August 15, 2016
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.
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).
April 10, 2014
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?