December – 2014

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Somebody Has To Pay: Or Do They?
The Eviction Educator
Vic Sulzer Recognized As Community Volunteer

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Volume 15 • Issue 12 December 2014 Landlord News 3600 South Yosemite Street Suite 828, Denver, Colorado 80237 Denver Phone 303.766.8004 FAX Completed Eviction Forms To: 303.766.1181 or 303.766.1819 Colorado Springs Phone 719.550.8004 FAX Completed Eviction Forms To: 719.227.1181 SOMEBODY HAS TO PAY – OR DO THEY? Making the tenant pay for damage can be problematic. For example, a tenant’s own washing machine doesn’t stop filling and floods several units resulting in $15,000 of damage. The washer flooded because of a defective valve that failed to turn the water off. The tenant had no prior knowledge that the washing machine was defective or in need of repair, nor was the tenant’s use of the washer improper. The tenant carries renter’s insurance. However, the insurance company denies the tenant’s claim because the tenant was not at fault. OK, the insurance company won’t pay, but the tenant still has to pay the community right? Surprisingly, probably not. For a tenant to be legally liable in damages to a landlord, the landlord must have a legal basis to hold the tenant liable. In any tenant lawsuit, a landlord must prove two things. The landlord must first establish that there is a legal basis to hold the tenant liable for what happened. If a tenant is legally liable, the landlord must also prove damages. In our scenario, the landlord clearly will be able to establish damages. The problem is proving liability. Specifically, the landlord will have difficulty proving that the tenant is legally liable for the washing machine flood. While the law imposes legal liability based on many theories, the most common legal liability theories by far are contractual and tort. Contractually liability is straightforward. The tenant agreed to be liable so the tenant is liable. Tort (negligence) liability is based on duties imposed by society. For example, society imposes a duty to exercise caution while driving a car. Thus, if you are texting while driving a car and run over a pedestrian, continued on page 2 1. As we all know “Situations” happen all the time. How does THS handle the hundreds of situations that occur each Month to deliver the best service to clients in the most timely manner possible. We have a Situation Manager, Megan Sadler. She is the front line in situation management and is responsible for coordinating all requests from clients for advice on situations. Entering the situation data into our database she oversees the management of each situation to make sure that each situation is responded to as expeditiously as possible. Our Firm database allows THS to effectively communicate, respond, track and document all communications with our clients. Our Situation manager is also responsible for New Client Intake Interviews/ Consultations. To reach our Situation Department you can email or call the firm at 303.766.8004 and speak with Meg. 2. Holidays are upon us once again and with all of the activities of the season it is easy to loose track of important dates that may affect your filings. THS and the courts take time off during the holiday season. The normal court filing dates change when the courts are closed. Don’t miss a filing deadline. Check out the filing calendar online at filing-calendar/ . SOMEBODY HAS TO PAY – OR DO THEY? continued from page 1 you have breached the duty to exercise care while driving. Since you breached your duty of care while driving, you were negligent and are now legally liable for all damages that proximately flow from your negligent operation of a motor vehicle. Whether a tenant owes a legal duty, in a particular circumstance, is a question of law. When an issue is a question of law, the judge decides the issue. In our washing machine flood scenario, this means a judge would decide if the tenant owed you a duty with respect to operating the washing machine. Clearly, the tenant has duties to use the washing machine properly, and to not use the washing machine if the tenant knows that the machine is defective or in need of repair. But does the tenant have a duty to monitor the washing machine? After all, if the tenant was watching his wash, he could have turned the water off. Courts consider a number of factors in determining whether a person owes a legal duty to another. Factors include risk, the foreseeability and likelihood of injury, the magnitude of the burden of guarding against injury or harm, and the consequences of placing the burden upon an individual. No one factor is controlling. The question of whether a duty should be imposed in a particular case is essentially one of fairness under contemporary standards. Would reasonable persons recognize a duty and agree that it exists? Reasonable persons would not recognize a duty to watch a