>Daily Development for Monday, July 21,
2008=20
>by: Patrick A. Randolph, Jr.
>UMKC School of Law
>Of Counsel:=20
Husch Blackwell Sanders
>Kansas
City,=20
Missouri
>dirt@umkc.edu=20
>
>LANDLORD/TENANT;=20
RESIDENTIAL; WARRANTY OF HABITABILITY; SEX OFFENDERS: Warranty of=20
habitability did not impose a duty on landlord to remove registered sex=20
offender, but landlord breached implied covenant of good faith and fair
dealing=20
by refusing to terminate lease and release tenants from obligation to
pay=20
rent.
>
>Knudsen v. Lax,=20
842 N.Y.S.2d 341 (Co.Ct. 2007).
>Landlord and tenant
signed a=20
form that landlord had downloaded from the internet that provided that
if tenant=20
vacated early it would be liable rent for the whole term of the=20
lease.
>
>Tenants submitted=20
a request to terminate their lease prior to the expiration of the
one-year term=20
after a level 3 sex offender moved in with the tenants living in the
adjacent=20
apartment. Failing to receive a response from the landlord,
tenants=20
vacated the premises and commenced a proceeding to recover the security=20
deposit. The landlord counterclaimed for the balance of the rent
due for=20
the remainder of the term of the lease.
>
>The
court noted=20
that it is state public policy to protect potential victims of a sex
offender=20
from the risk of a repeated offense, basing its view on the fact that
there were=20
a number of requirements to warn the public about the presence of a
registered=20
sex offender residing or working at a particular location.
>
>On the
other hand,=20
the court found that Real Property Law Section 235-f prohibits a
landlord from=20
removing a registered sex offender based solely on that designation.=20
Consequently, if the editor reads the case correctly, the court
reluctantly=20
concluded that the presence of the sex offender was not itself a
violation of=20
the implied warranty of habitability.
>
>But
the court also=20
concluded that remaining in the apartment with three young daughters
would place=20
unreasonable pressure on the tenants and would destroy their peaceful
and quiet=20
enjoyment of the apartment, as covenanted by the lease. It therefore
found that=20
the landlord=E2=80=99s refusal to permit the tenant, under these
circumstances (three=20
daughters) was a violation of the implied warranty of good faith and
fair=20
dealing.
>
>Of
course, it is=20
difficult to rely upon a implied warranty when the parties have
expressly=20
bargained otherwise - and there was that difficult language that if the
tenant=20
vacated it had to nevertheless pay the rent for the term (New York
imposes no=20
duty to mitigate). The court was up to this challenge, however,
and found=20
that the lease was an adhesion contract that the tenant entered into
with a lack=20
of meaningful choice and an inequality of bargaining power, and
therefore the=20
clause in the contract that held the tenant liable for a full
year=E2=80=99s rent=20
regardless of the tenant=E2=80=99s reasons for abandonment was
unconscionable.=20
>
>Even
had the=20
clause not been unconscionable, the court concluded that it should be
set aside=20
because the parties could not possibly have anticipated the instant
facts, and=20
thus did not bargain with them in mind, so the landlord had duty to be=20
reasonable in responding to the facts. The judge quoted
extensively from=20
analysis by Judge Posner. Here is the ultimate
conclusion:
>
>=E2=80=9CThe Court finds=20
in this case "a reasonable person in the position of the promisee
[tenant] would=20
be justified in understanding" . . . the landlord would allow him to
terminate=20
the lease in the event a Level 3 Sex Offender moved into the next door
apartment=20
because neither he or the landlord would have expected any objection to
such an=20
early termination in such an event when the landlord could not force the
Level 3=20
Sex Offender to vacate the apartment for the safety of the tenant's=20
family.
>In this case when the landlord refused to allow the=20 tenant to terminate the contract before the expiration date six months later and=20 seeks under the "abandonment" clause an additional six months rent of $2700=20 under the circumstances after it was **350 evident the tenant could no longer=20 enjoy the quit enjoyment of living there shattered by the level 3 sex offender=20 moving in next door which, the Court concludes he should have agreed to do so=20 under the covenant of good faith implied in the lease agreement to deal with a=20 situation at the time it was signed.=E2=80=9D
>
>Comment 1: The old=20
tenet that hard facts make bad law could not be more evident.
Basically=20
the court has lifted this case out of ordinary legal analysis and
decided=20
independently to ignore the contract and stick the landlord with the
problem of=20
the neighboring sex offender, even though the law required the landlord
to=20
permit the sex offender to remain in the apartment.
>
>Comment 2: =20
The editor is sympathetic with the outcome. The landlord should
have been=20
reasonable. But the court appears to be concluded that every lease
that=20
the landlord presents to a residential tenant that the tenant
doesn=E2=80=99t try to=20
bargain about is an unconscionable lease that the tenant can
ignore. Of=20
course, this goes beyond even the implied warranty of habitability, but
may=20
indeed be the modern attitude of the courts. Perhaps landlords
ought to=20
include =E2=80=9Ccannon fodder=E2=80=9D in every lease that they point
out to the tenant and=20
angle so that the tenants object and the language comes out. But
the=20
editor questions whether this would work for long.
>
>Comment 3: In any=20
event, the notion of the injection of good faith and fair dealing here
tends to=20
eliminate the unconscionability argument. Although the parties
appeared to=20
have made a bargain about the cost of the tenant leaving for reasons
unrelated=20
to landlord breach, the court essentially holds that unforeseen
circumstances=20
cannot possibly be part of that kind of bargain. The question is
will=20
courts apply the same analysis to economic allocations made by
commercial=20
parties? When there is an economic burden to be suffered due to
unforeseen=20
circumstances - and a lease allocates a loss - why should a court
disturb such=20
allocation?
>
>Comment 4: =20
On the implied warranty of habitability point, note that another lower
court=20
case in New York held the landlord in breach of the implied warranty
when next=20
door neighbors generated second hand smoke that disturbed
landlord=E2=80=99s tenants,=20
even though landlord did not own the smokers=E2=80=99 apartment and had
no apparent=20
power over them. Poyck v. Bryant, 820 N.Y.S. 2d 774 (N.Y.S2d Misc.
2006)=20
(The DIRT DD for 10/2/07)
>
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>Patrick A. Randolph, Jr., Professor of Law,=20
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