August 15, 2016
Escaping an Unlivable Rental Property
Americans continue to feel the effects of the recession that began in 2008. In April 2016, the Wall Street Journal reported that U.S. home ownership rates dropped to 63.5%, near the 48 year low of 63.4% experienced in 2015. Meanwhile more families are renting homes. Washington, D.C.’s local economy is more resistant to recession because of the federal government. In past years, the rental real estate market in Northern Virginia exploded. Many workers with decent wages found themselves renting because of challenges in saving up for a security deposit. Many single family homes available for rent are owned by landlords who live out-of-town. Frequently, tenants find themselves committed to written lease contracts for properties that are practically uninhabitable. Sometimes this happens because the tenants signed leases after viewing photos on the internet without an in-person inspection. In other situations, the tenants discover serious problems with the condition of the property only after living there a while. Not all habitability problems are immediately apparent upon an in-person visual inspection. Such problems can include insect or rodent infestation, contaminated water, broken furnaces, asbestos exposure, serious water intrusion, toxic mold, lead exposure or any other condition that threatens the health or safety of any occupant. Escaping an unlivable rental property has its own challenges. Tenants find themselves financially responsible for use of property that is not habitable. Adding to this, tenants must make a new financial commitment to another property if they want to move. The current landlord keeps additional leverage by holding the security deposit.
Typically, the landlord, her agent or attorney prepare the residential lease agreement. By design, that lease seeks to manage the risks of a damaging or non-paying tenant. Landlords look at their ownership responsibilities in terms of mortgages, taxes, insurance, agent’s commissions, association dues, you name it. Leases have more provisions about the tenants’ obligations than those owed by the landlord. When dealing with unlivable conditions, a tenant must consider legal protections outside the four corners of the lease agreement.
In Virginia, the chief consumer protections for tenants are found in the Virginia Residential Landlord Tenant Act. This statute applies to many landlord-tenant relationships in the Commonwealth. Also, the Virginia General Assembly enshrines the landlord’s obligations in a statute entitled “Landlord to maintain dwelling unit,” Va. Code § 55-225.3(A) requires the landlord to:
- Comply with the requirements of applicable building and housing codes materially affecting health and safety;
- Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition;
- Maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances, including elevators, supplied or required to be supplied by him;
- Supply running water and reasonable amounts of hot water at all times and reasonable air conditioning if provided and heat in season except where the dwelling unit is so constructed that heat, air conditioning or hot water is generated by an installation within the exclusive control of the tenant or supplied by a direct public utility connection; and
- Maintain the premises in such a condition as to prevent the accumulation of moisture and the growth of mold and to promptly respond to any notices as provided in subdivision A 8 of § 55-225.4.
Tenants intuitively know that they are entitled to these basic protections. How are they to get out of bad situations without bearing an unfair burden for problems which are someone else’s responsibility. Litigation should only be pursued if unavoidable. Many problems with the condition of property might require proof by testimony of an expert witness. The parties might have to wait several weeks for their first court date, and then weeks or months more for trial.
If a condition with the property is currently unbearable, the landlord can expect a prospective buyer or new tenant to have the same visceral reaction. If repairs or remediation are required, the landlord will have to pay for that while paying other obligations. The property could go for weeks or even months where the tenant rightfully doesn’t want to pay, but the landlord doesn’t want to release the tenants from their obligations. In a residential case, the parties should expect a judge to oppose giving damages for rents where the landlord could mitigate his damages by making the property livable and renting it out to a new tenant.
Under most lease agreements, timing issues are critical to tenants preserving their rights to get their deposits back. Landlords can try to enforce provisions requiring for advance notice harshly.
