Landlords Are Getting Hit With Pricy Habitability Lawsuits

Are your units habitable? When landlords and property managers don’t maintain properties and fix issues promptly, they can be hit with habitability lawsuits, and juries have been handing down large awards. In addition to increasing landlord liability, the litigation trend is also affecting landlord insurance coverage.

Trends in Habitability Lawsuits

Tenants may sue landlords for failing to maintain habitable properties. When these lawsuits occur, they can involve multiple tenants and span years of residency, contributing to complex and costly litigation.

Not every lawsuit makes the news, but there are several news stories of recent habitability lawsuits.

• More than 200 tenants brought a lawsuit against an apartment complex in Colorado alleging long-term uninhabitable conditions. According to CBS News, a jury awarded tenants a 31.42% rent reduction for those who lived in the complex from late 2018 through mid-2022.
• A jury in Kansas City awarded $40,000 to a tenant. According to the Kansas City Defender, the tenant says she dealt with a rat infestation, sewage backup, and other problems for months. She withheld rent due to the conditions. The landlord initiated legal action to recover the unpaid rent, and the tenant countered with habitability claims.
• A Nevada jury has awarded $6.6 million to three tenants. According to Multifamily Dive, the tenants say they lived in an apartment unit for three months, and during that time, toxic mold stemming from unfixed leaks negatively affected their health. One of the tenants, a child, experienced an asthma attack and had to go to the hospital.

CRC Group says California juries have been handing down larger awards, sometimes seven figures, in habitability cases. Insurers have responded by adding exclusions that reduce their risk. As a result, landlords may have difficulty securing coverage for claims related to certain habitability hazards.

When Is a Unit Uninhabitable?

Habitability standards can vary by jurisdiction, depending on the state and local laws in place. To determine exactly what is required, landlords and property managers should review all relevant laws.

Common habitability standards may include the following:

• The unit and common areas must be free of pests and mold.
• The plumbing system must function, so tenants have access to running water, and there must be a functioning toilet.
• The electrical system must function and be up to code.
• A functioning heater and/or air conditioner may be required.
• Units may require working smoke and carbon monoxide detectors. Landlords may also be required to provide working fire extinguishers.
• The common areas must be free of garbage, and tenants must have access to adequate garbage bins.
• Structural Integrity. The unit and common areas must be structurally sound with no hazards.
• Water Intrusion. The unit must be free of water leaks.

What Rights Do Tenants Have?

Tenant rights vary based on state and local laws. However, in many jurisdictions, tenants have a right to a habitable living space and prompt repairs.

If the landlord or property manager does not make repairs or address habitability issues, the tenant may have the right to withhold rent or deduct the cost of repairs that they have paid for themselves. This is highly dependent on the location and the relevant laws.

For example, in Los Angeles County, repairs are considered urgent if they pose a health or safety risk, such as a broken heater during the winter, bad electric wiring, infestations, or a lack of hot water. Urgent repairs must be handled immediately. If the landlord fails to address urgent repairs immediately, the tenant has several options, including moving out, withholding rent, deducting the cost of repairs from rent, or suing the landlord.

How Can Property Owners and Managers Protect Themselves?

For property owners and managers, allegations of uninhabitable conditions can be costly, resulting in lost rental income and legal expenses. Insurance exclusions could also leave landlords without coverage for certain types of claims.

Property owners and managers can protect themselves by doing the following:

• Make sure tenants can always reach someone for emergencies. Water leaks, burst pipes, broken heaters and other urgent problems don’t always happen during regular business hours. Tenants should have an easy way of reporting emergencies.
• Respond to issues promptly. Urgent issues require immediate attention.
• Keep records. In case there are any disputes, keep detailed records of all repairs and maintenance, as well as logs of tenant requests and your response.
• Know your responsibilities. Specific requirements vary greatly, and new rules can create additional requirements. For example, Los Angeles County recently passed an ordinance establishing new cooling requirements in rental units. Review the laws and keep up with changes.

One more tip: make sure you have solid landlord insurance. Heffernan Insurance Brokers provides customized real estate insurance to protect your properties. Learn more.