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Personal Property Repossession Appraisals

Section 303

(50 U.S.C. App. § 533)

Where a proceeding to foreclose a mortgage upon or to resume possession of personal property, or to rescind or terminate a contract for the purchase thereof, has been stayed as provided in this Act, the court may, unless in its opinion an undue hardship would result to the dependents of the person in military service, appoint three disinterested parties to appraise the property and, based upon the report of the appraisers, order such sum, if any, as may be just, paid to the person in military service or his dependent, as the case may be, as a condition of foreclosing the mortgage, resuming possession of the property, or rescinding or terminating the contract.

General. This section is designed to provide supplemental relief for all parties when an installment contract or other obligation for the purchase of personal property has been stayed under other sections of the Act.

Application. Section 303 is applicable in cases where a stay has been granted under this Act in any proceeding to "foreclose a mortgage upon or to resume possession of personal property, or to rescind or terminate a contract for the purchase thereof." In such a case, the trial court is empowered to appoint three appraisers to determine the value of the personal property involved. Based on the appraised value, the court may order whatever sum, if any, it believes is representative of the service member's equity to be paid to the service member or his/her dependent. This payment may be made a condition precedent to foreclosing the mortgage, terminating the contract, or permitting the vendor to resume possession of the chattel. This section has been effectively employed in the situation where the value of the pledged chattel is "rapidly diminishing."

When applying section 303, the trial court is faced with the task of striking a delicate balance of the equities between (1) the service member, in whose favor a ruling previously has been made by way of a stay or proceedings; (2) the dependent of the service member, who should not be subjected to undue hardship as a result of losing use of the chattel; and (3) the vendor, who has neither been paid nor has the benefit of the possession of the chattel.

The sole restriction against the court's use of this section is embodied in the clause "unless in its opinion an undue hardship would result to the dependents of the person in the military service." "Undue hardship" is difficult to define. Therefore, the courts have considered it a factual determination that must be made on a case by case basis.

Termination of Leases by Lessees

Section 304

(50 U.S.C. App. § 534)

(1) The provisions of this section shall apply to any lease covering premises occupied for dwelling, professional, business, agricultural, or similar purposes in any case in which (a) such lease was executed by or on the behalf of a person who, after the execution of such lease, entered military service, and (b) the premises so leased have been occupied for such purposes, or for a combination of such purposes, by such person or by him and his dependents.

(2) Any such lease may be terminated by notice in writing delivered to the lessor (or his grantee) or to the lessor's (or his grantee's) agent by the lessee at any time following the date of the beginning of his period of military service. Delivery of such notice may be accomplished by placing it in an envelope properly stamped and duly addressed to the lessor (or his grantee) or to the lessor's (or his grantee's) agent and depositing the notice in the United States mails. Termination of any such lease providing for monthly payment of rent shall not be effective until thirty days after the first date on which the next rental payment is due and payable subsequent to the date when such notice is delivered or mailed. In the case of all other leases, termination shall be effected on the last day of the month following the month in which such notice is delivered or mailed and in such case any unpaid rental for a period preceding termination shall be proratably computed and any rental paid in advance for a period succeeding termination shall be refunded by the lessor (or his assignee). Upon application by the lessor to the appropriate court prior to the termination period provided for in the notice, any relief granted in this subsection shall be subject to such modifications or restrictions as in the opinion of the court justice and equity may in the circumstances require.

(3) Any person who shall knowingly seize, hold, or detain the personal effects, clothing, furniture, or other property of any person who has lawfully terminated a lease covered by this section, or in any manner interfere with the removal of such property from the premises covered by such lease, for the purpose of subjecting or attempting to subject any of such property to a claim for rent accruing subsequent to the date of termination of such lease, or attempts so to do, shall be fined as provided in title 18, United States Code, or imprisoned not to exceed one year, or both.

General. This section of the Act differs from section 300 dealing with eviction in that it provides a method by which the service member­-lessee [or his or her dependents in their own right (see ' 536)], rather than the lessor, may terminate a lease. Its scope is not limited, as is section 300, by either the amount of the agreed rent or the nature of the premises. Section 304 is, however, limited in application to premises occupied prior to entry into military service. In further contrast to section 300, this section does not require that the lessee's ability to perform be materially affected by his/her military service.

Application. The termination provisions of this section apply to any lease covering premises occupied for dwelling, professional, business, agricultural or similar purposes, if the following two conditions are met:

(1) The lease was executed by a person who, after the execution of such lease, entered military service; and

(2) The leased premises have been occupied for such purposes by the service member or his/her dependents.

What if the pre-service lease was signed not by the service member, but by the nonmilitary spouse, could he or she terminate the lease? Generally, yes.

What if the nonmilitary spouse signed the pre-service lease before marrying the service member; can he or she terminate the lease? Generally, yes.

What if the service member or spouse signs the lease after entering active service; may they terminate the lease under § 534? No. Leases entered after coming on active duty may not be terminated under the SSCRA lease termination provision. Military tenants are advised to consult military legal assistance attorneys or housing officers prior to signing a lease to determine if the state where the lease is being signed has a statutory "military clause" allowing lease termination because of military orders or necessity. Where a state does not have a statutory "military clause", the tenants should negotiate with the landlord to include one in their lease agreement prior to signing the lease.

Procedural requirements. The lessee must deliver written notice of termination to the lessor at any time after entry on active duty or receipt of orders as contemplated by section 106. Delivery may be made by posting a properly addressed and stamped envelope in the U.S. mails. Oral notice to the lessor is insufficient In addition, among partners in an enterprise, notice from one partner to the others that the service person intends to vacate the premises is insufficient to notify the landlord.

The effective date of the termination is determined by the method of rental payment under the lease. In the case of a month to month rental, the termination becomes effective 30 days after the first date on which the next rental payment is due subsequent to the date when the notice of termination is delivered. For example, if the rent is due on the first day of each month, and notice is mailed on 1 August, then the "next rental payment is due and payable" on 1 September. Thirty days after that date would be 1 October, the effective date of termination.

All other leases will be terminated on the last day of the month following the month in which proper notice is delivered. For example, if the lease requires a weekly or yearly rental and proper notice of termination is given on 20 July, the effective date of termination would be 31 August.

Return of security or prepaid rent. The service member is required to pay rent for only those months before the lease is terminated. If the service member has paid rent in advance, then section 304 requires the lessor to prorate and refund the unearned portion. If a deposit for security was required by the lessor, then, upon termination of the lease, the lessee is entitled to the deposit.

Lessor's rights. Section 304 also extends certain rights to the lessor whose lease is terminated under these provisions. The lessor may, during the period from his/her receipt of notice to the effective date of termination, petition the appropriate court for relief from the lease termination. The court may then make such "modifications or restrictions as in the opinion of the court justice and equity may in the circumstances require." Landlords may petition the court on grounds of “undue hardship” or countervailing equitable consideration (e.g., lack of good faith rental of the property), for an “equitable offset” for lease termination. Such an "equitable offset" would most likely be granted in commercial or professional lease terminations. "Equitable offset" could include lost rent, realty fees for re-rental, deprecation in rental value of premises because of tenant-requested fixtures, and attorney fees and costs. In addition, if the service person requires the lessor to modify the property and subsequently terminates the lease, the lessor may charge the lessee for the alterations. This occurs only if the lessee knew of the impending call to active duty at the time the lessee requested the modifications.

Landlord Seizure of Personal Property. If the lessor seizes or attempts to seize the personal property of the lessee for the purpose of subjecting the property to a claim for rent accruing after the effective date of termination, however, he may be punished under subsection (3).

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Above Information Courtesy of United States Army JAG Corps