What is Considered as the Abandonment of Property?
In the Commonwealth of Pennsylvania, the law is clear with regard to what qualifies as property abandonment. Most specifically, Pennsylvania generally requires that all personal property left by the tenant must be removed (or scheduled to be disposed of) from the rental unit when the lease term ends. This may have specific implications for landlords who may intend to pursue an eviction. Most importantly, if the lease states that all property must be removed at the end of the lease term, failure of the tenant to do so removes the landlord’s obligation to give notice of disposal .
Landlords can usually dispose of personal property left behind by a defaulting tenant so long as proper notice is provided, even if the lease itself contains no specifications about when the tenant’s possessions will be disposed of after they abandon the property. However, if your lease requires that all items belonging to the tenant be removed from the dwelling unit by the end of the lease term, the landlord would need to give the tenant a written demand for removal and would need to hold that property in storage for 10 days before the landlord could sell the abandoned property. In other words, a landlord may not be able to unilaterally schedule an immediate sale.
It should be noted that tenants will be liable for any costs related to storing or disposing of abandoned property left at the rental unit.
Legal Ramifications of Abandonment of Property
While the potential risks for homeowners abandoning their property in Pennsylvania has been addressed, property owners should also be cognizant of their potential legal liability. Abandoning real property in Pennsylvania may have civil consequences in the form of monetary damages to a mortgagee who has been wrongfully denied possession in a forcclosure action. A recent Pennsylvania federal court case, Giddings v. Wells Fargo Bank N.A. et al., involving vacant Philadelphia property considered the potential liability for civil damages to a mortgagee after a deed-in-lieu of foreclosure was executed by the mortgagor 2 weeks after entry of a judgment of foreclosure. The United States District Court for the Eastern District of Pennsylvania reached the following conclusions with respect to filed foreclosure actions:
It is well-settled that a mortgage terminates the property interest conveyed by the underlying mortgage deed that secures such property and renders the mortgage null. The Pennsylvania Supreme Court has held that adding a surrender of possession clause to a residential deed-in-lieu of foreclosure is sufficient to protect mortgagees from mortgagors who subsequently try to regain control of the property after the deed-in-lieu has been executed. Without the surrender of possession clause, mortgagees of a vacant residential property may not be able to recover in an ejectment action. As such, mortgagees of a filed foreclosure action are encouraged to include a surrender of possession clause in the related deed-in-lieu of foreclosure if the mortgagor wishes to retain personal property which might be located at the subject property. In the absence of a surrender of possession clause, mortgagees may either avoid putting the property up for auction or foreclosing by consent and then attempt to evict the mortgagor.
How to Recover Abandoned Property
Property owners who believe that a tenant has abandoned a property must immediately take steps to ensure compliance with Pennsylvania’s Abandoned and Unclaimed Personal Property Act, 20 Pa.C.S. §§ 2501-2607 (the "Act"). Failure to do so may jeopardize the property owner’s ability to recover the abandoned property or to assess damages for its loss. The Act requires a property owner to make certain notifications prior to disposing of abandoned personal property, whether it be real or personal property, placed on the owner’s property by a current or former tenant.
In order to commence an action under the Act, a property owner must first give written notice to the current occupant of the property if the current occupant is registered in a secured party filing system under 13 Pa.C.S. 9513. 20 Pa.C.S. § 2503. According to the Act, the notice shall inform the recipient that his or her occupancy of the property is subject to forfeiture if the current occupant fails to remove any property within 15 days from the date specified in the notice. 20 Pa.C.S. § 2503(a). The notice must be served upon the current occupant of the property personally or by certified mail and, when the current occupant cannot be located, by first class mail.
After the 15-day period, if there are reasonable grounds to believe the property is unclaimed, the property owner must send a written notice of abandonment to the last address of each individual known to have been the owner of the abandoned personal property. 20 Pa. C.S. §§ 2502, 2504. A property owner cannot dispose of any personal property unless the notice of abandonment has been sent and the recipient has failed to correctly respond to the notice within ten (10) days. Id. If the personal property has been abandoned in connection with a bailment relationship, the property owner shall send a written notice of abandonment to each person who left the personal property with the owner and the presumed owner. 20 Pa.C.S. §§ 2505, 2506.
