Warranty of Habitability

Originally, a landlord had no duty to present the rental in a habitable condition, or to make any repairs to keep it in a habitable condition. The only obligations the landlord had were the terms and conditions in the lease contract. This is still true of commercial tenancies, but in residential tenancies a warranty of habitability is implied as a matter of law.

The seminal court case is Javins v First National Realty Corp decided in 1970.  The District of Columbia Circuit Court of Appeals held that a warranty of habitability is implied in residential leases, and breach of the warranty of habitability is a defense in an eviction.

The Court reasoned that local housing codes require a warranty to be implied. The Court also noted that society had changed since the old common law rules first evolved.

In agrarian England and early America where these rules first developed, the primary purpose of a lease was use of the land for agriculture. If a peasant erected a thatched hut on the land, that was secondary to agrarian purposes. In modern life, a residential tenant seeks a habitable dwelling, not land to farm.

The Court also noted that the modern trend was to treat a lease as contract as well as a conveyance of land. The Court pointed to implied warranties in other consumer contracts, such as sales contracts.

The Javins Court found that landlords and tenants in urban housing markets have unequal bargaining power, preventing tenants from bargaining for an express covenant of habitability.

After the Javins decision, states began adopting an implied warranty of habitability through court decisions and/or legislation. Now in the US a warranty of habitability rule is essentially universal. The standards the landlord must meet to satisfy the implied warranty, and the remedies available to the tenant upon breach of the implied warranty vary among the different states.

If you have questions about the implied warranty of habitability, you should contact a lawyer in your jurisdiction.

Rent Control Coming to Washington?

There is a widely-held consensus among economists—of both the “left” and “right” of economic thought—that rent control is bad economic policy. Consider these observations of economist Paul Krugman:

The analysis of rent control is among the best-understood issues in all of economics, and among economists, anyway—one of the least controversial.  In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that “a ceiling on rents reduced the quality and quantity of housing.” Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand.[1]

Wherever rent control has been implemented, adverse side effects have followed.  Rents of uncontrolled apartments go sky-high. Builders fear extension of rent controls and simply stop building new apartments in favor of condominiums, office buildings, and other structures not subject to rent control, exacerbating the shortage of affordable housing. Bitter relationships ensue between landlords and tenants as, with cash flow from rents capped, landlords fail to maintain properties, and seek ever more clever ways to curtail rent controls and get rid of tenants. This leads to a proliferation of government regulations.  Economists consider all these adverse side effects of rent control “predictable”, according to Paul Krugman.

Some economists go even further.  Rent control is “the most effective technique presently known to destroy a city–except for bombing,” according to a celebrated quote from a prominent Swedish economist.[2]

Even leaders of communist countries have become disenchanted with rent control. “The Americans couldn’t destroy Hanoi, but we destroyed our city by very low rents and controls. We realized that it was stupid and that we must change policy,” Vietnamese revolutionary, diplomat, and politician Nguyen Co Thach has said in a well known quote.[3]

More than nine out of ten economists agree rent control is bad policy.  Yet in Washington state a movement is afoot to impose rent controls. Rent control by Washington cities has long been banned under state law.[4]  New legislative proposals would lift this ban as to residential rentals.[5] Seattle is widely expected to pass rent control if the state-wide ban is lifted.

______________________________

[1] Paul Krugman, Reckonings; A Rent Affair, New York Times (June 7, 2000).

[2] Assar Lindbeck, The Political Economy of the New Left (New York: Harper and Row, 1972); cited in Sven Rydenfelt, “The Rise, Fall and Revival of Swedish Rent Control,” in Rent Control: Myths and Realities, Walter Block and Edgar Olsen, eds. (Vancouver: The Fraser Institute, 1981), pp. 213, 230.

[3] See, for example, Britain Goes Wild as Ed Miliband Proposes Rent Controls, Forbes April 27, 2015;

[4] RCW 35.21.830.