If the landlord refuses to let them go amicably, the tenants should prepare to go to Court if necessary to protect their rights. At the same time, where at all possible a reasonable settlement should be pursued. Depending upon how severe the problems are with the condition of the property and how the statutes and lease provisions speak to the problem, the tenants can usually negotiate an exit strategy that doesn’t require them to finance the landlord’s efforts to market or refurbish the premises. Landlords, their property managers, and attorneys will look to see if the tenants are serious in their desire to get out of an unacceptable situation while protecting their rights. Tenants have rights not to unfairly bear the financial and lifestyle burdens of landlords’ problems. Contract qualified legal counsel to protect your interests.
UPDATE:
I would like to share an emailed comment on this article from Deborah Goonan, property rights blogger & activist:
It certainly seems to me that a tenant has more legal protection than an owner of a condo or HOA. There is no specific obligation for an Association to provide maintenance up to a habitable standard — at least not spelled out to the degree that landlord/tenant law spells out in Virginia law.
And at least the tenant can leave (theoretically — depends on the tenant’s financial situation and if there’s anywhere else for the tenant to go), and loses, at most, the security deposit.
A condo owner has a LOT more financial risk and cannot easily walk away from obligation to pay assessments and mortgage payment for a place that is not livable. (Such as Michelle Germano with the toxic drywall).
Deborah
Photo Credit: 20-22 Surry Rd: Our 2 family house via photopin (license)
December 10, 2015
San Bernardino Landlord Holds Controversial Open House
Was the California landlord to the terrorist couple entitled to open up the rental property to the news media? Internet videos show a frenzied swarm of camera crews exploring every cabinet and closet. So what if the San Bernardino landlord holds controversial open house? Commentators raised questions about preservation of evidence in the criminal investigation. There is also an ethics-in-journalism element. Given the heinousness of the crimes and public interest in foiling future attacks, it’s easy to overlook the landlord-tenant legal issues raised when tenants use a rental for criminal purposes and some die before termination of the lease. This story is of interest to any landlord with elderly tenants or who rents in a community with a crime problem.
According to law enforcement, Syed Farook and Tashfeen Malik used the garage of the Redlands, California townhouse they rented as a homemade explosive device factory. They used their residence as a base for their December 2nd attack on the Inland Regional Center that tragically left over 14 people dead and many more wounded. The victims and their families deserve our continued concerns and prayers, especially as public attention shifts elsewhere. As a new father, I cannot fathom Farook and Malik’s decision to drop off their six-month-old daughter with a relative and then commit such a deplorable attack. While Malik’s pledge of allegiance to the Islamic State of Iraq and Syria makes motive discernment easier, this blog post is about landlord-tenant law and not the politics-and-religion issues discussed thoroughly elsewhere. The deceased attackers were not the only residents of the property. Farook’s mother and the couple’s six month old baby also lived there. Law enforcement searched the premises and removed certain items of interest. According to news reports, they turned it back over to landlords Doyle & Judy Miller. On Friday, December 4, 2015, Doyle Miller held an informal press conference on the lawn of the townhouse. After the interview he opened up the house and permitted the news media and their cameras to search the house except for the garage.
Given the law enforcement’s interest in further investigations, the landlord’s interest in preventing additional notoriety to the property, the grandmother’s possessory interest in the place and the child’s unique vulnerability as a resident, heir, and orphan, it is shocking that the media obtained free access with their film crews. The reporters likely put their fingerprints all over the townhouse, moved items around, and possibly removed or destroyed parts of the townhouse or the occupants’ belongings. In fact, MSNBC later publicly apologized for broadcasting some photos and identification cards of some occupants. One can imagine the intense pressure the identification of the killers’ home must have placed on the Millers. They needed to cooperate with law enforcement. After the police search, the news media must have inquired about the inside of the house. The deceased’s shocking crimes do not conjure sympathy. One would not expect the grandmother and grandchild to ever live there again. It may have appeared easier to simply let the media swarm inside the house than to face their constant inquiries.
The Millers may have been concerned that refusal to cooperate with the media might lead to further questions about landlordly knowledge of the activities at the house. In an informal press conference held at the property, Doyle Miller stated that his tenants always paid their rent on time. The renters called a few times requesting landlord repairs. During his visits he never saw any guns or bombs. When asked if he ever went into the garage where law enforcement found evidence of pipe bomb manufacturing, he stated that once he went in there but he only saw some people repairing a car.
