Breaking lease over 'inconvenient move'

Q: We're tenants in a condominium complex, where we've lived for a couple of months. We have just learned that the complex has settled a big lawsuit with the builders, which will mean we'll need to temporarily move out while workmen repair water damage to the ground floor and garage that was caused by years of leaks and seeps. Although the owner will give us some relief with the rent, he won't let us out of our lease, which we've asked for (we'd rather move out once and be done with it). Do we have any legal grounds to break the lease? --Vicky and Sam S.

A: The answer to your question turns on whether the owner should have told you about the pending lawsuit and the underlying problem before you signed the lease. Many states require landlords to disclose specific information to applicants, such as the details of any shared utility arrangements, any pending suit to foreclose or notice of default under a trust deed or mortgage, and the existence of any outstanding code violations. Some states require landlords to tell tenants of incidents of prior flooding, or any plan to demolish the property. And of course, all landlords must disclose the known presence of lead-paint hazards.

It's unlikely that any state statute requires landlords to disclose the existence of pending litigation against the property's builders. But that isn't the end of the matter. First, the lawsuit was based on recurring water damage, which alone (aside from whose fault it was) is an important piece of information to know before deciding to rent a property.

If you're in a state that protects consumer transactions, your landlord has a general duty, beyond specifics in the code books, to disclose information about a rental that would affect its value and desirability, if the landlord knows that the tenant is unaware of the information and it's not within reach of a reasonably diligent tenant. Surely a seasonally damp and flood-prone ground floor would qualify as important information. That this problem is the subject of a lawsuit would only add to your argument, because as a tenant you would face not only the unpleasant conditions, but the possibility that you'd have to move out for a significant amount of time, as well.

So now, what to do? The most satisfying approach would be to file a lawsuit asking a judge to rule on whether your landlord's failure to disclose will void the lease -- technically, you'd be arguing that the nondisclosure amounted to fraud. But this is a complex matter (you'd be asking for a "declaratory judgment"), which you probably can't bring in small claims court -- you'd have to go to regular trial court and hire a lawyer. It would be worth it if you had purchased the property, instead of rented it, and wanted out of the contract (the issues are the same). This approach isn't practical in a rental context because it will cost you more in lawyers' fees and court costs that the hit you may take if you simply break the lease.

If you break your lease, in most states you'll be on the hook for the balance of the rent for the lease term until the landlord -- using reasonable efforts -- re-rents the place. (Of course, it's not rentable during construction, and those months should be kept out of the equation.) The worst-case scenario is that the market is soft and the unit doesn't rent for months, or rents at a lower rent than yours.

Theoretically, you could be sued for months of rent or rent differential, but if that happens, you can defend yourself by bringing up the landlord's failure to disclose the conditions and the probability of an inconvenient move. If you're fortunate, the judge will buy your argument that these were material pieces of information that affected the rental's value and marketability, and you might end up with the judgment you wanted all along: This landlord's failure to be candid amounts to fraud, which voids the lease and any attempts to hold you to it. ...CONTINUED

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