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Risk Management: Habitability in Property Management (Updated January 2023)

What is habitability and why is it so important?

Updated January 2023


Essentially, it is anything that endangers the livability of the property and the health and welfare of the tenants. Many common issues are lack of heat, running water, major roof leaks, unsafe electrical, carpeting, stairways, or sidewalks, etc.

When renting a property to others, whether a house or a condominium, it is under the assumption that it complies with an “implied warranty of habitability.” Simply put, this means that the property you are renting is structurally safe for human habitation.

An owner must prove basic criteria for “implied warranty of habitability.”

  • The property is to be structurally sound, meaning it does not contain pest problems, holes in the walls, ceilings, or floors, and is safe for occupancy. A home that has any of these problems, or that does not provide adequate protection from the elements, is not considered fit for occupancy.
  • Known hazards or problems within the dwelling that might make it unsafe for tenants, such as asbestos insulation, lead paint, carbon monoxide leaks, or problematic plumbing. When renting a property, the owner implies that there are no hazardous aspects to the dwelling.
  • It is necessary to provide a working bathroom. Therefore, properly working bathroom fixtures, such as a sink, toilet, and bathtub or shower, must be usable for it to be fit for occupancy.
  • A consistently recurring problem may not fit the implied warranty of habitability. For example, if there is a problem with lack of heat, this is a breach of the implied warranty of habitability.
  • Electrical lighting, with wiring and electrical equipment that conformed to applicable law at the time of installation, must be maintained in good working order.
  • There must be locks on all exterior doors and locks or security devices on windows designed to be opened that are maintained in good working order.
  • Recent amendments to this bill state that the absence of mold is another requirement of a habitable residence.
  • Recent amendments to this bill also state that functioning appliances that conformed to applicable law at the time of installation, and that are maintained and in good working order are another requirement.

If a problem exists and the property owner does not provide the maintenance required to solve the problem, it can lead to a lawsuit filed for “breach of implied warranty of habitability” and is subject to the collection of punitive damages. The court has a very dim view of property owners that ignore the safety of their tenants. The court puts the burden of proof on the owner, not the tenant.

What are Habitability Claims

Over the years, courts have made many habitability rulings based on the Uniform Residential Landlord and Tenant Act, the URLTA. When faced with a difficult case between Landlord and Tenant, a judge will often consult the many points of this Act before rendering a decision. A number of states have based their statutory law on this act or the Model Residential Landlord-Tenant Code. Interpretations can vary with different judges and in different states. In addition, states will often model their legislation on rulings based on those of another state. Many people are unaware of the existence of these acts and their impact on tenant relations.

Landlord-tenant law in the United States originated from English common law developed within an agricultural society. The URLTA stems from this.

The basic purposes of the act were to:

  • Simplify, clarify, modernize, and revise the laws governing the rental of dwelling units and the rights and obligations of landlords and tenants.
  • Encourage landlords and tenants to maintain and improve the quality of housing.
  • Make uniform the law with respect to the subject of this Act among those states that enact it.
  • There are many specific definitions included such as good faith, building, and housing codes, dwelling unit, landlord, owner, person, premises, rent, rental agreement, single-family residence, tenant, etc.

Exceptions to Warranty of Habitability:

  • If the uninhabitable condition is the result of stalking, or domestic violence, domestic abuse, unlawful sexual behavior upon the tenant and the landlord has been given written notice and evidence of the domestic violence, abuse, or stalking.
  • If the uninhabitable condition is the result of a casualty or catastrophe to the dwelling unit, the landlord may terminate the rental agreement without further liability

Are Landlords responsible for Pest Control?

Unfortunately, there are many cases where landlords have ignored maintenance concerning “habitability.” These actions have lead to major court decisions. This in turn has produced more Fair Housing laws, lead based paint requirements, mold legislation, and more, all of which have a far-reaching impact on investment property.

How long does a Landlord have to make a repair in Colorado?

 

What are the major changes to the warranty of habitability law?

The WHA now breaks WH claims into four distinct categories. Similar, to the old law, the new law classifies some WH claims as Section 505 claims. These claims are called Section 505 claims because the list of these claims is set forth in C.R.S. § 38-12-505. First, if a property lacks any of the characteristics on the 505 list, then it is considered uninhabitable. Second, any other condition at a property if the condition makes the property “unfit for human habitation”. What makes a property unfit for human habitation is a judgment call that is determined by the courts. The any other condition is often referred to as the catchall category. The third category is any condition that “materially interferes with a tenant’s life, health, or safety.” Matters that impact a tenant’s life, health, or safety (“LHS” claims) are deemed more serious in nature. Fourth, mold but only if the mold would “materially interfere with a tenant’s life health or safety” if not remedied. Thus, the presence of mold and the failure to remediate it does not automatically violate the WHA.

