Sunday, April 17, 2011

LANDLORDS BEWARE THE NORTH CAROLINA UNFAIR AND DECEPTIVE TRADE PRACTICES ACT!!!

The Unfair and Deceptive Trade Practices Act (UDTPA) as it relates to landlords is one of the biggest areas of potential liability for North Carolina landlords.

What is the Unfair & Deceptive Trade Practices Act?

The Unfair & Deceptive Trade Practices Act is kind of like the legal equivalent of a Swiss Army Knife for going after a business. It can be used for just about anything. The UDTPA declares unlawful “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”

If we were to break it up it goes kind of like this:

(1) An unfair or deceptive act or practice;
(2) In or affecting commerce; which
(3) Proximately caused actual injury to the claimant or his business

Additionally, if you want to read the actual language of the UDTPA it begins at N.C.G.S. 75-1.


What does this have to do with being a landlord?


Sadly, the answer is plenty. The NC Court of Appeals has held that “Residential rental agreements fall within Chapter 75 because ‘the rental of residential housing is’ considered commerce pursuant to N.C. Gen.Stat. § 75-1.1.” Incidentally, the Act affects commercial landlords too.

Actions or inactions within the landlord-tenant relationship that may violate the UDTPA include:

1. Failing to maintain rental property in a “fully” habitable condition and continuing to demand rent. The North Carolina Appellate Court has held that collecting rent after having knowledge of the uninhabitable nature of part of a rental unit (water leaking in one of the bedrooms and the living room) constituted unfair trade practices and was thus a violation. The actual amount of “uninhabitability” of the premises that will trigger a UDTPA violation will be a fact sensitive question for each individual case;
2. Attempting to force a tenant out without filing for eviction by cutting off water and electricity to the rental unit (this is also a violation of the Ejectment of Residential Tenants Act);
3. Renting a property that you only have an option to purchase; and
4. Attempting to collect money you are not entitled to, or using means prohibited by the North Carolina Debt Collections Act.

Hopefully if you are smart enough to read this article you would not even think of doing anything that would violate numbers 2 and 3 above. These should be big red flags.

With respect to paragraph 4, you need to be familiar with at least the North Carolina Debt Collection Practice Act, N.C.G.S. 42-46 (which regulates the amount of late fees and court appearance fees), and your lease.

Paragraph number 1, regarding habitability issues, is a little more tricky and will require that you are familiar with N.C.G.S. 42-42 (which addresses a landlord’s responsibility to provide fit premises), your lease, any other local, federal, or state regulations that may apply to your rental unit, and most importantly common sense.

What if you didn’t mean to do anything wrong?


Unfortunately, the answer is: Too Bad. The North Carolina courts have held that the intent of the defendant is irrelevant, even if he is acting in good faith.

Ok, so we know what the act is, why is it so scary?

The UDTPA provides for mandatory recovery of treble damages if the court finds a violation of the statute. Additionally, if facts also support recovery for punitive damages, the plaintiff may allege both, but the recovery is limited to one or the other. Further, the court may award reasonable attorney’s fees to the attorney representing the prevailing party when the losing party willfully engaged in the unfair practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit.

If you have any questions or comments feel free to post or send me an e-mail.

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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.