Withhold rent and you can count on a visit by a process server with an unlawful detainer complaint identifying you as the defendant! Like night follows day! Like the sun rises in the east!
But, you argue, the Lessor, in breach of his obligation under the Lease, has failed to repair the roof of the building. Will the court consider this failure to justify your withholding of rent?
In a case arising out of a restaurant business in the City of Ontario, California, the Lessee failed to pay rent and taxes and was thereafter confronted with a Three Day Notice to Pay or Quit. An unlawful detainer action quickly followed.
In his Answer to the Complaint, the Lessee set forth an affirmative defense essentially alleging that the Lessor had breached its covenant to repair the roof of the building causing the Lessee substantial damages. The Lessee alleged that the roof leaked water to such an extent that it forced the Lessee to operate his business with "buckets on the tables to catch the leaking water, and with two inches of standing water on one portion of the floor of the restaurant."
The Lessor won at the trial level. The Lessee then appealed, but won no solace from the Court of Appeal which ruled that in a commercial setting, the Lessee could not assert the roof issue as an affirmative defense. The Court of Appeal concluded that the Lessee was privileged to pay the rent and file a separate action for damages against the Lessor as a result of the Lessorís breach of contract.
The Court of Appeal observed that in a commercial lease transaction:
"The parties are more likely to have equal bargaining power, and, more importantly, a commercial tenant will presumably have sufficient interest in the demised premises to make needed repairs and the means to the make the needed repairs himself or herself, if necessary, and then sue the lessor for damages."
Circumstances are different, however, when a residential lease is involved. The courts have determined that in a residential apartment lease, there exists an implied warranty of habitability.
An express warranty is a warranty stated in words in the contract. An implied warranty is inferred from the content of the contract, but not expressed in words.
Under the implied warranty of habitability, the landlord is considered to have warranted that the property is, and will be, repaired and maintained in a condition that meets certain minimum standards of habitability. The failure to meet those minimum standards will constitute a breach of the warranty on the part of the landlord. The implied warranty of habitability may be raised as a defense in a residential eviction action based on non-payment of rent for the period during which the warranty has allegedly been breached.
Illustrations of conditions which will constitute a breach of the implied warranty of habitability include:
- Collapse of a bathroom ceiling and the failure to repair
- Continued presence of vermin
- Lack of heat
- Plumbing blockages
- Exposed and faulty electrical wiring which was illegally installed
- Windows broken and boarded up
- No hot water
- The failure, under certain circumstances, to protect tenants against criminal conduct.
Although some tenants, not adequately protected against criminal conduct, have asserted the breach of the implied covenant of habitability as a defense in an unlawful detainer action, other tenants have challenged Lessors in more imaginative and economically productive ways.
In one California case, 75 tenants separately filed Small Claims Court actions contending the they were disturbed by non-tenant drug dealers working from and around the lessorís property. After consolidating the actions, the court awarded $218,325 to the plaintiffs. On appeal, the award was upheld by the Court of Appeal, which relied on a Health & Safety Code Section making each building used for drug dealing a nuisance. The court allowed these plaintiffs to recover for mental suffering (compensation for discomfort and annoyance) under this "nuisance" theory.
The moral of the story? In a commercial lease transaction, pay the rent and then argue or sue if the Lessor has breached an obligation under the Lease. If you lose possession in an unlawful detainer action, the consequences are substantial. Your equipment, off- location, will produce little income!