Good landlords check to make sure that prospective renters can pay their rent and won’t cause other problems. During the rental period, many obligations to maintain the property fall on the landlord. Most lease agreements provide for landlords to inspect the property for damage by the tenant or other causes during the rental period. Homemade bomb manufacturing is not just illegal. It is an ultra-hazardous activity involving explosive devices that can be easily set off. No landlord wants that in their townhouse no matter how timely the rent payments are.
Sometimes tenants engage in narcotics trade or other illegal activities. Tenants can be incarcerated or die. These are events that can lead to the termination of a tenancy. However, such events don’t necessarily cause the other occupants or the estate of the deceased to lose all of their rights in the premises or their belongings. In Virginia, like many places, a landlord cannot evict a residential tenant’s family without going through the courts. Hosting a media circus seems like a troublingly broad extension of a landlord’s right of inspection. Our legal system has many procedures in place to protect people from infringement of their rights to be secure in their own homes. News reports do not suggest that the townhouse or its contents were abandoned by the grandmother, infant, or the estate of the deceased. While the Millers must have been under a lot of pressure, it is not clear why they didn’t use California’s landlord-tenant laws and the provisions of the lease agreement to deal with the personal property and retake possession of the premises. The attorney’s fees would be a small price to pay for the value of the legal protection. Perhaps some of my readers may have some insights.
Landlords should not discriminate against prospective or current tenants based on their religion or national origin out of fear of renting to terrorists. I am not aware of any exception to anti-discrimination laws for instances where landlords associate a national origin or religion with types of illegal conduct. I’m wondering if any state legislatures will amend landlord-tenant, community associations, or mortgage statutes to give landlords, HOA’s, or lenders expanded legal privileges or duties to prevent homes from being used for terrorism. I’m concerned that homeowners’ rights are already under assault from different directions and such legislation would have unintended consequences.
Given the desire of the Farook family for privacy, I’m not sure if any legal claims will be brought against the Millers for hosting the media “open house.” The family may decide that any damages from loss of use of the townhouse or ownership of personal items is not worth the loss of privacy from media attention surrounding such a suit. However, given the high profile of this media event, the public may draw an incorrect inference that the Miller’s actions are advisable or without substantial risk. This is significant because home ownership is on the decline and renting is the trend. Many working people are unable to save a down payment necessary to purchase a home. In the event that tenants use a rental for illegal purposes and/or die before the leasehold is terminated, a landlord should consult with a qualified attorney before taking possession of the property. If occupants of rental properties are displaced by the criminal conduct of other tenants, they should also seek counseling to protect their rights.
Further Reading:
Rick Rojas, “Landlord Lets Reporters Into San Bernardino Suspects’ Home,” Dec. 4, 2015, NYTimes.com
Paul Janensch, “Was going through shooters’ home live appropriate?” Dec. 9, 2015, TCPalm.com
Photo Credit:
April 16, 2014
Unlicensed Real Estate Agent Costs Brokerage $6.6 Million Commission
What tasks can real estate brokerages assign to employees lacking a real estate license? What risks does a brokerage run from allowing unlicensed agents to manage relationships with clients and other parties to the transaction? On April 4, 2014, Judge Anthony Trenga decided that a prominent commercial broker forfeited a $6.6 million dollar commission because a leading member of its team lacked a Virginia salesperson’s license. This blog post discusses how the brokerage lost the commission on account of the unlicensed manager.
The Hoffman Town Center is a 56 acre mixed-use development in Alexandria, Virginia. (Yours truly lived in Alexandria for 9 years. AMC Hoffman was my local movie theater. I ran across the finish line in the George Washington’s Birthday 10K race at the Town Center.)
The Landlord, Hoffman Family, LLC, sought office tenants for the development. In August 2007, Hoffman retained Jones Lang LaSalle Americas, Inc. (“JLL”) as its leasing agent. JLL itself has a valid Virginia broker’s license.