The WHA now covers appliances. Appliance means “a refrigerator, range stove, or oven that is included within a residential premise by a landlord for the use of the tenant pursuant to the rental agreement or any other agreement between the landlord and the tenant.” The law is written so that landlords can’t sidestep coverage by proving appliances in a separate written agreement outside of the lease.

The law now covers mold. “Mold” means microscopic organisms or fungi that can grow in damp conditions in the interior of a building. The mold provisions are some of the most onerous and confusing portions of the new law and are likely to cause landlords the most problems.

The new law drastically changes relocation rights and obligations. Under the old law, a landlord could, in the landlord’s discretion, move a tenant to a comparable unit after paying the reasonable costs that were actually incurred by a tenant in connection with a move. Under the new law, the tenant can request that the landlord move the tenant to a comparable unit or hotel, both of which would be selected by the landlord. However, a tenant can only make such request if the WH claim at issue is a LHS (life, health, or safety) claim. It is especially interesting that landlords are not required to relocate tenants for mold WH claims for two reasons:

  • First, the new law subjects qualifying mold claims to hazardous waste-type protocols.
  • Second, mold only becomes a WH issue if it would interfere with the tenant’s life, health, or safety. Similar to the old law, tenants are required to give written notice. However, the new law requires landlords to respond to such notices in specific ways and in specific time frames. The law specifically provides that tenants can give landlords electronic notice of warranty ofhabitability (WH) claims.

“Electronic notice” means notice by electronic mail, or an electronic portal, or management communications system that is available to both a landlord and a tenant. Landlords can dictate where tenants are required to send electronic notice in their leases. Accordingly, we strongly recommend that every landlord state in their lease where tenants are to send electronic WH notices. However, landlords need to be aware that tenants can deliver WH written notice by hand, or by any other delivery method, e.g. US Postal Service, Fed-Ex, etc. The revised WHA significantly redefines and expands tenant remedies. Tenants can now seek injunctive relief in county court, where before tenants could only seek injunctive relief in district court. The most significant remedy change is that that tenants are now allowed to make repairs and deduct the cost of such repairs from the rent. The repair and deduct process, in the new law, is extremely complicated and may likely lead to significant disputes.

With respect to appliances, in addition to repairing an appliance and deducting the cost of the repair from the rent, tenants also have the right to replace the appliance.

Finally, even if a landlord remedies a WH issue, if the same issue arises within six months, tenants now have the right to terminate the lease upon fourteen days written notice.

What triggers a landlord’s legal obligations under the WHA?

Reasonably complete written notice (RCWN) from a tenant triggers a WHA claim and starts the clock for a landlord to respond. Nowhere in the statute is “reasonable complete written notice” defined. However, the statute does state “reasonably complete written or electronic notice of the condition described” with respect to 505 claims, catchall claims, and LHS claims. At a minimum, a tenant’s notice must describe a condition that falls into one of the four categories previously discussed.

Does the tenant’s notice need to state, “warranty of habitability” or “I’m making a warranty
of habitability claim”?

No, a tenant’s notice does not need to state that that it is a WH issue or mention the statute. Because the notice must merely “describe the condition”, the law places the burden on the landlord to determine whether the tenant’s notice involves a WH claim. Accordingly, landlords will be required to make the WH determination on every maintenance request regardless of what the tenant’s notice states.

A couple of examples illustrate landlords’ new burden. For example, the tenant’s notice might simply state that his “electrical lighting” is not working. Since electrical lighting is on the 505 List, this would be a WH claim. By way of additional example, the tenant’s notice might state “I hereby put you on notice that you are violating the WHA because my garbage disposal doesn’t work”. Because garbage disposals are not a WH item, this would not be a valid WH claim.
Mold notices complicate the situation even further. Tenants put mold potentially into play as a WH issue by providing any notice of mold. But under the law, mold is only a WH violation if it would materially interfere with a tenant’s life, health, or safety.

Upon receipt of “reasonably complete written notice” (RCWN), what does a landlord have
to do?

A landlord must respond to RCWN within twenty-four hours. Landlord’s response must indicate landlord’s intentions for remedying the condition, including an estimate for when the remediation will commence and when it will be completed. The law doesn’t require landlord’s response in writing, but obviously this would be best practice.