Upon receipt of a properly executed notice of abandonment, the owner must remove the property, store it in a clean, dry place in his or her possession, and retain it until the owner receives a properly executed notice of claim concerning the property or until the property is sold as unclaimed personal property. 20 Pa.C.S. § 2507. If a property owner fails to comply with the provisions of this section, the property owner shall be liable to the owner of the personal property in an amount equal to six months of storage charges associated with the property. Id.
Once the property has been removed and stored, the owner shall mail by regular first class mail a notice of sale accompanied by copies of the required notices of abandonment to the last-known address of each person known to be the owner of the abandoned personal property. 20 Pa.C.S. § 2508. The owner shall then make the sale of the unclaimed property either at public auction or by sealed bids. 20 Pa.C.S. § 2509.
All moneys received at sale shall be applied first to the payment of any expenses for the removal and storage of the property and the costs of the sale. 20 Pa.C.S. § 2510. Second, all moneys received in excess of any expenses incurred may be deposited with the court by the owner and said surplus shall not affect any lien of the owner for rent or other charges. Id. The owner shall pay any balance due to the owner of the property after deducting reasonable expenses of such storage and the costs and expenses of the sale. 20 Pa.C.S. § 2511.
Any surplus money remaining after payment of expenses shall be deposited by the owner of the property in an interest-bearing common trust fund established and maintained by the Commonwealth. 20 Pa.C.S. § 2511. An owner may file a claim to recover any amount deposited within 13 years after the notice of abandonment is sent. 20 Pa.C.S. § 2513. Upon expiration of this 13-year period, the money deposited shall become the property of the Commonwealth. 20 Pa.C.S. § 2514.
Failing to comply with the provisions of the Act can have serious legal consequences, even if a property owner’s good faith belief was that the property had been abandoned by a former tenant or occupant of the property. Therefore, a property owner should consider engaging the services of an attorney to avoid certain pitfalls and to ensure that the proper legal notices are provided to the individuals entitled to receive them, thereby depriving the former tenant or occupant of any basis to claim that the disposed property belongs to him/her.
Entitlements of Tenants and Room Occupants
The process and legal consequences of property abandonment are generally governed by the laws of the state in which the affected property is located. Pennsylvania law provides certain tenant protections and specific requirements for landlords who wish to locate and displace a tenant from an abandoned property.
A tenant may abandon the premises they occupy if they have breached an express or implied provision of their lease or rental agreement. Under such a breach, the landlord may, upon receiving a written notice from the tenant, enter the property and remove any items they own. Alternatively, in the absence of a written notice, the landlord may enter the premises and remove the tenant’s property if such is reasonably necessary to protect it, or if the lease requires the tenant to remove the chattels after they vacate the premises. The landlord does not have to return the removed property to the tenant if the lease agreement requires that the tenant remove it; however, the tenant has a right to recover at least the fair market value of any property that is damaged or destroyed as a result of the landlord’s actions. A landlord may also enter and remove such property if the tenant fails to pay rent within fifteen days after it was due; however, the tenant simply has a right to replace their obligations under the lease in such a situation . If the tenant has absconded with the full intent of never returning to the premises, the landlord may treat the premises as abandoned and re-enter the property. However, the landlord will be required to provide reasonable notice of such intent to the tenant, and thereafter they may place the tenant’s property in public storage. At that time, the tenant has the right to recover the property removed by the landlord upon reimbursement of all costs incurred by the landlord and prior to the disposal of the property. If the tenant does not tend to their property within a reasonable amount of time, the landlord may dispose of the tenant’s property without incurring criminal or civil liability. The Pennsylvania Landlord and Tenant Act provides that a tenant may not be evicted for abandoning their property, unless the tenant fails to pay rent. However, a tenant has no right to sublet or assign the leased property to a third party, unless otherwise specified in the lease agreement. Typically, the tenant will need the landlord’s consent to sublease the property, and the tenant will have the right to consent to any assignment or subletting. Furthermore, the subtenant will be regarded as solely responsible to the landlord for every obligation of the tenant under the lease. Although most leases will provide the tenant’s demise for a certain duration of time, this does not guarantee that the tenant will remain in the property for the full term of the lease.
Dealing with Abandoned Personal Property
In the event an eviction occurs and the tenant leaves behind personal property, the Landlord may be forced to deal with said property. The law gives the Landlord a couple options to deal with any property left behind.