In October 2007, Arthur M. Turowski retired from the U.S. General Services Administration. JLL hired him as a Senior Vice President and assigned him to manage the Hoffman account. Torowski saw an opportunity to lease the property to the National Science Foundation. He marketed the property to the GSA, who successfully bid on behalf of the NSF. Turowski negotiated with GSA and city officials. He signed documents on behalf of JLL. In May 2013, Turowski achieved a $330 million lease for his client from the federal government. The NSF will be an anchor tenant in the development. See Jonathan O’Connell, Wash. Post, Judge Rules for Developer in $6.6 million National Science Foundation Suit.
Mr. Turowski helped Hoffman outshine other suitors and land a sought-after tenant. Unfortunately JLL made one oversight: Turowski lacked a real estate agent’s license while performing the work. Hoffman discovered this fact while defending a lawsuit brought by JLL for payment of the $6.6 million dollar commission (JLL rejected Hoffman’s offer of $1 million).
In its ruling, the U.S. District Court for the Eastern District of Virginia discussed the broad scope of activities for which Virginia law requires a license:
1. Activities Requiring a Licence. The legal definition of “real estate salesperson” is “clearly intended to capture the realities and breadth of activities that make up the leasing process.” This strengthens the real estate sales profession by recognizing business realities and restricting the scope of activities unlicensed persons may engage in. Va. Code Sect. 54.1-2101 “Negotiation” is a broad professional activity not limited to agreeing to a property and a price and signing documents.
2. Activities Not Requiring a License. The Virginia Code provides for a narrow set of activities an employee of a broker may do without a license, such as (a) showing apartments if the employee also works on the premises (b) providing prospective tenants with information about properties, (c) accepting applications to lease and (d) accepting security deposits and rents. Va. Code Sect. 54.1-2103(C). These do not include relationship management and negotiation on behalf of a client. JLL’s lawyers argued that Turowski did not engage in activities requiring a license. If that was the case, what licensee-level work earned the commission? The opinion notes that GSA opted to deal with some matters with Hoffman directly because JLL represented other landlords competing for the NSF tenant.
Judge Trenga found that Virginia law required Turowski to hold a license to work under JLL’s agreement with the Hoffman Family. Since he did not, the Court denied JLL’s request for any portion of the commission. The Court observed that a realtor agreement between an unlicensed agent and a client is void. JLL did have a broker’s license and Hoffman’s contract was with JLL. However, Virginia law does not allow brokers to use unlicensed employees as sales persons. The Court decided that JLL’s use of Turowski voided its commission. Even if a listing agreement is valid at the time it was signed, if the brokerage performs under it through an unlicensed salesperson, that performance violates public policy and voids the commission.
The opinion does not discuss whether any other JLL personnel worked on the Hoffman account. I wonder whether JLL would have received a monetary award if licensed sales persons performed some of the work? Perhaps the outcome would have been less harsh if Turowski was not the leader?
Could a licensed real estate sales persons have achieved a greater result for Hoffman? The opinion does not discuss specific damages that arose out of JLL’s failure to use licensed sales persons in performance of the agreement. The underlying agreement was not per se void. In the end, Hoffman got a $330 million lease negotiated by an (unlicensed) agent with deep familiarity with the agency he negotiated with. Unless the verdict is disturbed on appeal, Hoffman does not have to pay anything except its attorney’s fees defending this suit.
Daniel Sernovitz of the Washington Business Journal observes that this litigation gave both the developer and the broker black eyes. Sernovitz points out that JLL’s lawsuit cast a cloud over the project. The possibility of reversal on appeal keeps a shadow of doubt on whether Hoffman will have an extra $6.6 million to help finance the next phase in the development. Lastly, the Hoffman-JLL relationship was mutually beneficial prior to this fee dispute. JLL’s relationships could procure additional tenants. Hoffman may have to rely upon other brokerages moving forward.
