Acres increased my rent by $200 a month" is a statement of fact. Because many negative reviews are expressions of opinion, legal action is often not an appropriate response to a negative posting.

If a false statement of fact is posted, and cannot be removed or mitigated using another method, a cease and desist letter from an attorney should be considered. A cease and desist letter may result in a false statement being removed, but on the other hand, could also be posted on the Internet by a ranting critic. Therefore, careful consideration should be given before sending a cease and desist letter.

If a cease and desist letter is sent, but is not successful, a property owner should think very carefully before resorting to litigation. Litigation is rarely a cost-effective response to a negative review. It is likely to be time intensive and expensive. Even identifying the person who made the negative comment can be difficult and expensive, since many online postings are made anonymously or with a pseudonym. Even if successfully prosecuted to judgment, a losing tenant may not be able to pay a substantial judgment. Property owners need to conduct a careful cost-benefit analysis at the outset, with the assistance of legal counsel, before initiating litigation.

If negative information is posted, management should also consider whether changes should be made in business operations. If operational changes can help mitigate or remove the problem in the future, those changes should be considered.

Management and owners of negatively-reviewed properties should consider applicable law, available options, and the costs and benefits of the available options, before choosing a course of action. If they feel that they need guidance, they may benefit by consulting with experienced legal counsel who can advise them.

*Jamie Sternberg, Esq. and Stephen Modafferi, Esq. of Kimball, Tirey & St. John, a full-service real estate law firm representing residential and commercial property owners and managers. This article is for general information purposes only. If you have questions, please contact your local KTS office. For past Legal Alerts, Questions & Answers, and Legal Articles, please consult our online resource. Kimball, Tirey & St. John specializes in landlord/tenant, collections, business and real estate law, with offices throughout California. This article is informational only and should not be used as legal advice. Check with your attorney before acting. If you have any questions regarding this article, please call 619/231-1422.

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2014 NAATV: Festivals of Colorado Opening Party

2014 NAATV: Festivals of Colorado Opening Party  

Food, drinks, networking and fun at the 2014 NAA Opening Party - Festivals of Colorado. It was a blast had by all!Bookmark www.naahq.org/educonf for save the date information for the 2015 NAA...