Challenging a lease termination notice

Rent it Right

Big plans for business in 2018?
Give yourself the tools to own the new year at Connect SF, July 17-20, 2018

Q: Our family has just received a termination notice from the landlord, for bogus reasons. He claims that we’re committing criminal acts on the property because my son was in a fight with a neighboring boy. It’s true that there was a fight, but my son acted in self-defense. Since when is it a crime to defend yourself? Doesn’t there have to be a conviction, or at least an arrest, before we can be tossed out? –Liam N.

A: Almost all landlords use written leases or rental agreements that allow the landlord to terminate the tenancy for disruptive behavior. Even in the absence of such a clause, landlords still enjoy this legal right because of the mutual duty of landlord and tenant to honor the "covenant of quiet enjoyment." The idea here is that tenants are entitled to reasonable peace and quiet, but they also have to act in a way that honors the same right of other tenants.

The landlord, for his part, must control all tenants so that everyone enjoys peace and quiet. If the landlord fails to reprimand (and evict, if necessary) a tenant who doesn’t honor the covenant, other tenants who are affected by the unruly behavior have the right to break their leases and leave. To avoid that result, landlords terminate the lease of the troublemaker.

Neither the legal definition of the covenant of quiet enjoyment nor most lease clauses that enforce it include a requirement that an actual conviction (or even an arrest) occur before the landlord may terminate. Instead, common-sense notions of how much commotion is acceptable prevail. Though frustrating, this standard of "reasonable peace and quiet" works precisely because it is flexible.

For example, we all know that noise at noon on a Saturday is not as disturbing as noise at midnight on a weekday, but would you want a noise standard to include actual decibel levels, days and times? Once you begin to get specific, a "reasonable peace and quiet" standard would grow to many paragraphs, and still wouldn’t cover every possible situation that might come up.

It’s interesting that your landlord has cited not disruptive behavior (the covenant of quiet enjoyment), but criminal acts as the basis for his termination notice to your family. In recent years, many states have given landlords a way to terminate when tenants aren’t just disruptive (that is, violating the covenant of quiet enjoyment), but are violating their state’s criminal law. These tenants don’t get a chance to change their ways and stay. In these situations, states sometimes address whether the tenant must have been arrested or convicted before a landlord may take such a harsh step.

For example, in New Jersey, the tenant must have been convicted or entered a guilty plea to one or more specified offenses before a "no second chances" termination on the basis of specific behavior will stick. (N.J. Stat. Ann. Section 2A:18-61.1.)

Other states aren’t so precise — in Missouri, for example, "allowing the illegal possession, sale or distribution of controlled substances upon the premises," which is also a criminal offense, is grounds for voiding the lease and demanding that the tenant move immediately — but no arrest or conviction is needed. (Mo. Rev. Stat. Section 441.020.)

Even HUD, in its model lease for Section 8 tenants, gives landlords the right to terminate "if the landlord determines" that the tenant or a guest has engaged in criminal behavior. (HUD Section 8 Model Lease, Section H(i)(8).)

You’ll need to take another look at your termination notice. If it gives you a chance to cure, or reform, your household’s behavior, take advantage of that opportunity and ask for a meeting with the landlord (and perhaps the other boy’s family). Discuss what happened and try to steer the conversation towards what the adults can do to help their children avoid future fights. You may be able to convince the landlord that you have "cured" the problem that resulted in his termination notice. …CONTINUED

On the other hand, if your termination notice gives you no opportunity to cure the problem, and simply demands that you leave, do some checking into your state’s rules for "unconditional" quit notices. If your state, like New Jersey, reserves these notices for behavior that a court has found to be criminal, you may have an argument that your son’s behavior will not support such a notice.

On the other hand, if your state allows landlords to use their own judgment as to whether the criminal law has been broken, you’re in a weaker position. If you refuse to move and contest the landlord’s subsequent eviction, you’ll need to convince a judge that your son’s response was not criminal, and that the landlord’s conclusions were not supported by the facts.

Q: We’ve been renting the same house for about eight years, always with a two-year lease. Our landlord used the property as collateral for a business loan, then we signed our latest lease, and now he’s out of money and losing the property to foreclosure. I understand that, under the new federal law, our lease will survive if the bank becomes the owner, whereas under the old rules, it would have been wiped out because it was signed after the loan was made.

But here’s the thing: Because of my own financial problems, I’d love to get out of this place and move in with our in-laws. In other words, I’d have been better off under the old rules — this foreclosure would have been a golden opportunity to escape an above-market lease with no negative ramifications for me. Is there any way I can invoke the "old rules" now? –Dean P.

A: You’re not the first tenant to appreciate that the old "first in time, first in right" common-law rules are a double-edged sword. As you note, those rules provided that a lease signed after a loan or mortgage was taken out on the home is wiped out by a subsequent foreclosure. Most of the time, this was a disaster for tenants, who want to keep their lease. But now and then it’s a windfall, giving tenants a legal opportunity to get out of a lease without breaking it. And as you no doubt know, lease-breaking tenants are usually on the hook for the rent for the rest of the lease term. (Their landlord is required to make reasonable efforts to re-rent; once the landlord finds a new tenant, the original tenant’s responsibility to pay the rent ends). A foreclosure allows tenants to walk away without worrying about continuing to pay rent while the landlord advertises and screens tenants.

When tenants happily skip out following a foreclosure, it’s for a reason — usually, because the place is renting at above-market rates. The bank (which owns the property, in the event of a foreclosure) doesn’t want to lose that lucrative deal and have to re-rent at lower rates. So, as a condition of making the loan in the first place, the bank’s lawyers often insist that the borrower-landlord insert a clause in the tenant’s lease (called an "attornment" clause) that requires the tenant to waive its right to walk away if there’s a foreclosure. Check your lease, looking for any indication that you have promised to recognize (you may even see the word "attorn") a new owner who buys the property at a foreclosure sale. If you don’t see it, you didn’t waive your right to walk — under the old rules.

The old rules changed in May 2009, when President Obama signed the Protecting Tenants At Foreclosure Act. That act gives relief to people like you, whose leases were signed after the loans or mortgages, by providing that the lease will survive the foreclosure. Of course, this isn’t the outcome you want: You’re hoping that the lease expires rather than survives. So you would be better off under the old rules, as long as there’s no attornment clause in your lease.

So the question is, do the old rules still exist — and can you invoke them to bolster your argument that your lease is wiped out by the foreclosure? You may find support for your position in the Act’s statement that "nothing under this section shall … affect any state or local law that provides longer time periods or other additional protections for tenants." (Protecting Tenants At Foreclosure Act, Title V11, Section 702(a).) The common-law rule that you want to invoke, recognized by most states, may be precisely those "additional protections" that Congress was intending to preserve for tenants in your position. It’s worth a shot.

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.

***

What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.