Advice to Residential Landlords in a Global Recession
Understanding Liability Issues Is a Must to Avoid Costly Mistakes
With the economy entrenched in a deep global recession, people across the economic spectrum are looking for ways to minimize expenses. Because the housing market was particularly hard-hit, there appears to be an unprecedented number of new landlords joining the ranks of seasoned investment-property owners renting to tenants.
Many of these new landlords are unable to either pay the mortgage or sell their property and are, therefore, forced to rent the property to raise some much-needed capital. For existing residential landlords, decreasing rents or income may be affecting the bottom line on the investment. Both groups, however, may be looking for ways to shave costs and raise or increase the income from properties and, in doing so, choosing to ignore some basic upkeep to their properties. This decision may prove more costly, however, in increased insurance premiums, more expensive renovations caused by delayed upkeep, and liability for injuries to people on the property.
From a liability standpoint, a recent decision by the Massachusetts Supreme Judicial Court (SJC) may give property owners pause, as the court extended another claim for liability to non-tenants. In the case of Scott v. Garfield, the SJC recognized that a claim for breach of the implied warranty of habitability could be brought not only by persons leasing and living on the property, but by lawful visitors who suffer personal injuries caused by such a breach.
As the court explained, the implied warranty of habitability is a multifaceted legal concept that encompasses contract and tort principals, as well as the State Building and Sanitary Codes. Although the warranty itself arises from the residential leasing contract between landlord and tenant, [the Court] has imposed a legal duty on the landlord, in the form of an implied agreement, to ensure that the dwelling complies with the State Building and Sanitary Codes throughout the term of the lease.
Traditionally, this implied warranty was based in part on the contract between the landlord and tenant and in part on the recognition that a tenant may recover tort damages for personal injuries caused by a breach of this implied warranty. The SJC decided to extend a claim for breach of the implied warranty of habitability to lawful visitors because of the expectation that a tenant might invite a guest into his home, and the concomitant expectation that the tenants home must be safe for a guest to visit which together go to the very heart of the landlords contractual obligation to deliver and maintain habitable premises that comply with the Building and Sanitary Codes.
Indeed, the SJC cited the State Sanitary Code as a document whose purpose is to provide minimum standards of fitness for human habitation to protect the health, safety, and well-being of the occupants of the housing and of the general public. This implied warranty would also extend to any area of the rented unit that must comply with the minimum standards prescribed by Building and Sanitary Codes. In Scott v. Garfield, the landlord could be liable to a lawful visitor who was injured by a defective porch railing.
This decision comes in advance of another potential decision of importance from the SJC in the case of Papadopoulos v. Target Corp., a case that addresses a property owners liability due to a slip and fall on snow or ice. The key issue in that case is whether to maintain the distinction between natural and unnatural accumulations of snow and ice when determining the liability of a property owner. While the duty owed by a property owner to someone lawfully on the premises is one of reasonable care in the circumstances, currently the law provides that this duty is not violated by a failure to remove a natural accumulation of snow or ice.
While seemingly a clear-cut rule, courts have developed several nuances when defining the distinction between a natural and unnatural accumulation of snow or ice. Therefore, there are scores of cases discussing tire marks and ruts, trampled snow, a property owners efforts to clear snow or ice, and what activity could morph a natural accumulation into an unnatural accumulation of snow or ice. For example, where snow or ice is cleared into a pile that subsequently melts on to a sidewalk and refreezes, that refrozen surface is considered a natural accumulation. It is also unclear from the law as to what is considered clearing property and what falls short.
Indeed, in the lower courts decision of Papadopoulos case, the court engaged in this strange analysis and found that, whether the piece of ice fell from the snow pile on the median strip or melted and refroze, it constituted a natural accumulation of ice. The presence of dirt on the ice does not alter our analysis.
Evidence had shown that the parking lot where the injury occurred had been plowed, and to the left of the plaintiffs car was a raised median strip with snow piled on it. The piece of ice had either fallen off the snow pile or was created by runoff from the pile. The court, in coming to its decision, noted that the presence of dirt, without more, is of slight, if any, prohibitive value in determining how long ice, water, or other substance has been in a particular spot. This sort of language shows the remarkable intricacies that exist in examining liability in a snow-and-ice claim.
The Connecticut standard for such cases is less complicated and has been adopted by several neighboring New England states. The Connecticut rule provides that a property owner has a duty to exercise reasonable diligence in removing dangerous accumulations of snow and ice, thereby removing the distinction between unnatural and natural accumulations.
That said, the courts applying this rule have instructed that property owners can wait until the end of the storm and a reasonable time thereafter before removing ice and snow from outside walks and steps, explaining that to require a landlord or other inviter to keep walks and steps clear of dangerous accumulations of ice, sleet, or snow or to spread sand or ashes while a storm continues is inexpedient and impractical.
The effect of any change in this case law could require plaintiffs or landlords and other property owners to be more diligent about snow and take measures to ensure that all accumulations are addressed following any storm; that may include inspecting the property even after the snow or ice is initially removed. This could also include addressing the freezing, thawing, and refreezing process that naturally occurs throughout the winter.
From a practical viewpoint, landlords should institute some very basic safeguards. First, conduct inspections of the property on a regular basis. While using a trained professional is favored, the context of this article is the global recession. As such, property owners should use their common sense: walk or inspect the property, and give it a good eye and shake test. If something is missing, moves, or presents a danger, remedy it by fixing it or hiring someone to fix it. Also, be sure to document these inspections. With the proliferation of computers, all landlords should have access to software that allows for word processing (for creating formal letters) and spreadsheets (for creating records of events).
Second, provide tenants with a mechanism for reporting problems, and, where possible, build in redundancies (such as providing phone numbers and e-mail addresses). Liability often rests on notice; therefore, the first defense to a claim is that the property owner did not have knowledge of the defect. Also, once the tenant has communicated a concern, be sure to acknowledge it and take action on that concern.
Providing open communication lines and keeping these records will also be important if the owner must evict the tenant. Under Massachusetts law, a tenant being evicted through the judicial process has the ability to counterclaim against the landlord. These counterclaims can include allegations that the propertys condition breached the implied warranty of habitability or that the property owners conduct is actionable. In these cases, the property owners ability to evict the tenant may be barred, and he can even be forced to pay the tenant. By taking the actions outlined in this article, some of these potential counterclaims can be avoided by diligence and documentation.
Finally, plan ahead, and be sure to set aside some funds for emergency purposes. Issues will inevitably occur with any property; therefore, property owners should have access to funds to at least remediate the issue.
While these changes to the law, notwithstanding the area of landlord-tenant law in general, may chill ones desire to be a landlord, the upside can be extremely positive with some diligence and common sense.
Jeff Trapani is an associate at Robinson Donovan, P.C. where he litigates a wide variety of civil cases;[email protected]