[5] HB 1082; SB 5286.

Trump Administration Threatens Marijuana Businesses

The Trump administration recently announced that it is rolling back Obama administration polices that had tolerated marijuana businesses where legal under state law.  Federal prosecutors are now free to enforce federal laws against marijuana, even if legal under local state law.  [1]

The sale and use of marijuana has remained illegal under federal law, despite legalization under state law in several states. Marijuana businesses and the landlords who rent space to them are subject to criminal penalties including imprisonment. Landlords may lose their property in civil forfeiture actions.

Landlords who knowingly rent to marijuana businesses do so at their peril. It is best to consult with an attorney before taking actions that may place your freedom and your property in jeopardy.

 

[1] See this CNN page, for example. http://www.cnn.com/2018/01/04/politics/jeff-sessions-cole-memo/index.html

$100,000 in Attorney Fees Awarded in Service Animal Dispute

A Florida condominium resident who suffered from post-traumatic stress disorder (PTSD) was awarded $5,000 in damages by a jury and over $100,000 in attorney fees by the court.[1]

The condominium association had a twenty-five pound weight restriction for dogs.

Ajit Bhogaita, a resident, acquired a dog that exceeded the weight limit. Bhogaita suffered from PTSD after a sexual assault he endured during his military service.

No medical professional initially prescribed the dog.  Nevertheless, Bhogaita’s symptoms improved and he began to rely on the dog to help him manage his condition.  He kept the dog for two years without incident.

About two years later the condominium association demanded Bhogaita remove the dog. Bhogaita then obtained and produced letters from his psychiatrist explaining that the dog was an emotional support animal.

Twice the Association demanded more information, and Bhogaita responded by producing another letter from his psychiatrist. After the third such letter, Bhogaita did not respond for over two months. The Association then sent yet another request for information to include a sworn statement from the psychiatrist providing “specific facts” about Bhogaita’s condition and what individualized training the dog had received.

The Association’s request for information gave a deadline for a response, informed Bhogaita that the notice served as a formal demand to remove the dog if the deadline were not met, threatened legal action, and admonished Bhogaita to “PLEASE GOVERN YOURSELF ACCORDINGLY.” [2]

Bhogaita filed a complaint with the United States Department of Housing and Urban Development (“HUD”) and the Florida Commission on Human Relations. The Commission issued findings of cause against the Association.

Bhogaita then brought a lawsuit. After a two-day trial the jury returned a verdict in favor of Bhogaita and awarded $5,000 in damages. The court granted over $100,000 in attorney fees. The Association appealed. [3]

The appellate court noted that once a housing provider is made aware of a request for a reasonable accommodation, the provider has an opportunity to make a final determination, which includes the ability to conduct a meaningful review.

An undue delay in responding to a reasonable accommodation request may constitute a failure to accommodate.  For more than six months, the Association had demanded additional information, sometimes making repeat demands for information that had already been provided, and then threatened legal action.  The Court ruled that the Association committed undue delay in investigating the request for accommodation.

In most cases, an individual’s medical records or detailed information about the nature of a person’s disability is not necessary to determine whether an accommodation is required.

The Association demanded information regarding Bhogaita’s treatment, medications, and

the number of counseling sessions he attended per week; details about how the diagnosis was made; whether the condition was permanent or temporary; and details of the prescribed treatment.  The Court found that the Association’s demands for extraneous information were not necessary for it to make a determination of the reasonableness and necessity of the request for an accommodation.

The verdict and attorney fee award were upheld on appeal.

 

[1] The condominium resident was not a tenant, but that has no bearing on the legal issues discussed. The same analysis would apply to a tenant.

[2] Emphasis in original.

[3] Bhogaita v. Altamonte Heights Condominium Ass’n, Inc., 765 F.3d 1277 (2014).

Property Damaged By Tenants – What Should You Do?

