Jerry Kopel

KOPEL: DOWN WITH CAVEAT EMPTOR!

New law requires rental units to be habitable

Finally! The common law doctrine from England, caveat emptor (Latin for “let the buyer beware”) is no longer the guiding principle in landlord-tenant residential contracts in Colorado.

Starting Sept. 8, Colorado law will demand that any contract between a renter and landlord — whether the lease is new, extended or renewed — presumes that rental properties are habitable. Gov. Bill Ritter has signed House Bill 1356, which was carried by Rep. Mike Merrifield, D-Manitou Springs, and Sen. Ron Tupa, D-Boulder.

The key words are: “In every rental agreement, the landlord is deemed to warrant that the residential premises is fit for human habitation.” (To legislative staff: grammatically, shouldn’t it be “premises are?”)

Colorado’s adoption of the common law (traced to as it existed around 1607) can be found in CRS 2-4-211 and was part of the original 1876 state laws.

It probably made sense in rural Colorado, where you might be renting a farmhouse and farmland. Our state Supreme Court held in 1888 and 1913 there was no implied warranty of safety or
habitability.

In 1976, the court again held in Blackwell v. Del Bosco, (558 P. 2d 563) that an implied warranty of habitability did not automatically exist as part of the landlord-tenant relationship.

The decision was 6-1. But even the author of the decision, Justice Robert Lee, sounded apologetic.

The facts: landlord owned a car dealership that included a run-down one-bedroom house in Colorado Springs. The tenant was an elderly woman who rented on a month-to-month basis.

The Landlord ultimately intended to tear down the house to make more room for his used car sales and did not plan to make any repairs. Meanwhile, a building inspector held the house unfit for human habitation. The tenant stopped paying rent, and the landlord tried to push her out through a forcible entry and detainer (FED) action. The district court ordered her out.

Justice Lee’s opinion held the lack of implied warranty of habitability evolved from an agrarian society in medieval England, where leases were subject to caveat emptor. The tenant took the premises as he found them with all the defects he could have ascertained upon reasonable inspection.

Lee recognized an increasing number of courts were now treating residential leases as short-term unequal bargaining contracts with tenants who lacked skills to make needed repairs, and thus they (the courts believing common law is expected to change with the changes in society) implied a warranty that the premises are habitable instead of caveat emptor.

Lee also cited housing codes, Uniform Commercial Code implied warranties of fitness, as well as state statutes, for recognizing an implied warranty, but “the implied warranty of habitability involves many economic and social complexities and its adoption should be preceded by the research and study of which the Legislature is more capable.”

Lee was joined by Justices Edward Day, William Erickson, James Groves, Paul Hodges, and Donald Kelley. Dissent was by Chief Justice Ed Pringle.

Pringle quoted U.S. Supreme Court Justice Oliver Wendell Holmes: “It is revolting to have no better reason for a rule of law than that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.”

Pringle also quoted from a federal court case “when American city dwellers, both rich and poor seek shelter today, they seek a well-known package of goods and services — a package which includes not merely walls and ceilings, but also adequate heat, light and ventilation, serviceable plumbing facilities, secure windows and doors, proper sanitation and proper maintenance.”

Does HB 1356 do the job? The shifting from caveat emptor to presumed warranty of habitability was absolutely essential, and was protected by the sponsors. But, in my opinion, the new law is overcomplicated and needs to have numerous hurdles eliminated in 2009.

Here are some:

Attorney fees:

• CRS 13-40-123 and 38-12-507 (2). Can you afford to take the risk of winning the lawsuit but not get attorney fees from the landlord? All the lease has to do is avoid mentioning attorney fees and you will be stuck. If you are a middle-income tenant, chances are you would be better off forgetting a lawsuit if the landlord leaves attorney fees out of the lease.

Written notice:

It is freezing cold out, but the furnace is defective, possibly affecting health and safety.

• CRS 38-12-503 (2) (c) “The landlord has received written notice of the condition ... and failed to cure the problem with a reasonable time.”

• CRS 38-12-507 (1) (a) “Upon no less than ten and no more than thirty days written notice to the landlord ... and giving the landlord five business days from the receipt of the written notice to remedy the breach ...”

• CRS 13-12-508 (3) “... unless the tenant has given notice to a local government within the boundaries of which the residential premises is located ...”

• CRS 38-12-503 (3) not a breach if not misconduct by victim if the condition is the result of domestic violence and “the landlord has been given written notice and evidence of domestic violence ...”

• CRS 38-12-503 (4) “In response to the notice sent. ... a landlord may ... move a tenant to a comparable unit after paying the reasonable costs actually incurred ...”

• CRS 38-12-504 (1) (f) “...promptly notify the landlord...”

“Business day,” “reasonable,” “local government,” and “comparable” are not defined, leaving it to years of court battles to finally define.

Repairs by tenant?

• CRS 38-12-506 (2) (a) “The agreement... is entered into in good faith and is set forth in a writing that is separate from the rental agreement, signed by the parties, and supported by adequate consideration.”

If the agreement is not separate, but in good faith, the outcome is the tenant will likely be stuck with the costs of repair.

Retaliation for complaint?

• CRS 38-12-509 (3) There is a rebuttable presumption it is not retaliation, despite the time frame when it occurs.

• CRS 38-12-507 (1) (c) If tenant defends non-payment of rent based on breach of habitability, the court can require payment of rent into the court.

The state allowing the author of the rental lease (almost always the landlord) to determine whether a successful party in a legal action will obtain attorney fees is probably unconstitutional, as a denial of equal protection under the 14th amendment to the U.S. Constitution. For the landlord, an attorney fee is a cost of doing business, but for the tenant, even in a slam-dunk case that the tenant would win, it could still mean bankruptcy.

Date of effect:

Does the fact that warranty of habitability is now a statute affect the 1976 decision by Justice Lee? I think it could be argued that while the new statute applies in full as to new or renewed or extended leases, that caveat emptor has been replaced in Colorado common law by warranty of habitability for leases otherwise not presently affected by HB 1356.

Jerry Kopel served 22 years in the Colorado House.