Phil Querin Q&A: Landlord Liability For Acts Of God?

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February 20, 2017
Phil Querin
MHCO Legal Counsel
Querin Law

 

Question.  Our park is on a well water. A few weeks ago, several homes had their pipes underneath their homes burst, leaving no pressure for water to deliver to the other homes in the community. The park was out of water for 6 days. A tenant in the park has told my onsite manager that he will deduct $15 a day from the rent. I told my manager not to accept his rent fearing that I will waive my rights to collect full rent which I feel that the park is entitled to. I have further instructed my manager to charge a late fee on the 6th day of the month, and then issue a 72 hour notice.

 

It is my belief that what occurred was not the fault of the park. I cannot allow this to occur, because every other tenant will then think that they can withhold rent when minor incidents happen. The tenant remains firm in his stance. I see my only avenue here is to file an eviction. Any suggestions?

 

 

Answer. ORS 90.730(3)(c) provides:

 

A landlord who rents a space for a manufactured dwelling or floating home shall at all times during the tenancy maintain the rented space, vacant spaces in the facility and the facility common areas in a habitable condition. The landlord does not have a duty to maintain a dwelling or home. A landlord’s habitability duty under this section includes only the matters described in subsections (3) to (6) of this section.

(3)For purposes of this section, a rented space is considered unhabitable if it substantially lacks:

(c)A water supply and a connection to the space approved under applicable law at the time of installation and maintained so as to provide safe drinking water and to be in good working order to the extent that the water supply system can be controlled by the landlord;  (Emphasis added.)

 

In relevant part, ORS 90.365 provides:

 

(1) If contrary to the rental agreement or ORS 90.320 (Landlord to maintain premises in habitable condition) or 90.730 (Landlord duty to maintain rented space, vacant spaces and common areas in habitable condition) the landlord intentionally or negligently fails to supply any essential service, the tenant may give written notice to the landlord specifying the breach and that the tenant may seek substitute services, diminution in rent damages or substitute housing. After allowing the landlord a reasonable time and reasonable access under the circumstances to supply the essential service, the tenant may:

(a)Procure reasonable amounts of the essential service during the period of the landlord’s noncompliance and deduct their actual and reasonable cost from the rent;

(b)Recover damages based upon the diminution in the fair rental value of the dwelling unit; or

(c)If the failure to supply an essential service makes the dwelling unit unsafe or unfit to occupy, procure substitute housing during the period of the landlord’s noncompliance, in which case the tenant is excused from paying rent for the period of the landlord’s noncompliance. In addition, the tenant may recover as damages from the landlord the actual and reasonable cost or fair and reasonable value of comparable substitute housing in excess of the rent for the dwelling unit. For purposes of this paragraph, substitute housing is comparable if it is of a quality that is similar to or less than the quality of the dwelling unit with regard to basic elements including cooking and refrigeration services and, if warranted, upon consideration of factors such as location in the same area as the dwelling unit, the availability of substitute housing in the area and the expense relative to the range of choices for substitute housing in the area. A tenant may choose substitute housing of relatively greater quality, but the tenant’s damages shall be limited to the cost or value of comparable substitute housing.

 

(2)If contrary to the rental agreement or ORS 90.320 (Landlord to maintain premises in habitable condition) or 90.730 (Landlord duty to maintain rented space, vacant spaces and common areas in habitable condition) the landlord fails to supply any essential service, the lack of which poses an imminent and serious threat to the tenant’s health, safety or property, the tenant may give written notice to the landlord specifying the breach and that the rental agreement shall terminate in not less than 48 hours unless the breach is remedied within that period. If the landlord adequately remedies the breach before the end of the notice period, the rental agreement shall not terminate by reason of the breach. As used in this subsection, "imminent and serious threat to the tenant’s health, safety or property" shall not include the presence of radon, asbestos or lead-based paint or the future risk of flooding or seismic hazard, as defined by ORS 455.447 (Regulation of certain structures vulnerable to earthquakes and tsunamis).

 

(3) For purposes of subsection (1) of this section, a landlord shall not be considered to be intentionally or negligently failing to supply an essential service if:

(a)The landlord substantially supplies the essential service; or

(b)The landlord is making a reasonable and good faith effort to supply the essential service and the failure is due to conditions beyond the landlord’s control. (Emphasis added.)