Sadly, it is not unusual for tenants facing eviction to take ‘revenge’ (or to recoup what they see as their losses) by damaging your property or stealing things like appliances. Obviously this is not a situation in which any landlord wishes to find themselves. Tenant-inflicted damage (especially if willful and malicious) can cost thousands of dollars to set right – not only in the actual rep air costs, but in lost rent while the repairs are taking place. Such things can put a struggling landlord into serious financial straits. However, there may be ways in which you can get some of your money back, and there may be ways to turn this nasty situation around. Here are the steps you should take if your property has been damaged by a tenant:

Record Everything

It is more than worth photographing or videoing the property in detail, making meticulous records of all damages. Ideally, you will have photographed the state of the property before the commencement of the tenancy (and will thus be able to compare ‘before’ and ‘after’) – but don’t worry if you haven’t. It is still useful to have a photographic and/or video record of the damage, and will help greatly with any ensuing investigation or court proceedings.

Tell The Police

It’s not often that the police make any actual arrests in the case of tenants damaging properties – but they may still issue you with a police report number, which is very much needed if you’re going to sue your tenants or claim the damage against your insurance. If your tenants have stolen appliances or anything else of yours that is valuable, the police may decide that they have grounds to make an arrest, in which case you can decide whether or not to press charges. Should it transpire that criminal activity has been occurring on the property, and if there is evidence of this, it is more likely that the police will take action against the tenants than if they’ve simply caused damage. Drug dealing or preparation within the property is a common reason for police to arrest former tenants on the landlord’s information – but you need to be able to present evidence of this to the police before they will take any serious action. However, even if the police don’t make any arrests, it’s still helpful from an insurance point of view to have informed them, and potentially to have had them assess the damage.

Contact Your Insurers

Depending on what kind of cover you have for your property, you may well find that your insurers are able to cover much of the cost of repairs. Getting reimbursed for rent lost while repairs are occurring is trickier, but not impossible depending upon your insurer and the status of the case. Your insurer is likely to want to see your photos of the damage, plus any police reports on the case. Most insurers who deal specifically with landlords will be sympathetic to you. However, you may have a battle on your hands in some cases, so it’s wise to be as organized, thorough, and meticulous as you can when presenting your case to the insurers.

Be Sensible With The Security Deposit

Whatever your tenants have done to your property, you still have to abide by the law when it comes to the security deposit your tenant left behind. If you use any or all of the deposit to pay for damages, you must present an itemized receipt to them for having done so. The precise ins and outs of landlord/tenant law varies from state to state, so it’s wise to familiarize yourself with your duties and responsibilities in this area. No matter how angry you are at the state of your property, withholding the security deposit or failing to fulfil your legal obligations will not help matters at all!

Decide Whether Or Not To Sue

On occasion, the best way to get justice and to recoup your losses is to take your former tenants to court. Sometimes, however, the costs of doing this exceed the costs of repairing your property. You may decide that the principle of getting justice is worth the extra costs, or you may decide to cut your losses and work on getting your property back into a reasonable condition. This is entirely up to you. The small claims court, however, is available for situations like this!

Evicting a Family Member

In many jurisdictions the typical expedited eviction process is not available to evict a family member. In some jurisdictions, rather than evicting a family member through the unlawful detainer process – which is the expedited eviction process applicable to landlord-tenant relationships – the family member can only be evicted through an ejectment action, which is slower and more expensive.[1]

This rule has been applied to fired erstwhile employees[2], and to buyers in possession in real property sales.[3]

Check with an attorney in your location for information about eviction laws in your state.

 


[1] See, for example: Rosentiel v. Rosentiel, 20 A.D.2d 71; Minors v. Tyler, 137 Misc.2d 505.

[2] Turner v. White, 20 Wn. App. 290, 579 P.2d 410(1978).

[3] Bar K Land Co. v. Webb, 72 Wn. App. 380, 864 P.2d 435 (1993).

