Thursday, April 23, 2015

Social Media and Leasing

     The Internet and Social Media has become a very powerful tool for people in determining where to eat, vacation, shop, purchase and live.  Many small businesses can be permanently harmed by bad reviews posted on one of the many popular sites such as Yelp!, Trip Advisor or Facebook.  These reviews can been seen by millions of consumers which is a phenomenon that simply did not exist twenty years ago.

    To combat the effect of negative reviews, an apartment complex in Orlando included a Social Media Addendum in their lease package for execution by new tenants.  The Addendum’s preamble is reasonable, stating that “unjustified and defamatory reviews…can cripple a business by creating a false impression in the eyes of consumers.” 

    The Addendum then sets forth a prohibition against any negative reviews, stating, “Applicant will refrain from directly or indirectly publishing or airing negative commentary regarding the Unit…”  To clarify its position, the Addendum states further that “Applicant shall not post negative commentary or reviews on Yelp!, Apartment Ratings, Facebook, or any other website or Internet-based publication or blog.”  Instead of discouraging defamation through reviews, the Landlord, in the Addendum, was attempting to stifle all negative reviews by making it a breach of the lease if a negative review was posted, even if factually accurate.  Even the determination of what was a negative review was subjective, making the Landlord the sole arbiter of negativity, “Owner shall make the determination of whether such commentary is harmful in Owner's sole discretion.”

    In most lease contexts, a breach of a lease term provides the party with the right to terminate the lease and possibly actual damages incurred as a result of the breach.  Instead, the Social Media Addendum provides for a liquidated damages clause upon posting of any negative review of “$10,000.00 for the first such breach, and an additional $5,000.00 for each subsequent breach…owed to Owner within ten (10) business days of the breach.”  To add pressure, if a roommate writes the negative review, the liability extends to all tenants, as the Addendum provides that “the Applicants shall be jointly and severally liable to pay Owner liquidated damages…”

    Finally, the Landlord attempted to claim ownership of “any and all rights, including all rights of copyright as set forth in the United States Copyright Act, in any and all written or photographic works regarding the Owner, the Unit, the property, or the apartments.”  This is clearly an overreach and unlikely to be enforceable. The purpose of this claim is to be able to indicate to any website owner who is hosting written documents, pictures, or videos of the apartment complex that the landlord owns all copyright in the works and has the legal right to have such works removed from any website. Many websites, regardless of whether this provision is enforceable, would likely act and remove such items to avoid future claims.

    After the addendum became known to the public, the apartment complex stated that it would no longer use the addendum and that it would not attempt to enforce same against its current tenants. While the goals of the apartment complex were misplaced, there are things a landlord can do to at least protect themselves from certain actions taken by tenants with regard to social media.

     First, a landlord can agree with the tenant to make the terms and conditions of their lease confidential. The main reason for this is to prevent others from knowing the specifics of any lease transaction which may affect negotiations for other units with in an apartment complex.

     Second, landlords can enforce, against any tenant or third-party, defamatory or libelous statements which are not based on fact. While truth is usually a strong defense to any online social media posting, subjective opinion or outright falsehoods can be actionable, resulting in a claim against the tenant should a court determine that the facts are false contained in any such online posting or that the opinions go far beyond the underlying facts such that the intent is not to explain the facts but to harm or punish the landlord.

     Third, while probably not fully enforceable, landlords should always seek a mechanism to resolve issues and disputes prior to a tenant making online postings which could damage the ability of the landlord to lease in the future. For example, a clause could be added to a lease that states, “Tenant agrees, before posting any negative reviews, pictures or information on any website or social media site about the landlord or the premises, to give the landlord ten days’ written notice of the underlying issues and if the landlord timely corrects the issue, tenant agrees not to post or disclose the negative matter on any website or social media site.”  Such clause would not prevent a subsequent posting by a tenant, but may discourage such action, especially if landlords are proactive in addressing tenant concerns.

    Finally, rewarding positive reviews is always permissible and should be encouraged by landlords.  For example, landlords can give discount coupons to tenants who post positive reviews on applicable social media websites. The tenants should be encouraged to give honest and factual opinions as part of any such program. Encouraging positive reviews and addressing negative issues before they lead to negative reviews is always the best weapon a landlord can have in promoting social media growth of their leased premises project to the world.

Michael J Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business oriented law firm serving all of South Florida, with offices in Palm Beach County.  They specialize in real estate and business law, and can assist landlord and tenants in leasing, evictions and negative reviews.  They can be reached at 561.594.1452 or by e-mail at