We’re not open on Saturday or Sunday; do we still have to respond within twenty-four
(24) hours?

Yes. The law makes no exceptions. The poor drafting of the law benefits landlords because the new law fails to state any consequences or ramifications for failing to respond within twenty-four hours. Specifically, failing to respond to a notice within twenty-four hours is not a default in itself or even an element of default. Rather, a landlord can only breach the WHA when a landlord fails to commence remedial action after receiving RCWN within applicable time periods (96 hours for less serious offenses and mold, and 24 hours for LHS issues) after receipt of notice from a tenant.

Maintenance policies and maintenance practices vary significantly. Accordingly, there is no one
size fits all solution especially given the number of permutations.

When do landlords have to commence repairs?

The law requires landlords to promptly commence remedial action upon receiving RCWN from a tenant. How promptly is dictated by the category of WH claim. If the WH claim is a 505 List item, falls under the catchall provision (any condition that makes the premises unfit for human habitation) or involves mold, a landlord must commence remedial action within ninety-six (96) hours, but only if the tenant has included permission to enter the premises in the RCWN. Landlords must commence remedial action for LHS issues within twenty-four (24) hours regardless if the tenant has included the tenant’s permission to enter the premises.

When must a landlord complete repair for WH claims?

Except for mold, the new law is silent regarding landlord’s time to cure WH issues. The previous law required WH issues to be cured within a reasonable time. Generally, when the law states no time, a reasonable time is implied. A reasonable time is how long it would take a diligent property manager to complete repairs under similar facts and circumstances. Landlord’s original estimate of time to complete (assuming it is actually made) will bear on whether landlord has completed within a reasonable time.

When do mold events become WHA claims triggering a landlord’s response?

The answer to this question is the most important thing to know about mold and the new WHA.
Mold is only a WHA issue if the mold would materially interfere with the life health and safety
(LHS) of a tenant, if not remedied. This means most mold events are not WHA claims.

All landlords should have standard operating procedures (SOPs) to respond to tenant mold
issues. SOPs should focus on investigating, determining, responding, and educating. Landlords
should promptly investigate and determine whether a mold issue materially interferes with a
tenant’s LHS. If this threshold is not met, Landlords should promptly respond to the tenant in
writing and simultaneously educate the tenant that only mold that materially interferes with the
tenant’s LHS can be a potential WHA breach, and mold issues that do not rise to this level are
addressed as routine maintenance items.

Investigations and determinations will vary depending on the circumstances. In routine cases,
maintenance can respond and document (taking photos is advisable) small amounts of mold.
Subsequently, a standard form letter or template can be sent to the tenant stating that the mold
event is not a WHA issue but will be addressed in accordance with standard maintenance
policies.

In short, landlords will need their own mold guy to make the call that a mold issue does not
materially interfere with a tenant’s LHS. Finding the right person can be difficult. If your mold vendor is qualified, they should be able to opine based on a physical examination whether the tenant’s LHS is impacted. Upon receipt of an opinion that there is not an impact on the tenant’s LHS from your vendor, you should inform the tenant that it is not a LHS situation (a WHA claim) but that you will promptly take appropriate remediation measures.
If a mold issue does impact a tenant’s LHS, you won’t need a vendor to tell you since dangerous or serious mold issues are obvious.

According to the CDC, “[g]enerally, it is not necessary to identify the species of mold growing in a residence, and CDC does not recommend routine sampling for molds. Current evidence indicates that allergies are the type of diseases most often associated with molds. Since the susceptibility of individuals can vary greatly either because of the amount or type of mold, sampling and culturing are not reliable in determining your health risk. If you are susceptible to mold and mold is seen or smelled, there is a potential health risk; therefore, no matter what type of mold is present, you should arrange for its removal. Furthermore, reliable sampling for mold can be expensive, and standards for judging what is and what is not an acceptable or tolerable quantity of mold have not been
established.”

Assuming you have a legitimate mold issue, what are a landlord’s legal duties
in response to a mold under the new WHA?

Invariably, all water intrusion events, and dampness issues will be called mold claims under the new law. But landlords should know that it is theoretically possible to have WHA claim involving “dampness” without the presence of mold based on the statutory language. The statutory language is “mold that is associated with dampness, or any other condition causing the residential premises to be damp”.

