Case Study on "Real Estate Law"

Case Study 5 pages (1676 words) Sources: 1+

[EXCERPT] . . . .

Real Estate Law: Expanding the Notion of the Implied Warranty of Habitability

When a landlord rents a dwelling to a tenant, regardless of the terms of the contract itself, there is an implied warranty of habitability. This means that the property is assumed to be, and must be a "safe dwelling for human beings" ("What is an Implied Warranty of Habitability," All Business, 2009). A tenant does not have to make special stipulations within his or her contract, for example, that he or she deserves decent water, functional appliances, and reasonably sanitary conditions within the structure he or she is renting. The hallways of the building should not be crawling with rats nor should the screens be full of holes.

In fact, when a landlord rents his or her property to a tenant, it is generally agreed that the property owner is making an implied statement that it is safe to live there. A landlord who rents a building and knows it to be hazardous gives the tenant grounds to sue on an implied warranty of habitability. In this case, there are clear grounds for such an implied breach on the part of the Hoffman Group, Inc. Had the property in question, that of the clubhouse at Bloomfield Estates been a purely residential structure, such as an apartment or a condominium, there would be virtually no legal grounds for the landlord to stand upon. However, the structure in question is a clubhouse, a freestanding building that is not directly attached to any of the single-family homes and townhouses that make up the Bloomfield property. But because members of the residential facility pay for the maintenance, taxes, and insurance for the clubhouse in 'common,' and the existence of such exterior facilities is presumably why the residents agree to live there, for the purposes of real estate law it would seem as if the clubhouse was an extension of the facility itself.

The clubhouse is no mere 'shack' or treehouse, but a structure must be maintained. It consists of a number of amenities that require routine upkeep, including a library, a hospitality room for entertaining, an exercise room, an indoor pool and restrooms. The need for such upkeep was made clear to every townhouse and home owner. Maintenance, taxes, and insurance for the clubhouse are assessed proportionally to each homeowner, meaning that all homeowners possess ownership of the structure proportionate to their investment in Bloomfield. An analogy might be made to a common area in an apartment building. Tenants in an apartment building clearly have an implied warrantee of habitability regarding their lobby. They 'rent' common ownership of the lobby, along with their individual apartments. If their apartments were in livable condition but the lobby was crawling with rats and had exposed electrical wiring, this would still affect the resident's quality of life. And eventually, the lack of maintenance would begin to affect their quality of life within their apartments.

When the Bloomfield Club Recreation Association filed suit against the defendant alleging a violation of the clubhouse's implied warrantee of habitability, the Association noted that the defendant violated this warranty by 1) installing sub-standard roofing materials; 2) the installation of an inadequate number of roofing nails; 3) deficient roofing ventilation; and 4) the improper installation of a heating/ventilation unit in the pool area. This made it unusable for residents, and also, it could be argued, made the building a potential heath hazard, much like a common area in an apartment complex that was improperly maintained. If an individual paying to use the property was within the library and the roof caved in, or if someone using the library developed asthma because of a lack of ventilation, he or she would have grounds to sue. So would someone using the pool area who was electrocuted, or who developed a bacterial infection due to the build-up of algae in a too-warm pool.

An even better analogy might be that of exterior structures that are commonly owned at a condominium development. For example, when an individual buys a condominium, part of the agreement is usually that he or she pays for routine maintenance of the exterior yard of the condominium facilities. If the condominium association did not engage in such routine upkeep, and employed an individual who allowed the grass to grow high, allowed wild animals to inhabit the yard, and allowed the exterior swimming pool to go green in the summer, and lie empty and exposed in the winter, this would pose a hazard to the health of the community, and could, after time make even the interior structures uninhabitable.

Even if these arguments were not persuasive, there are other likely laws that apply. One is that of an attractive nuisance. "The doctrine of attractive nuisance is premised on the belief that one who maintains a dangerous condition which is likely to attract children on their property is under a duty to post a warning or take affirmative action to protect children from the dangers of that attraction…. To be liable for injury, an owner must create or maintain the harmful object" ("Attractive nuisance law and legal definition," U.S. Law, 2010). It is very easy to imagine a scenario in which a child might wander into the clubhouse and be injured by a falling roof or become ill because of swimming in an ill-kept pool. In this case, the owners of the facility would be held responsible for any injury the child incurred. However, by paying their membership fees, the Bloomfield residents were making a good-faith effort to uphold the livability of the clubhouse. The Hoffman Group, the organization responsible for maintaining the facility, was in effect putting the residents at risk for an attractive nuisance lawsuit. Unless Hoffman did something to maintain the property, Hoffman thus put the homeowners at legal as well as medical and physical risk.

One of the difficulties of the implied doctrine of habitability is its vagueness. Regarding its enforcement, "there are no set rules. However, generally, the landlord must provide drinkable water, heat (in cold weather), a working sewer system, a safe, working electrical system, an operating smoke detector, a lock…a home not filled with rodents and/or bugs, and a sanitary condition of the structure of the home and outside area" ("Attractive nuisance law and legal definition," U.S. Law, 2010). The Hoffman Group has argued that because the residents had a decent place in which to dwell at night, adequate plumbing, and the basic necessities of daily life, being deprived of the library and pool was not a violation of the doctrine. Additionally, a pool and a library are not necessities.

Another problem with the applicability doctrine is that it would seem that standards would vary from structure to structure, and rent bracket to rent bracket. Few would deny that "the landlord must repair substantial defects in the rental unit and substantial failures to comply with state and local building and health codes," and remove hazards such as lead paint, "a furnace that is known to have a carbon monoxide leak, a dangerously hot water heater, and to fix "recurring issues with plumbing" (Warranty of Habitability, U.S. Law, 2010). But in a luxury structure, is the doctrine of habitability higher? Yet "holes in the exterior walls, damaged ceilings, damaged floors, improper protection from the elements" as well as "a faulty roof" are some of the most commonly-cited structural violations of warranties of habitability, and not all of these issues are 'strict necessities' even though they affect residential quality of life and are part of habitability expectations of most tenants ("Attractive nuisance law and legal definition," U.S. Law, 2010)..

Of course, landlords are not responsible for violations to their properties that occur as a result of tenant abuse. But they have recourse for the risk of being blamed for… READ MORE

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