washing machine. We have all left washing machines unattended when doing our laundry. Based on Colorado legal precedent, tenants have no duty to monitor or watch washing machines when doing laundry. Without a legally imposed duty, a tenant can’t be held legally liable for negligent laundering. What about the lease? Surely, the tenant has to be liable for the washing machine flood under the lease. Again, the answer is probably not. Contractual liability is continued on page 3 VIC SULZER RECOGNIZED AS COMMUNITY VOLUNTEER We are very proud to announce that our Firm Partner Vic Sulzer was the recent recipient of the Minoru Yasui Community Volunteer Award. Vic was selected to receive this Award for his outstanding commitment and work with and on behalf of the Rocky Mountain Down Syndrome Association. This award is named for Minoru Yasui, an attorney, who was a community leader dedicated to improving the quality of life for all people and served as the Executive Director of the Denver Commission on Community Relations for 16 years. The Denver Foundation, who established this program in Minoru Yasui’s name believes that volunteers are the heart of our community and are a precious resource to nonprofit organizations and that the vital work of these community volunteers should be recognized and rewarded. As a recipient of this Award, Vic was presented with a $2,000 check for the Down Syndrome Association. JJJJJJJJJJJ Landlord News December 2014 Page 2 IMPORTANT THS DECEMBER DATES December 19th THS CLOSED AT NOON THS HOLIDAY LUNCH December 22nd-26th JEFFERSON COUNTY NOT HEARING CASES NO FILING WEEK BEFORE CAN FILE FOR FOLLOWING WK CHRISTMAS HOLIDAY December 25th ALL COURTS CLOSED CHRISTMAS HOLIDAY December 25th -26TH THS Closed CHRISTMAS HOLIDAY SOMEBODY HAS TO PAY – OR DO THEY? continued from page 2 based upon agreement. For example, in every lease, the tenant agrees to pay the rent. Thus, if a tenant doesn’t pay the rent, the tenant breaches the agreement and is legally liable in contract for the rent. To hold the tenant legally liable in our scenario, your lease must have a clause where the tenant agreed to be liable for events that cause damage even if the tenant was not negligent. Based upon our experience, most leases do not hold tenants strictly liable for events regardless of negligence or fault. Rather, most leases make tenants liable for intentional or negligent acts, including both THS’s lease product and the National Apartment Association’s Blue Moon lease. For example, a tenant shall always be liable to an owner for any damage caused, whether intentionally or through negligence, by tenant any occupant, family member, guest, invitee, licensee of tenant, or any other person on the premises or the community due to tenant. Negligence includes acts of commission (breaching a duty by overt act) and acts of omission (breaching a duty by failing to do something the tenant should have done, e.g. leave the heat turned on during the middle of winter when the tenant is absent from the unit for an extended period of time). OK, we get it. The tenant isn’t going to be held liable based on a negligence theory and our current lease probably doesn’t protect us. So the solution is to fix our lease, right? Yes, we definitely recommend fixing washer and dryer language in your lease as a step in the right direction. You should add language similar to the following: Regardless of Tenant’s knowledge or fault, Tenant assumes all risks and agrees to assume strict liability for all damages to the Premises, to other units, and to personal property in the Premises and other units caused by the Tenant’s equipment, including but not limited to leaks and flooding. Owner’s insurance will not cover such damages. Tenant agrees to indemnify Owner and Agent and their agents for any and all damages of any kind arising from Tenant’s equipment. We know what you’re thinking. If a strict liability clause is great for washers, we should extend strict liability to all circumstances. Specifically, by agreement, let’s make the tenant liable for every event regardless of fault, and regardless if the tenant has any connection to the damage. Such a clause is known as a blanket indemnity clause. Blanket indemnity clauses shift all risk of damages from one party to another regardless of fault or the circumstances. Courts have routinely held that blanket indemnity clauses in residential leases are unenforceable. A well- written lease should impose liability on tenants for damages negligently or intentionally caused by the tenant. When your lease’s general damage clause goes from being based on fault to a blanket indemnity clause, you risk having a court ruling that your damage clause is unenforceable even in fault cases. In no-fault cases, specific strict liability clauses will give you a chance, but unfortunately a specific strict liability clause won’t guarantee that you will be reimbursed for flooding washing machine damages for several