Do you think that use of an unlicensed real estate agent presents the same risk to residential brokers?
case cite: Jones Lang LaSalle Americas, Inc. v. Hoffman Family, LLC, No. 1:13-cv-01011-AJT, 2014 WestLaw 1365793 (E.D. Va. Apr. 4, 2014)(Trenga, J.).
April 10, 2014
Landlord Strategies for Avoiding Security Deposit Disputes
The departure of a tenant leaves the landlord with long to-do list, including listing the property for rent, evaluating applicants, repairing or remodeling the property and preparing a new lease agreement. Wrapping-up the relationship with the previous tenant can inadvertently fall to the bottom of the list of priorities. A lawsuit over the prior tenant’s security deposit can create a big distraction to the landlord after the old tenant leaves and the new one moves in. Proving damages can be a time intensive activity. Fortunately, many of these disputes are avoidable. This blog post explores seven strategies landlords may employ to avoid tenant security deposit disputes.
1. Use a Lease Appropriate to the Jurisdiction and the Property:
In urban areas of Virginia, landlords leasing out 4 or more properties must follow the Virginia Residential Landlord & Tenant Act (“VRLTA”). Similarly, District of Columbia landlords must follow the D.C. Housing Code. These sets of rules contain different provisions regarding what terms a landlord may put in a lease. They also show how the courts would interpret the lease. If the property is a condominium unit, the community will have rules and regulations governing leases in the development. Confusion is fertile grounds for conflict. Wise landlords use lease agreements adapted to their jurisdiction’s laws and the property unique situation.
2. Calculate Realtor Commissions and Routine Repairs into the Rent:
When the tenant moves out, the landlord may need a realtor to promptly market the property to a good replacement tenant. The realtor will require a commission on the rental. Even with fastidious tenants, features of the property will wear out with the passage of time. Most landlords want the property to “pay for itself” out of funds from tenants. During a transition, the previous tenant’s security deposit appears as low-hanging fruit. However, the landlord’s interests are best served by having the property pay for these expenses over the term of the lease out of ordinary rent. Landlords should account for more than mortgage payments, insurance, association fees and real estate taxes in the rent. The decision to rent the property requires a full cost analysis in addition to review of what the market will bear. The security deposit is for damage that exceeds ordinary wear over the period of the tenancy.
3. Conduct an Inspection of the Property Prior to the Tenant’s Move-In:
If the landlord and tenant end up litigating over the security deposit, the Court will hear evidence of the difference in the condition of the property between the move-in and the move-out. Whenever a property is in transition or dispute, a thorough, documented inspection is invaluable. I have previously blogged about property inspections in my “Navigating the Walk Through” post series. Before the tenant moves in, the landlord should conduct an inspection, take photos and provide a simple report to the tenant. The VRLTA requires the landlord to provide the tenant with a move-in inspection report. This can save the landlord tremendous time later on.
4. Provide the Tenant Notice and Inspect the Property Again at the End:
Both the VRLTA and the D.C. Housing Code require landlords to provide tenants notice of the final inspection. The close-out inspection should be conducted within three days of when the tenant returns possession. This requires the landlord and his agent to focus on the departing tenant, new renter, realtors and contractors simultaneously. Some inexperienced landlords put off focusing on the previous tenant’s security deposit until after any renovations are done and the new tenant is in. Savvy landlords recognize the significance of the condition of the premises at the time the previous tenant departs. After the property has been renovated and the new tenant has moved in, the condition of the property cannot be documented post-hoc.
5. Retain and Store Damaged Fixtures Replaced Between Tenants:
When contractors replace fixtures in a rental property, usually they throw the replaced ones away to clean the job site. If the landlord intends to deduct those damaged fixture from the security deposit for damaged fixtures, he should consider retaining them as real evidence. Some damages don’t photograph well. If the tenant later complains about the deduction, the landlord can then offer to let the tenant inspect the physical items. A tenant will think twice about filing suit knowing that the landlord will bring the disputed fixtures to court. Few landlords do this. Even if they tell the contractor, the manager may not remind the employees accustomed to cleaning up the site. This requires extra attention to detail, but may be convenient to some landlords. Some bulky or fragile items may not be suitable as trial exhibits.
