LEGAL UPDATE
R. DAVID FRITSCHE
SAAA Legal Counsel
REVISITING PROBLEMS WITH EVICTIONS AND YOUR LEDGERS:
WARNINGS TO AVOID WAIVING RENT AND DEBT COLLECTION SUITS
This is an update to a prior article
regarding the explosion of problems you
face regarding debt collection suits arising
out of problems caused by mistakes you or
your eviction service may make in evictions
and accountings. Tenant attorneys in San
Antonio have continued to aggressively
target owners and managers of apartment
communities for mistakes in evictions and in
accounting practices with demands and
lawsuits for up to $1,000,000.00; the
mistakes may be inadvertent or minimal, but
the expense to defend or settle a Debt
Collection lawsuit against the owner, the
manager or the management company could
be significant, even if you are paying
“nuisance value” just to avoid the costs of
extended legal representation.
The Legal Background:
Most everyone is familiar with the
Federal Fair Debt Collection Practices Act
that spells out the rights, limitations and
responsibilities when “debt collectors”
attempt to collect a debt; under the Federal
Act, “debt collector” is a defined term that
refers primarily to collection agencies that
are in the business of collecting “debts,”
such as amounts owed to an apartment
community, the dry cleaners or your local
auto repair shop. Owners of apartment
communities and management companies
are not subject to the provisions of the
Federal Act as they are not “debt collectors.”
Few are aware that under the Texas
Finance Code, the Texas Legislature has
passed the “Texas Debt Collection Act;”
under the Texas Debt Collection Act (the
“Texas Act”), the Texas Legislature did not
exempt the owners of a debt from the
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July/August 2018 | www.saaaonline.org
provisions of the Texas Debt Collection Act;
in other words, every multi-family
community,
manager,
management
company, dry cleaner and local auto repair
shop is required to follow the Texas Act
when collecting any debt – even
unintentional errors could lead to a tenant or
consumer lawyer making a claim. Why the
Texas Act does not exempt the first party
debt holders, like you, and mirror the
Federal Act has to have been an oversight by
the business lobby in Austin.
Here is how the Texas Attorney
General’s website frames the issue:
It is unlawful for a debt collector
to attempt to collect more than
the amount originally agreed
upon – whether the agreement
was in writing or not. However,
the debt may be increased by the
addition
of
attorney
fees,
investigation fees, service fees,
collection fees, or other charges if
a written contract authorizes the
additional charges.
If it is incorrect, it must be
corrected. The debt collector must
notify anyone who has already
received a report containing the
incorrect item. If, at the end of 30
days, the debt collector has not
been a