A landlord’s lien on personal property left in a residential unit is governed by 68 P.S. §250.101, et seq. 68 P.S. §250.101(a) provides that "[a]ll rents, issues and profits that may be due, or may become due, to any person for any lands, tenements or hereditaments shall be liable to be seized and applied to any rents, issues and profits which he may by contract become bound to pay for any other lands, tenements or hereditaments in this Commonwealth." This language essentially makes any property located within the leased premises a lien on the property located on that leased premises. Although this lien exists, the tenant must fail to pay rent before the Landlord can exercise his or her lien.
If a tenant is evicted from the leased premises, the property left behind is generally abandoned. If the tenant does not remove personal property from the premises after being served with a written demand for possession of the property delivered by certified mail or posted conspicuously on the premises and if which the tenant fails to remove within ten (10) days, a landlord may assume that such rental units are abandoned pursuant to 68 P.S. §250.105. Further, under 68 P.S. §250.102, a lien on the personal property may extend twenty (20) days following the date the lease terminates.
Pursuant to 68 P.S. §250.103, a landlord may dispose of abandoned personal property only after an inventory of such property has been made by the landlord and at least fifteen (15) days have elapsed from the receipt of the demand by certified mail or ten (10) days from the date the demand was posted on the premises. Further, any property left behind that is deemed to have a value of less than two hundred ($200.00) dollars may be requested by the former tenant who must pay all expenses related to the retrieval of said property within five (5) days of the request for pickup.
This area of the law can be extraordinarily confusing for both tenants and landlords. As always, consultation with an attorney before disposing of any property left behind will ensure that no rights are violated.
Avoiding Abandonment of Property
In many circumstances, when dealing with a tenant who has not paid rent and who may be abandoning the property, the situation can be diffused, tensions can be relieved and the matter can be resolved before it gets any worse, just by communicating with the tenant. There may be an explanation. Maybe the tenant experienced an unexpected financial hardship and is doing the best he can to get back on track. Perhaps the tenant and also the landlord reacted too quickly to the situation and what may have appeared to be abandonment was no such thing. Regardless, the sooner either party reaches out to the other and attempts to understand what is going on, the better.
We have also had circumstances in the past where other causes of disputes have arisen between landlord and tenant, or that third parties – not necessarily related to either landlord or tenant – have become involved, and that third parties’ interference has caused a seemingly temporary situation to become a permanent one. We have had clients engaged in commercial lease disputes in which their tenant had paid its monthly rent on time for many months, then suddenly stopped paying. Was it due to financial issues, or was the tenant planning to walk away from its business?
While none of us can predict the future, just as all of this dialogue between landlord and tenant could defuse the situation in which abandonment could have resulted in, communicating with, or taking actions against, other third parties could prevent that same scenario from happening.
Case in point, we have all heard the phrase "vigilante justice" where someone takes matters into his own hands in order to make a point, instill fear, or achieve some other goal. While the phrase may apply more to the criminal realm than to commercial landlords and tenants, the reasoning is the same. Often the simplest of actions can avert more significant consequences . Perhaps all the landlord would have to do is send a simple letter to the tenant to express concern and request a meeting. Maybe the landlord will tender payment of the rent due to a default under the lease specifically, and not just because it prides itself on being a good, responsive landlord.
But unless the landlord goes that extra step, the net result might be that a third party unexpectedly shows up at the police station with a printout of the tenant’s lease information, and even if it is not legally admissible (and even if it is even authenticated) as against either landlord or tenant, the fact that the police consulted it in order to identify the tenant could in fact achieve the results that the landlord was initially trying to avoid, or it could simply delay that very outcome. If the landlord and tenant were in direct communication, however, they would have quickly realized that it was an innocent misunderstanding.
While we are not advising our landlord clientele to give the tenant the benefit of the doubt after repeated non-payment, we are indicating that sometimes the simple course of action in the face of what appears to be a temporary situation is to reach out to the tenant directly before taking actions that could, if done too quickly, cut off the most amicable resolution of the problem that is available.
Where a tenant fails to pay rent and there is no reasonable understanding as to why the rent was not sent, the landlord should communicate with the tenant to remind the tenant of its obligation. Hopefully the tenant will respond, be apologetic, and make a payment arrangement. Either way, in the absence of a bona fide dispute between landlord and tenant, a landlord following through with a simple process of requesting payment of rent will often deter the tenant’s position to abandon the premises without further cause.