6. Provide an Itemized List of Deductions Supported by the Inspection:
Under the VRLTA and the D.C. Housing Code, the landlord has 45 days to provide the tenant with the security deposit refund and the written list of deductions. If the tenant disputes the list, the landlord may desire to later add additional items not included on the list to aggressively respond to the lawsuit. However, the Court may deem any items not listed as waived. The deductions included on the list should be those supported by the final inspection documentation. Note that the landlord cannot deduct for ordinary wear and tear. The definition of “ordinary wear and tear” is flexible. I like to understand it as normal depreciation over the life of the item’s normal use. If any refund is made, the tenant may be entitled to interest.
7. Provide Strong Customer Service:
Whether a landlord is renting out a room to a summer intern or leasing a single family home for a year to a large family, he owes it to himself (and the tenants) to manage the property like a business, including a commitment to strong customer service. A happy tenant can save a landlord a realtor’s commission by referring a new tenant. Where the realtor may also get referrals by establishing rapport with the departing tenant.
Can you think of any other strategies for landlords to prevent or resolve legal disputes with departing tenants?
photo credit: Jem Yoshioka via photopin cc
April 3, 2014
Commercial Leasing: New Developments in Acceleration of Rents
How much unpaid rent can a landlord of a commercial property collect against a tenant who has fallen into default? Arlington attorney John G. Kelly explored this issue in his blog post, Acceleration of Rents: Part 1, How to Ensure It’s Enforceable? Acceleration of Rents provisions typically give the landlord the right, after default by the tenant, to demand the entire balance of the unpaid rent under the lease paid in one lump sum. Without such a term, a Virginia landlord is only entitled to possession of the premises or to collect each rent payment as they become due. The landlord has no duty to mitigate his damages by re-letting the premises unless such is required by the terms of the lease. Kelly’s post shows that although this is a significant issue, there haven’t been many Virginia case opinions guiding landlords, tenants and their advisors. Kelly discusses a 1996 Virginia Circuit Court opinion that acceleration of rents provisions are enforceable unless they constitute a “penalty.” This reflects a concern that a landlord may be unjustly enriched if it receives accelerated rents under the defaulted lease and rents from a new tenant for the same premises. In the country there is an expression, “Pigs get fat, hogs get slaughtered.” As we will see, this principle may carry weight even when there is no affirmative duty to mitigate damages.
In September 2013, a new federal court opinion illustrated how acceleration of rents provisions may be enforced against tenants. A Federal Judge sitting in Lynchburg, Virginia awarded accelerated rents as damages arising from default of a lease of a nursing home property. Landlord Elderberry owned a 90-bed nursing facility in Weber City in Southwest Virginia. Elderberry rented it to ContiniumCare of Weber City, LLC to operate the nursing home. Continium continued to pay rent until March 2012. Three months later, the Virginia Department of Health & Human Services terminated the nursing home’s Medicaid Provider Agreement. Elderberry terminated the lease by letter in August 2012. Continium then vacated the premises. The property required substantial repairs and renovations for further use as a Medicaid facility. In January 2013, Elderberry re-let the premises to Nova, a new nursing home tenant.
The parties litigated this case heavily through extensive motions practice, discovery and a multi-day trial. Today’s blog post focuses on the Court’s interpretation of the acceleration clause provisions in the nursing home lease. The tenant asserted that the acceleration of rent provision was not enforceable because it constituted an impermissible “penalty” above and beyond fair compensation for actual damages.
