Termination of Tenancy – A Friendly Reminder From The 1980’s
May 24th, 2017 | By: Matthew I. Paletz, Esq.
The 1980’s are long gone. No more parachute pants or shoulder pads and no one still listens to music on a Walkman. MTV has stuck around (although they don’t play videos anymore) as well as a Michigan eviction case from 1982 called Park Forest of Blackman v. Smith. This case is the reason why we do not accept payment of rent after a 30 Day Termination of Tenancy Notice has expired.
Since this ruling came out, Michigan courts have taken the viewpoint that by accepting rent, you as a landlord are signaling to the tenant that you are willing to continue their tenancy. Of course, this does not take into consideration that while a termination case is pending, the tenant could practically stay without paying rent until they move out voluntarily or an eviction judgment is entered.
To illustrate this timeline, let’s say you issue a 30 Day Notice on May 1st that expires on May 31st. You can accept rent for the month of May, but you may not take June’s rent if you are committed to ending the relationship with the tenant. If you do, then you risk having to start over with issuing a new Notice.
Another example is that you issue a 30 Day Notice on May 25th and it expires on June 25th. To err on the side of caution, you should not accept rent for June. If you were to do so, you have potentially indicated to the tenant that you are willing to let them stay beyond June 25th. You could possibly pro-rate the rent for the 25 days of June, but in our experience that would confuse the court, even if you cash the check for the full months’ rent and give back a partial refund.
One technical exception under the law as it relates to manufactured home owners is that these tenants have a specific requirement to pay ongoing lot rent even in a termination case if they own their home. However, based on previous local court rulings and common judicial misconceptions, we recommend that you still do not accept the rent so again not to confuse the court.
Now, all is not lost as there are things a property manager can do to mitigate this. First, is to always consult your landlord tenant lawyer when contemplating a termination to explore all options. Second, depending on the jurisdiction your property is in, you may be able to hold rent provided that the check is not cashed and therefore not posted to the tenant’s ledger, but this can be risky. Third, is while a court case is pending, rent monies can be ordered into escrow. Fourth, always remember that once you have regained possession of the property, you ultimately have the remedy to pursue past rent owed in a separate collection action, barring some prior adverse court ruling.
The Bottom Line: It is doubtful that Debbie Gibson or Huey Lewis and the News are making a comeback anytime soon. It is equally doubtful that courts are going to overturn Park Forest. So, just remember as a general rule not to accept rent after a 30 Day Termination of Tenancy Notice expires and as always if you have any questions, contact Paletz Law for help. Also, check out our blog at paletzlaw.com and follow us on twitter @paletzlaw for all the latest news that affects property management.