When ‘carelessness’ justifies lease termination

Rent it Right

Janet Portman
Inman News™

Q: Our landlord deducted several hundred dollars from our security deposit after he saw the damage that resulted when we left a window open during a rainstorm (the rain damaged a hardwood floor and soaked a wall). We replenished the deposit as asked — then he gave us a termination notice! Can he do that? –Wes V.

A: I can understand your consternation over what’s happened. You made a mistake, paid for it, and promptly topped off the security deposit. But then you were given the boot.

If you have a lease (as opposed to a monthly rental agreement), the landlord can terminate midlease only for an allowable reason, and not for discriminatory or retaliatory reasons.

Now, it seems you have been somewhat careless with the property, resulting in damage; but that carelessness was not extreme, and the damage appears to have been both fixable and fixed.

In other words, you have not committed “waste,” a legal term that refers to extreme damage, both in how it’s caused (often involving gross carelessness or even intentional acts) and its extent. A claim of “waste,” if the landlord can prove it, will usually support a lease termination. Mere carelessness, however, doesn’t qualify.

If you have a month-to-month agreement, however, you are not protected from “no fault” terminations. Those terminations give the tenant longer to leave (typically 30 days), but don’t require the landlord to give a reason, though again, the reason can’t be discriminatory or retaliatory.

But in most states, alas, even careless damage to the property would qualify as an allowable reason. You might be out of luck if you’re in this situation.

Tenants in West Virginia, however, may soon enjoy some protection from terminations that are based on deductions from their security deposits. According to SB 545, a “landlord who makes any deductions from the tenant’s security deposit … may not use the circumstances related to the deduction as a basis for the termination of the tenancy.”

In my experience, that’s a unique protection, and would prevent a landlord in your situation from terminating you. It would even, arguably, prevent a landlord from terminating due to waste.

The West Virginia bill, which will give the state its first security deposit law, has another interesting and groundbreaking wrinkle. For up to a year after the tenancy ends, landlords must maintain and itemize records for each tenant of all midterm deductions from security deposits; and tenants or their attorneys have the right to inspect these records upon 72 hours’ notice.

This will make it far easier for a tenant to challenge any deductions in a small claims court lawsuit, because tenants won’t have to make use of “discovery,” a legal and often laborious process that parties in a lawsuit use to unearth each others’ records.

Q: The home we’ve been renting was foreclosed when the owner, our landlord, stopped making his mortgage payments. The bank held a sale, and a guy and his wife bought it. They told us they intended to move in and gave us a 90-day notice (we still had six months left on our lease). We moved out, but have learned from the neighbors that the place remained vacant, and has just been rented out! What recourse do we have? –Molly and John D.

A: Your predicament illustrates both the blessings of a relatively new law that gives tenants some protections in foreclosure situations, and its limitations.

Since May 2009, tenants have had the benefit of the federal Protecting Tenants in Foreclosure Act of 2009. Only one page long, the act revolutionized hundreds of years of landlord-tenant law in this respect: Formerly, leases that were signed after a mortgage was recorded would not survive a foreclosure.

Because most mortgages were older than most leases, tenants could be asked to leave with very little notice. But courtesy of the act, leases signed after the mortgage was recorded now survive foreclosure, as long as they were signed “before the notice of foreclosure” (the date title is transferred to the new owner).

The act includes some exceptions, however. The one that’s pertinent to you specifies that if a natural person or people (in other words, not a corporation or other business entity) bought the property at the bank sale and intend to live there, that person could oust the tenant with 90 days’ notice.

Unfortunately, the act did not include a mechanism for establishing how to prove the new owners’ intent, let alone any consequences should the new owners fail to move in.

It would have been nice, for example, to require purchasers to submit a sworn declaration stating their intentions; and for the law to provide for consequences should they renege (for example, they could be on the hook for the tenant’s relocation expenses, plus any differential in rent, if replacement housing was more expensive).

A sworn statement would also give the new owners a place to explain any intentions to perform remodeling or renovations, which would shield them from liability for failing to move in immediately.

You’re reporting a situation that involved not delayed occupancy, but no occupancy at all. The new buyers may have genuinely planned to move in and changed their minds, or they may have lied to you, planning all along to rerent at a higher rate. You won’t know until you ask, and they’re not likely to tell you unless they’re forced to in a lawsuit.

You’ll need the help of a lawyer if you want to go after these folks. Your state’s laws may give you more detailed protection than the federal law. And the federal law’s failure to list specific consequences for noncompliance won’t necessarily stop an imaginative lawyer from coming up with a theory (perhaps fraud) on which to hang a lawsuit.

Before hightailing it off to the nearest lawyer, however, think for a moment about how having to move has affected you financially. How much could you ask for in damages? Besides moving expenses, did you end up with a higher rent, in a less desirable neighborhood? How disruptive was the move in terms of schooling, your commute, and so on?

Even if the damages are not particularly high, you may get a judge to award punitive damages, which are assessed when a defendant’s behavior was particularly egregious. But that will likely happen only if the owners were scheming all along. If they simply changed their minds, punishment may not be in order.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.

Copyright 2011 Janet Portman