Implied Warranty of Habitability in PAAugust 15, 2012
This post is the second of two on the implied warranty of habitability in Pennsylvania.
THE FOLLOWING IS INFORMATIONAL ONLY:
If you are tenant reading this, do NOT attempt to use one of these remedies without consulting an attorney FIRST. SERIOUS CONSEQUENCES may result if these remedies are done incorrectly.
This post assumes the tenant has reached the point where the implied warranty of habitability in PA has been triggered. The landlord has been notified, been provided with a reasonable opportunity to fix the problem, and has failed to resolve the issue. At this point, there are several remedies available to the tenant.
Vacate the Premises:
The first remedy is that the tenant may simply vacate the premises without any further rent payments or liability under the lease. CAUTION: If a court finds that the warranty is not breached, the tenant may be liable for the past rent and could be liable for the entire lease amount.
Retain Premises but withhold rent:
If the implied warranty of habitability is breached, a tenant may retain possession and withhold rent. This is most often used as a defense to a landlord complaint asserting a tenant failed to pay rent.
CAUTION: If the tenant fails to pay the rent under the mistaken belief that the landlord breached the implied warranty of habitability, the landlord then brings an action for nonpayment of rent, if a judge finds that the tenant’s actions of withholding rent was improper, the tenant could be held liable.
A judge may also conclude that there was a partial breach of the implied warranty and the tenant may be liable for a portion of the rent. Although not mandatory, it is often prudent to place the rent into an escrow account.
Determining how much (if any) rent the tenant is liable for is a complex question. There are two competing doctrines. The first way to calculate the amount the tenant is liable for is by comparing the difference between the rent agreed upon versus the fair rental value of the property in the present condition. For example, if the rent was $1,000 a month for 1 year and the fair rental value was $500, the tenant would only be liable for $500, the amount of the fair rental value.
The second way to calculate the damages is by the “percentage reduction of use” which reduces the amount owed by a percentage equal to the percentage by which the use of the premises has been decreased by the breach of the warranty. For example, if the rent was $1,000 a month, and the tenant could not use 50% of the premises, the tenants would be liable for only $500.
The Pennsylvania Supreme Court has explicitly held the percentage reduction use is the correct method because the first method would be cost prohibitive as it would inevitably require the use of experts to provide an opinion on the fair rental value of the property under the implied warranty breach.
Repair and Deduct Rent:
If a tenant gives a landlord notice, a reasonable opportunity to repair and the landlord still does not correct the defect, the tenant may make the repairs themselves and deduct the costs of the repairs from the rent. However, there are a few important exceptions to this rule.
CAUTION: Remember, if a court disagrees with the tenant, and/or the tenant fails to follow the law properly, the tenant could be found liable for rent, repairs, and other costs.
The first notable caveat to this rule is that the repair costs cannot exceed the total amount of the rent owed for the lease term. For example, if the lease term is for 1 year, with rent of $1,000 per month, the repairs may not exceed $12,000 ($1,000 X 12 months = $12,000). This means that if the tenant’s shower breaks, the tenant cannot replace the entire shower with a new Jacuzzi tub that exceeds $12,000 and expect the landlord to reimburse the tenant. Again, this is keeping premises habitable—not aesthetically pleasing.
Also, the costs of repairs must also be reasonable. If the repair costs are not reasonable, a landlord may deduct the actual cost of repairs compared to the reasonable cost of repairs from the amount the tenant is entitled to.
Not only must the costs of repair be reasonable, the repairs themselves must be necessary. As discussed in my previous posts, a landlord is not entitled to an aesthetically pleasing dwelling—only that the premises be fit for habitation.
For example, if the walls of a premises are covered in shag carpet that the tenant absolutely hates, if the tenant makes the repairs but a judge later determines that the repairs were not necessary, the tenant is not entitled to recover the costs. However, if the shag carpet is falling down and every time the carpet falls off, it takes large pieces of drywall with it, there is a much stronger case for an implied warranty of habitability breach. Again, this is very fact specific.
Court Order to require Landlord to Perform Repairs:
A tenant may also get a court order to require the landlord to make the repairs following traditional contract principles of specific performance. This option may be attractive where the tenant cannot finance the repairs themselves and cannot find another residence that is affordable.
Use these remedies carefully!
Again, please remember, if applied incorrectly these remedies can have serious consequences. The purpose of this post is to describe the various remedies. If you find yourself in a situation where you would like to apply one of these remedies it is crucial that you consult an attorney first.