 

So based upon my reading of the italicized sections, my take is that if the issue is truly an act of God – i.e. it was truly beyond your control - then the failure of the system for those days is not something for which the resident has a remedy against you. Of course, “the devil’s in the details”, if you’ll pardon the pun. You have not indicated what cause all of the pipes to burst at one time. Was it earth movement, a systemic failure that you could not have foreseen? 

 

As you can see from these sections, residents do have significant rights when loss of habitability issues occur. So before butting heads with the resident, make sure you’re on sound footing. Caveat: I have not researched the Oregon case law recently to see how these statutes have been interpreted by Oregon’s appellate courts.

 

A Cautionary Tale. But here is the risk you assume if you simply issue a 72-hour notice and file for eviction:

 

In a nonpayment of rent eviction, a good tenant's attorney can frequently retain possession for his/her client, even though they clearly failed to pay the rent when due.  All it takes is a little familiarity with that labyrinthine set of statutes in Oregon's Residential Landlord Tenant Act, or "RLTA." 

 

However, oftentimes it is not until the first appearance following the filing of the eviction that the landlord discovers that the tenant has gone to an attorney and is now raising various counterclaims.  In your case, it was be for the failure to provide an essential service.

 

Assuming that the tenant has the money to pay the entire rent due, this is a battle that you are almost certain to lose. The reason is found in the rent-tender statute, ORS 90.370 (Tenant Counterclaims).  Essentially, this statute, and several cases that have construed it, permit the tenant to tender the past-due rent into Court, even though it was not paid during the 72-hour period set forth in your notice.  At the conclusion of the case, if the Court finds that the amount tendered into Court covers the amount found to be due, the tenant automatically retains possession. The tenant is permitted to hedge their bet.

 

                        Example:  Landlord files an eviction against Tenant based upon the failure to pay monthly rent of $400.  Tenant files counterclaims alleging habitability violations, and claims that because of the deficiencies, the market rent for the premises is only $200 per month.  Tenant has had possession for seven months (including the month for which rent was not paid) and asks for the return of $200 for each of the prior six months.  Tenant tenders $400 into Court prior to the commencement of trial.  Assuming that the claims are in good faith, here are the various scenarios:

 

                        1.  Worst Case for You:  The Court finds in favor of the tenant, awarding him a judgment for $1,200 (6 months X $200) plus costs and attorney fees.

 

                        2.  Best Case for You:  Although the Court finds against tenant on his counterclaims, and therefor finds that the amount due to you is the full $400, since it has already been tendered into Court, the tenant is allowed to retain possession and may submit a request for recovery of his costs and attorney fees.   

 

                        The only exception to the "Best Case" scenario is where you are able to convince the Court that the counterclaims are improper and/or have been filed in bad faith.  In that case, the rent tender will do the tenant no good, and if the tenant loses his counterclaims, he will be evicted and become subject to a judgment for your costs and attorney fees.

 

So, when should a landlord fight to evict a tenant for nonpayment of rent, where the tenant has made a tender into Court?  Only in the following situations: (a) Where the landlord is confident that he/she can convince the Court that the counterclaims were filed in bad faith; or, (b) Where the rent tender is believed to be inadequate and the tenant's attorney does not know that the shortfall could be tendered into Court.  In virtually every other situation, the odds of winning a contested nonpayment of rent eviction where there has been a rent tender are very rare.

 

Conclusion.  I agree with you that it would be bad precedent to permit this situation to continue, as it could metastasize throughout the rest of the community of affected residents.  I also agree that it would be unwise to accept partial rent, unless you could do so with a written agreement where the tenant acknowledges that you are not waiving the shortfall.

 

I suggest that you thoroughly vet the cause of the bursting pipes, so as to leave no doubt that a failure of maintenance was not the problem. Speak to one or more experts and try to get a written statement as to the cause.  With that you might then try to reason with the tenant – if that’s possible. Reasoning with a person who refuses to obtain legal advice is often difficult.

 

One possibility is to privately meet with the resident and see if some accommodation can be reached. If we’re only talking about $90.00 (6X$15), perhaps he would agree to pay the full rent, and you could provide some ancillary park service of equivalent service for free. I’m sure this doesn’t sound attractive, but if he sticks to his guns, the end game will likely not end well for you – unless you have thoroughly vetted the issue of responsibility and provided him with proof that this was an act of God. 

 

There is another, slightly imaginative, but possibly effective, solution: Issue a 72-hour notice for each month he tenders partial rent that you reject (making sure you photo each check), and then on the third one, issue a non-curable 30-day notice under Oregon’s three-strike law. (See, ORS 90.630(8)).