Landlord-Tenant Obligations in Aftermath of Hurricane Sandy

Warranty of Habitability Residential tenants in New York are protected by the warranty of habitability, set forth in the New York Real Property Law (RPL) §235-b, which is implied in every residential lease to ensure that the premises are habitable and fit for the uses reasonably intended by the parties and that there are no conditions in the premises, or the common areas, that are detrimental to the occupants' life, health or safety. In explaining the rationale for RPL §235-b and its departure from the common-law rule (and its often draconian consequences) that a landlord's failure to repair does not suspend the tenant's obligation to pay the entire rent, the Court of Appeals has compared the rental of residential property to a sale of shelter and services where implied sales warranties should apply. Park West Mgt. v. Mitchell, 47 N.Y.2d 316, 324, 418 N.Y.S.2d 310 (1979). The warranty of habitability applies to all residential housing units rented in New York, including cooperatives,[FN1] but it does not extend to condominium owners.[FN2] In order to constitute a breach of the warranty of habitability, a condition must materially affect the habitability of the premises or the tenant's health and safety.[FN3] While there is no clear rule as to the circumstances in which courts will find that a breach has occurred, many of the conditions that commonly result from a severe storm, including the loss of electricity, heat and hot water,[FN4] the reduction of elevator service[FN5] and other "essential services,"[FN6] non-functioning appliances,[FN7] leaks and flooding,[FN8] and odors, mildew and mold,[FN9] have been held to constitute a breach of the warranty of habitability. Conversely, however, RPL §235-b does not require that the premises be in perfect condition[FN10] or that a heightened standard be applied to luxury apartment buildings.[FN11] If the warranty of habitability is breached, the fact that the landlord is not at fault is not generally a relevant consideration. The landlord's good faith may only be raised as a defense if the landlord is prevented from making repairs by a strike or labor dispute. Otherwise, the landlord is responsible for the acts of third parties and other events that are beyond the landlord's control. This means that if a tenant is displaced from the leased property as the result of a storm or natural disaster, such as Hurricane Sandy, the landlord may be responsible for breach of the warranty of habitability even if the landlord took precautions to protect against damages. In Park West, a seminal case considering the scope of RPL §235-b, where the tenants' claim was based on a 17-day labor strike of maintenance and janitorial staff (this case pre-dates the statutory exemption for strikes and labor disputes), the Court of Appeals held that the tenants were entitled to a rent deduction, noting that RPL §235-b creates an "unqualified obligation" not excused by the "acts of third parties or natural disaster." Flooding and Other Damage Like Hurricane Sandy, the destruction of the World Trade Center on Sept. 11, 2001, was a tragedy of unprecedented proportions, which created hazardous conditions in the homes of many New Yorkers. In Duane Fabs Properties v. Cronus Consulting, Sept. 11, 2002 NYLJ 18, col. 5 (Sup. Ct. N.Y. Co.), the only reported case addressing the application of the warranty of habitability in the context of the 9/11 attacks, the court held the landlord responsible for air pollution and other conditions resulting from the attacks. In Duane Fabs, the tenant rented an apartment several blocks north of Ground Zero before 9/11, but was forced to abandon the apartment when his health deteriorated due to air and noise pollution created during the clean-up process. When the landlord sued the tenant to collect the balance of the rent due under the lease, the tenant asserted, as an affirmative defense, that the landlord had breached the warranty of habitability. In denying the landlord's motion to dismiss the defense, the court echoed the Park West decision, stating, without equivocation, that RPL §235-b "can apply to conditions beyond the Landlord's control, including acts of third parties and natural disasters." Similarly, in McGuinness v. Jakubiak, 106 Misc.2d 317, 431 N.Y.S.2d 755 (Sup. Ct., Kings Co. 1980), the tenant's apartment was flooded due to a defective roof during a great rainstorm on May 14, 1978. The apartment was rendered uninhabitable, and the floods caused extensive property damage. While acknowledging that the tenant had not previously complained of roof leaks in the apartment, the court took note of the expansive scope of RPL §235-b established under Park West and held that there need not be a showing that the landlord acted in bad faith or contributed to the defective condition. The court unflinchingly granted partial summary judgment against the landlord on the issue of liability under the warranty of habitability. In McBride v. 218 E. 70th Street Associates, 102 Misc.2d 279, 425 N.Y.S.2d 910 (1st Dept. 1979), the court considered a landlord's liability under the warranty of habitability under circumstances similar to those faced by many New Yorkers during Hurricane Sandy. In McBride, the tenant's "below grade" apartment was flooded after the New York City storm sewers were overwhelmed by extremely heavy rainfall. The tenant relied on RPL §235-b to sue the landlord for damages resulting from the latest of eight floods, which had inundated the apartment with six inches of water. The tenant moved for summary judgment on her claim of breach of the warranty of habitability. The Appellate Term reversed the decision of the court below, which denied the tenant's motion for summary judgment, and ruled that the motion should have been granted in the tenant's favor on