The Fair Credit Reporting Act and Landlord-Tenant Law

The federal Fair Credit Reporting Act (FCRA) went into effect in 1971.  It regulates consumer reporting agencies (CRAs), the use of reports, and furnishers of information to CRAs. Some states have similar statutes.[1]

  1. CRAs

CRAs must utilize reasonable procedures to ensure maximum possible accuracy of information and must conduct an investigation after a consumer disputes the accuracy of information.

Violation may lead to damages and attorney fees if negligent, and also statutory damages and attorney fees if willful.

  1. Use of Reports

Users of consumer reports must give written notice of adverse action. The notice must contain

  • A statement of the adverse action taken;
  • The name, address, and phone number of the CRA that supplied the report;
  • A statement that the CRA did not make the decision and cannot supply the reasons for the adverse action;
  • A notice that, upon a request by the consumer made within sixty days, the consumer may obtain a free copy of his or her consumer report;
  • Disclosure of the consumer’s right to dispute with the CRA the accuracy or completeness of the report; and
  • The credit score used by the person in taking the adverse action and related information.

 

Denial of a lease based on a consumer report is an adverse action.[2]

 

The 7th Circuit Court of Appeals has held there is no private cause of action for violations of adverse action duties under federal law.[3]  However, state law must also be considered.



[1] See, for example, chapter 19.182 RCW (Washington).

[2] 15 U.S.C. §1681a(k)(1)(B)(iv); Cotto v. Jenney, 721 F.Supp. 5 (D. Mass. 1989); RCW 19.182.010(1)(a)(iv); RCW 59.18.257.

[3] Perry v. First Nat. Bank, 459 F.3d 816 (7th Cir. 2006).

Landlord Duty to Deliver Possession

“English” Rule

The covenant to deliver possession is enforceable against the landlord when a third party wrongfully remains in possession at the time the tenant is entitled to possession. The landlord’s obligation is to ensure actual possession, not a mere right of possession.

This is the long-established rule in England and is followed by a number of American jurisdictions.[1]

“American” Rule

The landlord need only convey the right of possession, not actual possession – unless there is an express lease covenant to the contrary.  This rule was developed historically in US jurisdictions but has been largely modified or abandoned, particularly as to residential tenancies.

Many states have adopted the Uniform Residential Landlord-Tenant Act.[2]  The Uniform Residential Landlord-Tenant Act in its current form has provisions expressly creating a duty to deliver actual possession.

Although statutes in many states are based on this model act, the model and the various statutes in jurisdictions that adopted it evolve separately and differ more and more over time. The Washington Residential Landlord-Tenant Act does not have these provisions.


[1] American Law of Landlord and Tenant, Robert S. Schoshinski.

Advice For New Landlords

by Eve Pearce

With housing prices remaining relatively low, some are looking to rent out their existing property when moving on rather than selling at a price lower than the purchase while others are using this time of more affordable housing to buy an investment property as a provision for the future. Whatever the reason, becoming a landlord is not risk free and so it is important that you do your research and take the proper precautions to protect your investment and hopefully see a good return.

A Good Rental?

First things first, find out whether your property or prospective property will make a viable rental. This involves calculating total outgoings such as mortgage payments, insurance, maintenance and repairs and agent fees and researching typical rental prices in the same neighbourhood. Speaking to local real estate and letting agents and looking at online property rental websites is essential to finding the right rental price for your property. This is important not only for calculating the yield on your investment to check for financial viability, but also for setting an appropriate price that will attract tenants when you come to advertise. Whether or not a property will make for a good rental is not only about how the figures stack up. It is vital to consider the local market, the competition, and identify the type of tenants that are likely to be interested in your property so that you can make sure you tailor your rental accordingly. For example families will generally require a bath whereas young professionals are often fine with just a shower room. By understanding your market you can ensure that your property caters for the needs of prospective tenants and, in areas of ample competition, stands out from the crowd.

