Category Archives: damage

Landlord “Fines” Guests for Smoking, Plus a Lesson Learned

I write a nationally-syndicated newspaper and website column, Rent It Right, in which I answer questions from landlords and tenants. For almost three years now, I’ve been writing about controversial topics like breaking a lease, who pays for bedbug eradication, and rent control. But no subject—even renting to registered sex offenders—has generated as many responses as did a recent column on a vacation rental landlord’s practice of “fining” guests $300 when they smoke in her no-smoking unit. The renters’ adult children had smoked while the parents were away one evening and “you could smell the smoke.”

My answer, which was legally correct, pointed out that “fines” are generally illegal in consumer contracts because they’re really a liquidated damages provision. Liquidated damages are allowed only in situations when it would be very hard to measure the consequences of misbehavior, and both parties to the contract specifically agree beforehand that this is so. Often, liquidated damages clauses must contain specific language in order to be enforceable. On the assumption that this rental contract had no such language, I wrote that the tenant stood a good chance of prevailing if he refused to pay it and had to defend himself in court.

Well. Several people begged to differ. No one challenged the legal analysis, but the writers (passionate non-smokers all) told me that paying $300 for breaking the smoking rule was actually a windfall for these tenants. The writers assumed that the smoke had permeated the furnishings and carpets to the extent that deep steam cleaning throughout would be needed. Arranging for and performing this type of cleaning would cost several hundred dollars or more, and would likely take the unit off the market, depriving the owner of future rents. In addition, some advised me that if the landlord didn’t do a thorough job, and subsequently rented to non-smokers, many such tenants would refuse to take the rental, resulting in more lost rent and damage to the landlord’s reputation. These writers advised me that having to pay only $300 was a good deal, and that rules-breaking renters should shut up and count themselves lucky. The final cut, however, was unjustified—practically everyone assumed I was a smoker, and “on their side.” Nope, never smoked.

But personal accusations aside, my correspondents’ points are all well taken. It’s a good lesson: Sometimes it pays to stop and think of the practical consequences of standing upon the letter of the law. But I’m not sure what the best advice is for owners who want to be compensated for smoke residue. If the tenants know the law and challenge the “fine,” they will likely win, and a judge may not allow the landlord to turn around and sue for actual—and higher—damages. Knowing this, landlords may decide to use a liquidated damages clause and hope that they’ll be dealing with tenants who either won’t know the law or who will willingly pay the amount. Three-hundred dollars might suffice when the smoking was minimal, but if the residue is extensive, it would not cover the real cost of removing it. But over the long run, hoping to collect $300 from all rules-breakers may be more cost-effective than individually suing tenants when the real cost of cleaning is higher.

Hopefully, the crow will be delicious.

 

Unluckiest Landlord: When Police Destroy Rental Property

It’s not every day that a federal appellate court addresses a state landlord-tenant matter, let alone writes an opinion that begins like this: “A landlord is lucky when he rents a dwelling he owns to a tenant who turns out to be pretty good. When he rents to a tenant who turns out to be fairly bad, he’s unlucky. And then there’s a landlord like Roland Johnson, who goes far beyond being merely unlucky. Johnson picked a doozy of a tenant—he rented to a fellow named Steven Avery.”

Who was Steven Avery? A convicted rapist who spent 18 years in a Wisconsin prison, but released after proving his innocence using DNA testing. His release prompted legal reforms, and he even sued the county for wrongful conviction. And for a while, he was Johnson’s tenant, living in a trailer at a salvage yard. It was there that he raped and murdered a young woman. Ironically, the case against him was proved using DNA evidence.

The police investigation that literally unearthed the evidence that would nail Avery was not conducted with kidd gloves. Searchers ripped up carpet, tore up walls, and jackhammered a concrete floor. Mr. Johnson, the hapless landlord, was left with more than the usual amount of damage after a typical tenancy. Mr. Johnson needed a responsible, deep pocket, and he set his sights on one, with lofty arguments—he sued the county for violations of his Fourth, Fifth, and Fourteenth Amendments rights.

But the federal court didn’t buy it. He lost on the Fourth Amendment claim when the court decided that the officers acted reasonably, even though they might have used less destructive means (such as a diamond- or carbon-bladed saw in place of the jackhammer). And his Fifth Amendment claim—that the government had deprived him of his property without just compensation—was a “non starter,” because the government had acted legally when serving its warrant. Sadly for Mr. Johnson, the state’s police power trumps the usual duty to compensate when taking or damaging private property.

Mr. Johnson was consoled with the suggestion that he look to state law for compensation. That might prove to be a cruel hint. Wisconsin does provide for suing government officials for property damage they cause, but such suits need to be filed within 120 days of the event. (Wisc. Stat. Ann. § 893.82.) It’s a bit late.

But maybe the federal judge was alluding to another state law remedy. Landlords can sue for damage when the security deposit is inadequate; all they need prove is that the tenants, or others on the property with their consent, caused damage beyond normal wear and tear. Although the cops were hardly there with Avery’s consent, an argument might be made that Avery, by committing a crime on the property, was setting in motion a foreseeable series of events that he should be held accountable for. In legalese, this is known as “proximate cause.” If the search and the damage it caused can be said to be a foreseeable consequence of the on-site crime, Johnson might have a case.

Of course, even a good legal theory is no guarantee of actually collecting what you win. Avery is off to prison and will surely remain there. But remember that unlawful conviction lawsuit filed over the first conviction, the one he was exonerated for? Apparently, it hasn’t settled, and it’s unlikely any judge or jury would give him a cent. But if Avery had collected, his landlord might have had a source for payment.

Last but not least—what about the landlord’s insurance policy? His property policy is subject to named exclusions, and a big one is damage caused by the seizure or destruction of property by government authorities. No help here, either.