the issue of liability. The court specifically addressed, and rejected, the "landlords' protestations of being victimized by circumstances beyond their control," finding that a breach of RPL §235-b had been established by the tenant's showing that the apartment was uninhabitable and that the tenant did not in any way cause or contribute to the flooding. Limitations on Enforcement While the determination of whether a breach of RPL §235-b has occurred is a heavily fact-driven inquiry, made on a case-by-case basis, courts have showed no hesitation in placing the onus of repairs on landlords even when they are necessitated by events that are wholly out of the landlord's control. While, fortunately, New York courts have had few occasions to apply this principle to natural disasters on the scale of Hurricane Sandy, the expansive view of RPL §235-b taken by courts would appear to encompass even the extraordinary damages left in Hurricane Sandy's wake. However, there are limitations on the enforcement of the warranty of habitability in order to protect landlords. For example, the landlord must have had either actual or constructive notice of any conditions requiring repair[FN12] and the tenant must provide the landlord with reasonable access to make any such repairs.[FN13] And while the tenant may wish to undertake any necessary repairs and set off their cost against the rental obligation, the tenant may only do so if the landlord has first been notified of the conditions in need of repair and fails to take action in due course to provide a remedy.[FN14] Moreover, a breach of the warranty of habitability does not give a tenant the right to unilaterally cancel the lease. The tenant remains bound by the terms of the lease, subject to any claim or offset against the rent under the warranty of habitability, giving the landlord a strong incentive to make repairs as quickly as possible. If there is a breaching condition in the premises, the warranty of habitability may be used as a shield, permitting the tenant to withhold rent and assert the breach as a defense in any summary nonpayment proceeding brought by the landlord, or as a sword, allowing the tenant to raise the breach as a counterclaim or in a plenary action. In determining the appropriate "abatement" or rent deduction to which a tenant is entitled, courts will balance the nature, severity and duration of the breach against the landlord's diligence in making repairs. Depending on the circumstances, an abatement can range from a reduction of a few percent to the full amount of the rent. However, courts have held that RPL §235-b will not support a tenant's claim for personal injuries,[FN15] and courts in the First and Second departments have limited a tenant's ability to recover for damages to personal property.[FN16] In situations such as a severe storm, where habitability issues can impact an entire building, a group of tenants or a tenants' association will sometimes band together in a "rent strike" to collectively withhold rent until necessary repairs are made by the landlord. While no single statute or regulation governs rent strikes, tenants' right to pool their resources and act in concert to compel repairs is protected under RPL §230. Notably, the warranty of habitability protects only residential tenants. The rights and obligations of commercial parties are governed by the parties' agreement. Conclusion In the aftermath of 9/11, very few landlord-tenant disputes reached New York courts as most were settled in the spirit of compromise engendered by New Yorkers' shared feelings of loss and solidarity. One would hope that, with some direction from New York law, this same spirit will guide landlords and tenants in facing the many issues to be faced following Hurricane Sandy. Damon Howard is a partner at Ephron-Mandel & Howard, and is a coauthor of 'New York Residential Landlord-Tenant Law and Procedure,' published by the New York State Bar Association. Endnotes: 1. Suarez v. Rivercross Tenants' Corp., 107 Misc.2d 135, 137, 438 N.Y.S.2d 164 (1st Dept. 1981). 2. Frisch v. Bellmarc Mgmt., 190 A.D.2d 383, 389, 597 N.Y.S.2d 962 (1st Dept. 1993). 3. Solow v. Wellner, 86 N.Y.2d 582, 588, 635 N.Y.S.2d 132 (1995). 4. See, e.g., 111 East 88th Partners v. Simon, 106 Misc.2d 693, 694-695, 434 N.Y.S.2d 886 (Civ. Ct., N.Y. Co. 1980), judgment aff'd as modified, 127 Misc.2d 74, 489 N.Y.S.2d 139 (1st Dept. 1985). 5. See, e.g., Levine v. Raffe, 133 Misc.2d 1038, 1039, 508 N.Y.S.2d 837 (Civ. Ct., N.Y. Co. 1986). 6. See, e.g., Salva v. 446-452 Ft. Washington Ave., 26 Misc.3d 1234(A), 2010 N.Y. Slip Op. 50368(U) at *5 (Civ. Ct., N.Y. Co. 2010). 7. See, e.g., Whitehouse Estates v. Thomson, 87 Misc.2d 813, 815, 386 N.Y.S.2d 733 (Civ. Ct., N.Y. Co. 1976). 8. See, e.g., McBride v. 218 E. 70th Street Associates, 102 Misc.2d 279, 283, 425 N.Y.S.2d 910 (1st Dept. 1979). 9. See, e.g., 360 W. 51st St. v. Cornell, Sept. 6, 2005 NYLJ 18, col. 1 (Civ. Ct. N.Y. Co.), aff'd, 14 Misc.3d 90, 831 N.Y.S.2d 634 (1st Dept. 2007). 10. See, e.g., Park West Mgt. v. Mitchell, 47 N.Y.2d 316, 328, 418 N.Y.S.2d 310 (1979). 11. Solow v. Wellner, 86 N.Y.2d 582, 589, 635 N.Y.S.2d 132 (1995). 12. See, e.g., Moskowitz v. Jorden, 27 A.D.3d 305, 812 N.Y.S.2d 48 (1st Dept. 2006); Windemere Chateau v. Hirsch, 22 Misc. 3d 1108(A), 880 N.Y.S.2d 228 (Civ. Ct., N.Y. Co. 2008). 13. See, e.g., Fifty Seven Associates v. Feinman, 30 Misc.3d 141(A), 924 N.Y.S.2d 309 (1st Dept. 2011). 14. Katurah Corp. v. Wells, 115 Misc.2d 16, 17, 454 N.Y.S.2d 770 (1st Dept. 1982). 15. Barragan v. Mathai, 253 A.D.2d 508, 509, 677 N.Y.S.2d 157 (2d Dept. 1998); Elkman v. Southgate Owners, 233 A.D.2d 104, 105, 649 N.Y.S.2d 138 (1st Dept. 1996). 16. Mastrangelo v. Five Riverside Corp., 262 A.D.2d 218, 692 N.Y.S.2d 350 (1st Dept. 1999); Concetto v. Pedalino, 308 A.D.2d 470, 764 N.Y.S.2d 638 (2d Dept. 2003).