Let Your Mortgage Company Know

If you are thinking about renting a property which you previously purchased with a residential mortgage, it is important that you inform your lender of your intention to let. Some lenders might force you to change your mortgage to a buy-to-let which often requires a lower loan to value and charges a higher interest rate, so be sure find out where your lender stands when you are assessing the suitability of renting out your property.

Work Out Tax Implications

As with any income, money earned from rental of real estate is subject to federal taxation. It is therefore important that you understand the tax implications of becoming a landlord. When you start to receive an income from your property – regardless of whether you make a profit – you will need to declare this income on your tax return. However, there are a number of deductibles (for example repairs to the property) that can offset some of the income you make so it is important that you get into good record keeping habits from the start.

Get Rock Solid Contracts

Regardless of who you are letting your property to, a solid rental contract is vital. Even when you are renting your property to family or friends this is essential, and it is unfortunately often these situations that go wrong and so it is important that you are protected by a sound lease agreement or rental contract. It is worth seeking the advice of a real estate lawyer or attorney to have a contract drawn up to ensure it contains all of the proper provisions. Often new landlords are tempted to find a contract or template online or try drawing up an agreement themselves to save money, but this will be a false economy if your contract turns out not to be watertight if you have problems with your rental.

Vet Your Tenants

Although you will never really know how a prospective tenant will turn out until they are living in your property (or more often until they move out), but it is nonetheless vital to make the appropriate checks into their character and background before you hand over your keys. If you are using a rental agent to obtain tenants and manage your property, they will undertake such checks. However if you are choosing to self-manage, then conducting a credit check and obtaining references from employers and previous landlords is necessary. Another test not to be underestimated is simply meeting prospective tenants face to face. If their checks and references look good but you just have a strange feeling about them, trust your instincts.

Protect Your Property

As a landlord it is important to have the proper insurance in place to protect your real estate and any contents which you own by taking out appropriate landlords insurance. When moving out of and renting your own home, it is important to switch to landlords insurance rather than rely upon your existing policy as in the event of an incident for which you need to make a claim, you could find that your insurer refuses to pay out on the basis that you had leased the property without their knowledge. In addition to covering the property itself and any fixtures and fittings you have provided, it is possible to take out cover against loss of rental income or your liability as a landlord to ensure you are covered in any situation. Another way of protecting your property is by installing adequate smoke alarms and this is in fact a legal requirement in most states.

Know The Law

Another important aspect of becoming a landlord is being aware of all of the laws that protect you as a landlord, such as eviction procedures, and those which you are obliged to adhere to for the protection of your tenants. Understanding your legal requirements as a landlord is crucial to ensuring you don’t find yourself in a litigious situation and understanding your rights as a landlord before you lease your real estate to your first tenants will give you the confidence to act swiftly and appropriately should any difficult situation, such as non-payment of rent, arise.

 

Ive been Evicted, and had a car Repoed?

well, im 24 years old currently live in NY. back in 2006 i moved to florida bought a car and rented an apartment. well i lost my job, and got evicted in june of 2007. subsequently i moved back to NY and drove the car i purchased back to ny with me. i moved back in with my parents, and during the whole process i fell behind on my car payments and my car was repoed in april 2008.

currently i am paying 50$ a month on my eviction payments. the total due is over 6000 dollars. i know its a small payment but thats all i can afford. im a full time student and will graduate from comm college i may, and plan on enrolling in a 4year school in the fall. i have not heard anything from the finance company of the car. they do have my address and my phone # but still havnt heard a word. is it possible that they will not try to collect the debt? just brush it under the rug? i still owe over 5000 dollars on it…

2006-2008 was a very rough period for me, but im getting my life back together. these 2 years has destroyed my credit.

should i even pay off this eviction? is it even worth it? it will be off my credit report in 7 years right then there will never be a trace of it correct? should i just wait it out a few years? and is it possible that the car place has just squashed my debt?

advice plz.. thanks!