Last week, we opened the topic of tenant self-help rights. We’re not going to do much repetition. So, if you haven’t seen it yet or, if you are like us, you’ve forgotten most of what you’ve read, click HERE to see that posting.
In that posting, we gave some examples of when a tenant with the right to do what its landlord should have done, won’t. In short, a tenant occupying one percent of a property isn’t very likely to plow an entire parking lot or replace a lot of roof area. That caveat doesn’t make the tenant’s self-help right entirely useless. Not all tasks are so extensive or expensive. Here are easy examples: a manageable roof leak or a rooftop HVAC replacement (in each case, assuming the landlord had responsibility to take care of those items).
Another “kind of landlord breach” that a tenant might be willing to “cure,” and one we’ve never seen in a lease and probably never will, is a self-help right to cure its landlord’s breach of a neighbor’s lease where that breach will materially, adversely affect the tenant with the self-help right. If that thought intrigues any reader (or if anyone has seen such a right), please share your thoughts with everyone else by adding a comment in the box below the end of today’s posting. [Well, we’ve gotten that item from last week’s ListServe out of the way.]
Now, back to where Ruminations was headed. What happens when one of those “things” (a required, but undone landlord repair) needs attention? To begin with, the landlord deserves a shot at fulfilling its obligation. Neither a roof leak nor a stuffy store rise to the level of an “emergency,” something we’d be more comfortable calling a condition that “threatens imminent, serious harm to person or property.” We use those words because they evoke something a lot closer to an objective test than does the word “emergency.”
In the case of a roof leak, there isn’t very much of a reason why a landlord couldn’t get a professional “on the roof” the same business day or the next one. After all, a landlord of any decent size project should have a roofer lined-up. Similarly, within a day or two, an HVAC technician should be on location to assess the situation and make needed repairs. If an HVAC unit needs to be replaced, a quote should be ready within one to three days and a standard rooftop unit available the next business day.
Now, Ruminations knows that some readers will challenge our timetable. So, add a few days; it won’t make a difference to what we have to ask: “Why, then, does a landlord commonly get 30 days after a tenant’s notice to do what it should have done in two or three days?” We think it is because of a false attempt at reciprocity. After all, tenants commonly get 30 days to cure their defaults. Should landlords get the same? We think not, at least not in all circumstances.
Here’s why. Most repair defaults by a tenant affect the tenant far more than anyone else. If something for which a tenant is responsible is “broken,” certainly the landlord needs to see that it is fixed because, at the end of the day, the broken thing belongs to the landlord. But, for the moment, it’s the tenant hurting itself. Similarly, if the tenant was obligated to pay taxes directly to a taxing authority and its failure to do so would result in a lien against the landlord’s property, what’s the big deal if the landlord steps in after three days or 30 days? If the landlord steps in, it will just pay the taxes, interest, and penalty and the lien or threat of a lien will go away. Now, the tenant owes money as “additional rent,” and the landlord has an even simpler remedy – eviction for non-payment of rent if not reimbursed by its tenant within the lease-required period. Even if the landlord pursued eviction based on its tenant’s “non-performance,” something that is less “clean” and will take at least as long to pursue, if there is a real threat of a fine, it will have to pay the charges anyway.
None of this is to say that 30 days isn’t an appropriate “notify and wait” period before a tenant with a self-help right should be able to step into its landlord’s shoes, only that as Ralph Waldo Emerson began, “A foolish consistency is the hobgoblin of little minds… .” If something undone by a landlord really, really, as a practical matter interferes with a tenant’s business, the waiting period should be pretty short; and, if not, 30 days (and sometimes longer) should be perfectly fine.
[Ruminations could say the same thing when it comes to a landlord’s self-help rights. Using a blanket 30 day “notify and wait” period is convenient, but doesn’t always make sense. Some leases recognize this when it comes to particular items such as the tenant’s failure to maintain required insurance coverage, but landlords should look more closely at other items for which a 30 day period is too long.]
Tenants should be careful what they wish for. [No, that wisdom doesn’t come from Eminem or from the candy company or from our law firm.] If “A” has a duty to fix something, doesn’t do so, and “B” gets hurt because it wasn’t fixed, “A” will be calling its insurance carrier. With that in mind, wise tenants (and, in the parallel situation, wise landlords) will want to make sure their leases can’t be interpreted to have imposed a duty on a party with a self-help right to actually employ self-help and should make clear that just because self-help had been employed in the past, that won’t create a duty to do it again and again. For small claims, a properly written lease provision will probably be a pretty good defense. For large claims looking for deep pockets, it probably won’t.
There is a general principle, strong but not inviolable, that if a claiming party can be made whole by the payment of money, it can’t seek a court order to make a non-performing party do what it was supposed to do. So, the hypothetical wise tenant (and, in the reverse situation, landlord) will want to make it clear that having the self-help remedy doesn’t preclude getting a judge to order the non-performing party to “shape up.” More broadly stated, one wants to make sure not to trip over what is called the “election of remedies” trap and be stuck with only the right to use “self-help” and not the alternative remedy of seeking monetary damages. So, the bottom line is to be sure that the lease has a provision giving the tenant (or, in the reverse situation, the landlord) the right to elect one or more remedies, legal and equitable, and not have to choose among alternative remedies.
Lastly (for today only), if a tenant is going to actually step up to the plate and do what its landlord was supposed to do, it will want its landlord to indemnify it to the fullest extent allowable by law for anything arising out of the work that the tenant does or fails to do. After all, if the landlord did the work in the first place, the tenant wouldn’t have any exposure. Why should the landlord transfer what should have been its “risk” or “exposure” to the tenant? Similarly, a tenant should seek a waiver of claims by the landlord for work the tenant had to do because the landlord wasn’t doing it.
Next week, if that Native American tribe known as the Creek “don’t” rise, we’ll wrap this subject up with some ideas about money and offset rights, all (or most) of which we think will be worth waiting for.