Elderberry did not have a legal obligation to mitigate its damages. The landlord nonetheless gave the tenant credit for rents already collected from the new tenant and scheduled to be paid in the future for the term of the prior tenant’s lease. In addition to other damages, the Federal District Court awarded Elderberry $278,228.58 in unpaid rent up until the replacement tenant began paying rent and $125,857.04 in shortfall between the two leases. The court observed that the landlord’s efforts to invest its own funds into repairing and remodeling the premises mitigated tenants’ damages and returned it to functional use to Medicaid patients faster.
To secure a new lease, the landlord provided to the new tenant $588,708.60 in working capital above and beyond renovations and replacement furnishings invested in the premises by Elderberry. The defaulting tenants complained that Elderberry would receive a windfall if awarded both this working capital and the rent shortfalls. The Court observed that the landlord is entitled to rent increases under the new lease based on the amount of working capital provided. However, the shortfall is adjusted accordingly to prevent any windfall. The Court found the working capital to be a necessary incentive to a new tenant to take over the space and begin making rent payments mitigating the damages.
Retail leasing attorney Ira Meislik observes in his blog that the modern trend is for courts to interpret leases less like land conveyances and increasingly like commercial contracts. See his 2012 post, How Much Can a Landlord Collect from an Evicted Tenant? Elderberry illustrates how even in “land conveyance” states like Virginia, reasonable efforts to mitigate damages can facilitate the collection of the balance of accelerated rents. Avoiding unnecessary windfalls is a principle that underlies both mitigation of damages and the prohibition against penalty provisions in leases. In this case, the landlord re-let the premises before trial but after filing suit against the tenants. Like in many cases, the facts continued to develop after the lawsuit began. By adjusting their trial strategy to give a re-letting credit, Elderberry avoided asking for damages that tenants could easily argue were a windfall and hence a penalty. It is not clear whether Elderberry will actually collect all or even some of this judgment, but they did avoid getting “slaughtered” at trial.
The Defendants appealed the Western District of Virginia’s award of damages, and as of this blog post the Elderberry case is now on appeal before the U.S. Court of Appeals for the Fourth Circuit.
photo credit: pcopros via photopin cc (photo of a Lodge in Scott County, Virginia [same county where Weber City is situated]. Does not depict premises discussed in blog post)
January 13, 2014
Reel Property: Hitchcock’s Skin Game
A working-class family is wrongfully evicted from their rental homes and may lose their jobs. A neighboring landowner and his shrewd agent try to stop the sharp-dealing landlord from destroying property values with industrial air pollution. Can they successfully escalate conflict without unintended fallout?
This is the subject of Alfred Hitchcock’s early film, “The Skin Game” (1931). The Skin Game is based on a play by John Galsworthy, a British lawyer who found a second career as a writer. Mr. Hillcrist (C.V. France) is an old-money landowner at odds with Mr. Hornblower (Edmund Gwenn), a nouveau-riche industrialist. Hillcrist objects to Hornblower’s purchase of neighboring pristine countryside for the construction of new smoke-belching factories. The two battle over competing visions for the Deepwater community in a series of increasingly sharp business practices. The Hillcrests’ agent, Mr. Dawker (Edward Chapman) plays an easily overlooked role in this dark comedy.
Jocelyn Codner observes in her blog, The Hitchcock Haul, that The Skin Game speaks to contemporary controversies surrounding land use, fracking and class warfare. Contemporary audiences may identify with the film in additional ways. The Skin Game’s audience remembers the horrors of global war. Worldwide recession brought high unemployment. Fear and desperation hide in the film’s shadowy scenes. These emotions unfold in total war between the neighboring landowners with tragic, unintended consequences. Tenants’ and neighbors’ rights versus job creation.
The aggressive business practices in the movie are frequent, rash and ill-considered. I found myself counting all of the legal claims and defenses that could potentially be brought in Court (this post makes no effort to interpret the facts under 1931 British law). Spoilers follow, but they are 83 years in the making!
- Violation of Covenants. In order to build new factories, Mr. Hornblower violated a covenant he made to Hillcrist when he turned out long-standing residential tenants. In Virginia, that would likely unfold as a contested unlawful detainer (eviction) action. Since the parties did not end up in Court, I assume that the Hillcrists failed to make the covenant legally enforceable.
