Monday, November 29, 2010

Avoiding the Retaliatory Eviction Defense

Ok, you have all of your ducks in a row, you have noticed your tenant, filed your complaint and had it served. Weeks have gone by and now you are finally ready to have your day in court with the hopes that you will soon be rid of a problem tenant. You put on all of your evidence and the tenant denies the claims.

No real surprises here, but then the tenant brings up that they complained to the building inspector eleven months ago. The judge or magistrate, who is just looking for a reason not to evict the tenant, finds that your real motive in the eviction was the complaint to the the building inspector and rules against you. You are left wondering what just happened, and should they have at least bought you a drink first?

To avoid this happening you need to become familiar with the Retaliatory Eviction Defense that can be found under Section 4A of the Landlord Tenant Act at N.C.G.S. 42-37.1.

First off, what is prohibited?

Seeking to evict a tenant for engaging in the following protected activities:
(1) A good faith complaint or request for repairs to the landlord, his employee, or his agent about conditions or defects in the premises that the landlord is obligated to repair under G.S. 42-42 (we addressed NCGS 42-42 in an earlier post);
(2) A good faith complaint to a government agency about a landlord's alleged violation of any health or safety law, or any regulation, code, ordinance, or State or federal law that regulates premises used for dwelling purposes;
(3) A government authority's issuance of a formal complaint to a landlord concerning premises rented by a tenant;
(4) A good faith attempt to exercise, secure or enforce any rights existing under a valid lease or rental agreement or under State or federal law; or
(5) A good faith attempt to organize, join, or become otherwise involved with, any organization promoting or enforcing tenants' rights.

How long can a tenant raise this defense?

A tenant may present evidence that the landlord's action is substantially in response to the occurrence within 12 months of the filing.

Surely, a tenant can't get away with not paying the rent and use Retaliatory Eviction as an excuse!

This is the good news. The act provides that a landlord may prevail in an action for summary ejectment if:
(1) The tenant breached the covenant to pay rent or any other substantial covenant of the lease for which the tenant may be evicted, and such breach is the reason for the eviction; or
(2) In a case of a tenancy for a definite period of time where the tenant has no option to renew the lease, the tenant holds over after expiration of the term; or
(3) The violation of G.S. 42-42 complained of was caused primarily by the willful or negligent conduct of the tenant, member of the tenant's household, or their guests or invitees; or
(4) Compliance with the applicable building or housing code requires demolition or major alteration or remodeling that cannot be accomplished without completely displacing the tenant's household; or
(5) The landlord seeks to recover possession on the basis of a good faith notice to quit the premises, which notice was delivered prior to the occurrence of any of the activities protected by subsections (a) and (b) of this section; or
(6) The landlord seeks in good faith to recover possession at the end of the tenant's term for use as the landlord's own abode, to demolish or make major alterations or remodeling of the dwelling unit in a manner that requires the complete displacement of the tenant's household, or to terminate for at least six months the use of the property as a rental dwelling unit.

What if the Court agrees with the tenant that the eviction is retaliatory?

If the court finds that an ejectment action is retaliatory it shall deny the request for ejectment; provided, that a dismissal of the request for ejectment shall not prevent the landlord from receiving payments for rent due or any other appropriate judgment.

Additionally, the rights and remedies created by the Act are supplementary to all existing common law and statutory rights and remedies. Which means that if the tenant can find any reason at all they will probably try to bring an Unfair and Deceptive Trade Practices Act (UDTPA claim against you. We will be discussing the UDTPA in a post shortly.

What if my lease states that the tenant waives the Retaliatory Eviction Defense?

Too bad. In case you thought that you could do an end run around this law by putting a waiver of this defense in your lease, the legislature made a special point of prohibiting the waiving of this defense.

Knowledge is power, and in the case of property management it can save you a lot of money too.

Happy landlording!

Wednesday, November 10, 2010

North Carolina Landlord Responsibilities

What are a landlord's responsibilities with respect to the rental premises?

The first place you should look is your lease. A properly drafted lease will clarify who is responsible for what, and not place too many unnecessary responsibilities on the landlord.

The next place you will want to looks is
N.C.G.S. 42-42
Hopefully, this statute was taken into account when your lease was drafted. 42-42 provides most of the answers about what is required of a landlord and provides that a landlord shall:

(1) Comply with the current applicable building and housing codes.

(2) Make all repairs necessary to put and keep the premises in a fit and habitable condition.

(3) Keep all common areas of the premises in safe condition.

(4) Maintain in good and safe working order and promptly repair all electrical, plumbing, sanitary, heating, ventilating, air conditioning, and other facilities and appliances supplied or required to be supplied by the landlord provided that notification of needed repairs is made to the landlord in writing by the tenant, except in emergency situations.

(5) Provide operable smoke detectors, either battery‑operated or electrical, having an Underwriters' Laboratories, Inc. The landlord shall ensure that a smoke detector is operable and in good repair at the beginning of each tenancy. Unless the landlord and the tenant have a written agreement to the contrary, the landlord shall place new batteries in a battery‑operated smoke detector at the beginning of a tenancy and the tenant shall replace the batteries as needed during the tenancy. Failure of the tenant to replace the batteries as needed shall not be considered as negligence on the part of the tenant or the landlord.

(6) If the landlord is charging for the cost of providing water or sewer service and has actual knowledge from either the supplying water system or other reliable source that water being supplied to tenants within the landlord's property exceeds a maximum contaminant level, provide notice that water being supplied exceeds a maximum contaminant level.