Under the WHA, a mold claim under Section 2.2 cannot be a warranty of habitability issue unless the mold would materially interfere with the life, health, or safety (LHS) of a tenant. However, Section 2(a)(II) provides that a warranty of habitability claim can be based upon any issue that materially interferes with the life, health, or safety of a tenant. Mold can (but usually does not) interfere with LHS. When it does materially interfere with LHS, mold would have fit squarely within the LHS language in 2(a)(II).

Upon receiving Reasonably Complete Written Notice involving a mold claim, the law requires landlords, within ninety-six hours, to mitigate immediate risk from mold by taking specific actions. Landlords must install a containment (not defined in the statute), stop active sources of water (anybody who knows anything about mold would have said “terminate the mold’s moisture source”), and install a high-efficiency particulate air filtration (HEPA) device to reduce tenants’ exposure to mold. Landlords should be prepared to respond to tenant demands for
HEPA filters.
Landlords should note the inconsistent time frames between the mold section and the general LHS Section(2)(a)(II). Specifically, landlords get ninety-six hours to commence remedial action for mold claims, but only twenty-four hours on all other LHS issues. The ninety-six-hour requirement does not make sense given the statute defines mold as a LHS issue and landlords only get twenty-four hours to address Life Health Safety issues in Section 2(a)(II). Given that mold is almost always caused by a water intrusion event, most landlords will usually leap into action (immediately take action to stop the water source) in most mold scenarios.

Under the law, landlords must maintain containment until certain actions mandated by the statute are executed and landlords must completely address mold claims within a reasonable time. Assuming a valid mold issue, landlords are required to establish appropriate protections for workers and occupants, eliminate or limit moisture sources and dry all materials, decontaminate or remove damaged materials as appropriate, evaluate whether the premises has been successfully remediated, and reassemble the premises to control sources of moisture and nutrients and thereby prevent or limit the recurrence of mold.

Almost all mold found in rental housing is less than 10 square feet, and in the majority of cases is less than one square foot.

Under the WHA, when does a landlord have to provide a tenant alternative accommodations? And what are a landlord’s responsibilities in providing those accommodations?

A landlord must provide tenant alternative accommodations when the tenant’s notice describes a condition that materially interferes with the tenant’s life, health, or safety (LHS). Since the statute specifically refers to Section 2(a) II) and mold is its own section, logically landlords would not have to relocate tenants over mold issues.

Taken literally, many non-life-threatening maintenance issues could be viewed as materially interfering with a tenant’s life. For example, a tenant lives in a four-story building and the elevator goes out. While extremely inconvenient, this should not be a WHA issue. However, based on the statutory language, a tenant could argue that the issue is materially interfering with their life. This is a good illustration of how the potential impact of the WHA at this point remains largely in the hands of the courts. If the courts interpret life as being a tenant’s daily activities, the WHA will have an enormous impact. If the court’s interpret life as potentially causing death, then the WHA sweep will be much more reasonable.

Assuming a legitimate LHS issue, landlords are required to provide the tenant with a comparable dwelling unit, as selected by the landlord, at no expense or cost to the tenant. Alternatively, a landlord can provide the tenant with a hotel room, as selected by the landlord, at no expense or cost to the tenant.

While the landlord is required to provide alternative accommodations, the tenant remains responsible at all times for payment of the rent during any temporary relocation and the remainder of the term after the WHA issue is resolved. Accordingly, even while a WHA issue is being addressed, landlords can elect to terminate a tenant’s right of possession of the impacted unit for non-payment.

Can damage caused by the tenant be a breach of the WHA?

No. The WHA is clear on this. Maintenance issues or damage caused by the misconduct of the tenant, a member of the tenant’s household, a guest or invitee of the tenant, or a person under the tenant’s direction or control, cannot constitute a breach of the warranty of habitability.
Accordingly, a tenant who causes the problem cannot demand alternative accommodations. Because a landlord cannot breach the WHA if the tenant causes the problem, the first question a landlord should always ask when evaluating potential warranty of habitability claims is whether the tenant is responsible. Second, if a mold claim, landlords should determine if the mold interferes with the tenant’s life health or safety. Third, landlords should determine whether the issue is on the 505 list (INSERT 505 Link). Fourth, if not on the 505 list, landlords should
determine whether the condition otherwise makes the unit unfit for human habitation (this should be the only standard in our opinion). Fifth, landlords should determine if the issue is a condition that materially interferes with the tenant’s life, health, or safety.

As your property management company, we have the expertise to handle these important issues. We make habitability a primary concern to protect your investment.

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The material provided in this newsletter is for informational and educational purposes only. It is NOT legal advice. Although we believe this material is accurate, we cannot guarantee that it is 100% without errors.

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