reasons. First, and foremost, even with a strict liability clause (the tenant is liable for washing machine related damages regardless of fault), you may not prevail in court. Absent knowledge (tenant knew that the machine was in need of repair or was defective) or fault (tenant overloaded machine or used improperly), many, if not most, judges may be reluctant to stick a tenant with a $15,000 repair bill for doing what every American does, starting the washing machine and leave. Assuming no knowledge or fault upon the part of the tenant and even if you have a strict liability clause, a judge could easily find that the tenant is not liable for a washing machine flood based on the adhesion contract or unconscionabilitydoctrines. An adhesion contract is a contract drafted unilaterally by a business enterprise and forced upon an unwilling and often unknowing public. An adhesion contract is generally not bargained for, but is offered on a “take it or leave it” basis. Similarly, a finding of unconscionability can result based upon overreaching on the part of one of the parties that results from an inequality of bargaining power. Based on Colorado law, continued on page 4 Landlord News December 2014 Page 3 SOMEBODY HAS TO PAY – OR DO THEY? continued from page 3 these doctrines should not defeat a limited strict liability contract clause. However, courts can and do use both the adhesion contract or unconscionability doctrines to justify not holding tenants liable. Strict liability clauses also do not solve the renter’s insurance problem. Even if you have a strict liability clause and the court enters judgment against the tenant for the damage, the tenant’s renter’s insurance, in all likelihood, still won’t pay the claim. Again, renter’s liability insurance only covers negligent acts on the part of the tenant. Renter’s liability insurance does not cover damages based upon the intentional acts of a tenant or damages that result without tenant fault. Your sole remedy at that point is to collect from the tenant. Because most tenants can’t pay a $15,000 judgment, you’re left with a $15,000 judgment against the tenant that you can’t collect. Absent fault, tenants are not always liable for all damage events. If a tenant is not at fault, you should carefully evaluate the tenant’s legal liability. The only thing worse than a tenant or an insurance company not paying is wasting your time, effort, and more money pursuing a futile claim. Scenarios involving malfunctioning appliances such as washers are among the most common damage scenarios where a tenant may not be at fault. If your community or your portfolio keeps incurring losses, you should evaluate changing your lease to impose strict liability on the tenant regardless of fault for specific damage scenarios. However, strict liability should only be imposed in limited circumstances. Otherwise, you may risk your ability to recover damages from the tenant in cases where the tenant is clearly at fault. JJJJJJJJJJJ Holiday Greeting Happy Solstice, Happy Hanukkah, Merry Christmas, Happy Kwanza Sorry for the delay…our Legal Department just approved the following Holiday Greeting: Please accept with no obligation, implied or implicit our best wishes for an environmentally conscious, socially responsible, low stress, non-addictive, gender neutral, celebration of the winter solstice holiday(tm), practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all . . . and a fiscallysuccessful, personally fulfilling, and medically uncomplicated recognition of the onset of the generally accepted calendar year 2015, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great, (not to imply that America is necessarily greater than any other country or is the only “AMERICA” in the western hemisphere), and without regard to the race, creed, color, age,physical ability, religious faith, choice of computer platform, or sexual orientation of the wishee. By accepting this greeting, you are accepting these terms: This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting. It implies no promise by the wisher to actually implement any of the wishes for her/himself or others, and is void where prohibited by law, and is revocable at the sole discretion of the wisher. This wish is warranted to perform as expected within the usual application of good tidings for a period of one year, or until the issuance of a subsequent holiday greeting, whichever comes first, and warranty is limited to replacement of this wish or issuance of a new wish at the sole discretion of the wisher. Landlord News December 2014 Page 4 Questions Where can you find literature about Santa’s assistants? In the Elf-help section. What do you call people who are afraid of Santa? Claus-trophobic. Landlord News December 2014 Page 5 The THS Team Extend Our Very Best Wishes To Our Clients and Friends For A Happy Holiday Season And A Bright and Prosperous New Year We appreciate the loyal support of all of our clients