(7) Provide a minimum of one operable carbon monoxide detector per rental unit per level, either battery‑operated or electrical. The landlord shall replace or repair the carbon monoxide detectors within 15 days of receipt of notification if the landlord is notified of needed replacement or repairs in writing by the tenant. The landlord shall ensure that a carbon monoxide detector is operable and in good repair at the beginning of each tenancy. Unless the landlord and the tenant have a written agreement to the contrary, the landlord shall place new batteries in a battery‑operated carbon monoxide detector at the beginning of a tenancy, and the tenant shall replace the batteries as needed during the tenancy. This subdivision applies only to dwelling units having a fossil‑fuel burning heater or appliance, fireplace, or an attached garage.

(8) Within a reasonable period of time based upon the severity of the condition, repair or remedy any imminently dangerous condition on the premises after acquiring actual knowledge or receiving notice of the condition. Notwithstanding the landlord's repair or remedy of any imminently dangerous condition, the landlord may recover from the tenant the actual and reasonable costs of repairs that are the fault of the tenant. For purposes of this subdivision, the term "imminently dangerous condition" means any of the following:

a. Unsafe wiring.
b. Unsafe flooring or steps.
c. Unsafe ceilings or roofs.
d. Unsafe chimneys or flues.
e. Lack of potable water.
f. Lack of operable locks on all doors leading to the outside.
g. Broken windows or lack of operable locks on all windows on the ground level.
h. Lack of operable heating facilities capable of heating living areas to 65 degrees Fahrenheit when it is 20 degrees Fahrenheit outside from November 1 through March 31.
i. Lack of an operable toilet.
j. Lack of an operable bathtub or shower.
k. Rat infestation as a result of defects in the structure that make the premises not impervious to rodents.
l. Excessive standing water, sewage, or flooding problems caused by plumbing leaks or inadequate drainage that contribute to mosquito infestation or mold.
(I excerpted the statute slightly, so for actual language click on the link to it above.)

In North Carolina several municipalities put additional responsibilities on a landlord as well as additional prohibitions, such as no pine straw within a certain proximity to the rental units.

Finally, you can look to federal laws and regulations. This is more often the case if you have tenants receiving rental assistance and is beyond the scope of this article. We will probably get to it another time though. Additionally, their maybe requirements on a landlord under certain disability protection statutes.

What if I don't fulfill my responsibilities?

If a landlord fails to comply with his duties the penalties may include fines, rent abatement, civil judgments, and in some cases criminal prosecution. However, a tenant still is not entitled to withhold rent with a judicial order.

How do I keep on top of all this?

I can't emphasize enough that careful lease drafting, as in every other facet of the landlord tenant relationship, is important in defining a landlord's responsibilities. It is best when you are starting out, and from time to time thereafter, to have your forms prepared by, or at least reviewed by, an attorney who specializes in real estate law.

Additionally, it is very important that every landlord keep abreast of any changes in laws and regulations, and the best way to do this is to get involved in real estate investors and/or apartment associations such as the Triangle Real Estate Investors Association or the Triangle Apartment Association.

Happy Landlording!

Sunday, November 7, 2010

How to Keep From Getting Beat By Your Tenants

As a landlord you can never completely guard yourself against a tenant owing you money, there are simply too many laws in the tenant's favor, however you can take steps to level the playing field.

Tenant Selection

The first step to avoid ending up with a tenant owing you money is to carefully choose that tenant. The single most important tool for finding a responsible tenant is check your prospective tenant's credit score. Job history is good, prior landlords may not be trustworthy, or possibly may not even be prior landlords at all, but credit scores are pretty objective. If you wish to accept a tenant whose score is lower than you would normally accept make sure that you get a co-signer. The better practice is to have objective criteria such as at least a credit score of 660. If you base your decision on who you rent to on objective criteria it will make it much more difficult for anyone to win a fair housing lawsuit against you.

Security Deposit

The next step is to always require the maximum security deposit that the law, and the market, will allow. In North Carolina the maximum security deposit a residential landlord can require is: (a) If the term of the tenancy is week to week, the landlord can require two weeks rent; (b) If the term of the tenancy is month to month, the landlord can require one and one-half month’s rent; or (c) If the term of the tenancy exceeds one month, the landlord can charge two months rent. See N.C.G.S. 42-51.You must require this security to be paid prior to giving your new tenant keys. I have seen kind hearted landlords get beat for unpaid rent many times by tenants who were going to send the security deposit "next week."

A Good Lease
The third step is to make sure you include necessary lease provisions allowing you to bring an eviction action immediately upon a breach of the lease, such as non-payment of rent. Evictions in the best of circumstances take several weeks from when you file. There is no reason to get stuck waiting an extra ten days because you do not have a properly drafted lease.

Lease Enforcement
You did not go through the trouble and expense of getting a good lease just to hide it in a folder. File on you tenant as soon as they are late, and make sure if they are going to stay they reimburse you for your fees and costs surrounding the filing. Also, make sure you require that late fees be paid. Make it in the tenant's best interest that they pay you timely.

The Paperwork
Keep a file on each tenant with their application and require that they update the application when any information changes. Additionally, if your tenant pays by check keep copies of the checks at regular intervals so that you know where your tenant banks. This information will be invaluable if you have to sue your tenant for unpaid rent, and you wish to collect on the judgment.

The Human Touch
Finally, you or your property manager should try to keep on friendly terms with your tenant(s) so that you will know when there are any changes in their lives that might render them unable to pay rent. Problems with tenants are much easier to deal with if you catch them early.

As always, if any of the readers have suggestions I am always open to new ideas. Feel free to comment or send me a personal e-mail.
Happy Landlording!

Legal Disclaimer

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Nothing in this blog shall create an attorney-client relationship. The opinions expressed herein are those of the blogger and not of the PRAET LAW FIRM, PLLC.