- Bid Rigging. A mutually coveted parcel of land goes to a public auction. Ominously, the auction house’s lawyer reads the conditions of sale so softly that only the front row can hear. The Hornblowers and Hillcrists bid in concert with their own secret bidding agents to confuse their opponent and hike the price. Hornblower wins. Hitchcock uses quick camera work and multiple angles to build suspense and simulate confusion.
- Fraud. Hornblower’s daughter-in-law Chloe (Phyllis Konstam) has a secret past that includes employment by men to help them secure divorces premised upon adultery. This doesn’t come up much in the era of non-fault divorce, but giving false testimony for hire is sanctionable.
- Conspiracy. The Hillcrists’ estate agent, Mr. Dawker discovers Chloe’s past from her former client. Mrs. Hillcrist and Mr. Dawker decide to use the secret to extort Mr. Hornblower into selling them the contested parcel at a loss. The parties anticipated that disclosure of the secret would destroy Chloe’s marriage with the young Hornblower. The consideration of a sale from Hornblower to Hillcrist consisted of both (a) a written contract for cash and (b) a secret unwritten agreement not to reveal Chloe’s past.
- Breach of Contract: Upon pressure by the young Hornblower, Mr. Dawker violates the secret unwritten non-disclosure agreement and likely his fiduciary duties to the Hillcrists.
- Professionalism. In contemporary transactions, one would expect Mr. Dawker to be a licensed real estate agent. His role in the bid rigging and the conspiracy would potentially expose him to disciplinary action by the Real Estate Board.
- Assault. In a fit of rage, Mr. Hornblower throws his hands on Mr. Hillcrist’s neck.
- Defense of Unclean Hands: Although the evicted tenants temporarily get their cottage back, this victory falls flat because of the greater tragedy which brings Mr. Hillcrist remorse. Unclean hands foul the initial nobility of their cause.
Was there a moment when a more trusted advisor, be it a realtor, attorney, or friend, could have helped Hillcrest settle the dispute? The loud passions of the warring families obscure Mr. Dawker’s fateful role as agent in the “Skin Game.” In the final scene, loggers chop down one of the Hillcrists’ oldest trees. What goes around, comes around.
December 31, 2013
Can My Landlord Evict My Business Without Going to Court First? – Part I
Part I – Landlord Self Help in Virginia
Suppose a company leases commercial property to run its business. Due to economic conditions, the tenant struggles to pay rent. The landlord has declared the tenant in default, or is threatening to do so. One of the remedies asserted by the landlord is “self-help” such as changing the locks and removing the business’ property from the premises. Can the landlord do that? What strategies and considerations are available to the tenant in such a situation?
When a tenant of a commercial property falls into default under the lease, or such default is imminent, knowing what options the landlord has moving forward is essential. The tenant making present use of the leased premises needs to know the landlord’s potential legal remedies so it can craft its own plan for the immediate future and to provide a framework for negotiations. In Virginia, and other jurisdictions where landlord self-help is permitted, threats such as changing the locks or otherwise barring the tenant from re-entry, removal of the property from the premises and placing it elsewhere may be the most urgent concern to a struggling commercial tenant. Understanding the respective rights of the landlord and tenant are crucial to planning continuity of business operations and safeguarding company property.
In Virginia, a landlord in a residential lease has no right of self-help eviction. However, the right of self-help remains an option for non-residential leaseholds. The commercial landlord is limited to using reasonable force in taking possession of the property upon default. The landlord may not “Breach the Peace” in taking possession. In other words, confrontation threatening physical harm is not permitted. Self-help may be attractive to the landlord in order to make an urgent transition to a new tenant without having to go to Court, take the case to trial and have the sheriff come out to the property.
While the remedy of self-help is legal in Virginia in non-residential matters, there are several considerations that make landlords reluctant to pursue it. In Part II, I will discuss several reasons why landlords usually avoid trying self-help eviction.
