CREJ - Property Management Quarterly - July 2016
I will never forget the first time I heard a tenant say the dreaded words: constructive eviction. I broke out in a cold sweat, drove myself to the nearest emergency room for excessive heart palpitations and extreme nausea. The ER doctor gave me a thorough physical, and had the audacity to give me the following prescription – hire a good trial attorney and get ready for a painful trial and expenditure of lots of money for legal fees and damages. In order for us all to have a thorough understanding of the legal doctrine of constructive eviction or breach of quiet enjoyment, and to avoid painful and costly consequences, I asked Amanda Halstead to address the following key questions. Sessions: What is the covenant of quiet enjoyment? Halstead: The covenant of quiet enjoyment has two components. The first gives the tenant some assurance that she has the right to occupy a property and that she won’t be thrown off the property by someone with superior title. The second gives the tenant the right to occupy a property free from disturbances that render the property unfit for the purpose for which it was leased. Although the covenant of quiet enjoyment is implied in every lease, it can be expressly disclaimed. Most commercial leases, however, include an expressly stated right to quiet enjoyment. It should be noted that conditions accepted at the time of lease execution cannot serve as a basis for a constructive eviction. By way of example, acceptance of a leased premises in its “as is” condition could limit the bases on which a tenant may later claim constructive eviction. From a tenant perspective, a tenant should always attempt to carve out any “latent defects or the existence of any hazardous materials” from an “as is” clause. Sessions: What is a claim for constructive eviction? Halstead: A breach of the covenant of quiet enjoyment often is referred to as a constructive eviction. A breach of the covenant of quiet enjoyment occurs “when the lessor’s disturbance of the lessee’s possession renders the premises unfit for occupancy for the purposes leased or deprives the lessee of the beneficial enjoyment of the premises, causing the lessee to abandon them,” see Carder, Inc. v. Cash, 97 P.3d 174, 184. It should be noted that actual abandonment of the leased premises is not required. There must be acts or omissions of the landlord that deprive or substantially interfere with the tenant’s possession or use and enjoyment of a leased premises in order to support a claim for constructive eviction. Acts of a third party cannot serve as a basis for such a claim. Sessions: What should a tenant do if he believes he has been constructively evicted? Halstead: If a tenant believes that a condition exists on or about the property that renders the property unfit for the purposes leased, the tenant should first review his lease to determine whether the condition is one that must be remedied by the landlord or the tenant. If the condition is the landlord’s responsibility, the tenant should send a written notice, delivered in accordance with the notice provisions of the lease, identifying the condition and requesting that the landlord address the same. The inquiry into whether a tenant has been constructively evicted is very fact specific. In most cases, a successful tenant will have written multiple letters to the landlord without any meaningful action on the part of the landlord to address the condition. Sessions: What should a landlord do if he receives notice of a constructive eviction from a tenant? Halstead: If a landlord receives a notice from a tenant indicating that something needs to be addressed, the landlord should respond promptly. The landlord, like the tenant, should refer to the lease to confirm whether the condition is one that is required to be addressed by the tenant or the landlord. If the condition is the landlord’s responsibility, the landlord should send someone to evaluate and correct the problem immediately. An experienced property manager knows that keeping detailed records of the efforts made to address a tenant’s concerns can be critical to defeating a claim of constructive eviction. By way of example, if someone complains about a heating unit, a call log documenting the time the complaint was received and what efforts were made to get a contractor on site should be kept. Copies of any invoices and work orders should be maintained. Taking reasonable efforts to address a problem can be just as important as actually correcting a problem. There may be situations where a landlord is unable to get a contractor on site immediately to address a problem. For example, contractors may be inundated with work orders following a hail storm and may not be readily available. If reasonable efforts are made to address a problem and notes detailing the reason for any delay are kept, the landlord likely will be in a good position. Also, remember that tenant notices do not always use the words “constructive eviction.” In most cases, they simply will come in the form of a maintenance request or complaint. Sessions: When do constructive eviction claims usually arise? Halstead: Constructive eviction claims are asserted most often as a defense to a landlord’s claim against a tenant for the nonpayment of rent. Most commercial leases include language indicating that rents are due without notice, demand, offset or deduction. This means that a tenant usually is required to pay rents notwithstanding a condition that might interfere with its use and possession of a property. With that in mind, if a tenant believes he has been constructively evicted, he should contact an attorney to confirm what his rights and obligations are in that circumstance, what notices might be required before such a claim can be asserted and whether it is appropriate to withhold rent. Sessions: How does a constructive eviction differ from a breach of the warranty of habitability? Halstead: The warranty of habitability only applies in a residential lease context and not in a commercial context. The warranty of habitability statute provides certain notice requirements that must be met before a tenant can claim that he has been in essence constructively evicted. In the case of a commercial lease, any such notice requirements arise under the lease agreement itself. Sessions: What is the remedy if the tenant has been constructively evicted? Halstead: If a tenant is constructively evicted, the lease would be deemed terminated, in which case, the tenant would have no ongoing liability for rents that would have otherwise accrued there under. A tenant also might seek an award of damages he incurs as a result of the constructive eviction, including, without limitation, moving and other relocation expenses, a rent differential (if the rent at his new location is higher) and, even, lost profits. Of course, in a well-drafted lease, a tenant’s rights to one or more of the foregoing may have been expressly waived. Whether a tenant has been constructively evicted is fact specific. It is not common for tenants to prevail on these claims, but a landlord should, nonetheless, take situations that could ripen into a constructive eviction claim very seriously. A good landlord/tenant attorney can be essential in navigating the terms of the lease and applicable case law. Sessions: Class adjourned!