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2019
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Missouri’s implied warranty of habitability: It’s time for meaningful clarification

Vol. 75, No. 5 / September - October 2019

Summary

Many tenants and landlords in Missouri have been waiting for more guidance regarding the enforceability of the implied warranty of habitability and the question of whether a tenant who remains in possession must pay rent into escrow to assert the warranty of habitability as a defense or counterclaim to a rent and possession case.

Jana Ault-Phillips and Carol J. Miller [1]

Many tenants and landlords in Missouri have been waiting for more guidance regarding the enforceability of the implied warranty of habitability and the question of whether a tenant who remains in possession must pay rent into escrow to assert the warranty of habitability as a defense or counterclaim to a rent and possession case.

Missouri's Implied Warranty of Habitability

Recognizing the duty of the landlord to repair began in Missouri 50 years ago,[2] and since that time there has been very little substantive clarification from the courts or legislature, beyond acknowledging the enforceability of local housing codes.[3] Presented with the opportunity to address this situation in Kohner Properties, Inc. v. Latasha Johnson,[4] the Supreme Court of Missouri deliberated for more than 500 days before issuing a per curiam decision that deferred to the trial judge regarding the role of rent escrow, citing King v. Moorehead.[5] The ball is now in the court of the Missouri General Assembly to provide a more modern, comprehensive approach to residential landlord/tenant law that accomplishes the goal of the implied warranty of habitability.

History

The common law warranty of habitability was recognized by the Supreme Court of Missouri in Detling v. Edelbrock in 1984. Elements for the common law cause of action for breach of implied warranty of habitability are:

  1. A lease for residential property;
  2. Subsequent development of dangerous or unsanitary conditions on the premises materially affecting the life, health, and safety of the tenant;
  3. Tenant’s reasonable notice of defects to the landlord; and
  4. Landlord’s subsequent failure to restore the property to habitability.[6]

This recognition of the cause of action was not premised on a prerequisite that a tenant pay rent into escrow. The cause of action for breach of implied warranty exists at common law and is not superseded by Missouri’s Enforcement of Minimum Housing Code Standards Act (“MHCSA”), discussed below.[7]

In the 1973 landmark appellate case of King v. Moorehead, the landlord filed a rent and possession case, to which the tenant asserted two affirmative defenses based on the illegality and unenforceability of the rent agreement: (1) violation of the Housing Code of Kansas City, Missouri, and (2) failure of the landlord to fulfill an implied covenant to provide safe, sanitary, and habitable conditions.[8] The court in the King case discusses in detail the history of the evolution of the implied warranty of habitability, but it did not base its decision squarely on that theory. By the time the affirmative defenses were asserted, the tenant had vacated the premises without paying rent for the last three months. Since the tenant vacated the premises, rent escrow as a prerequisite to retaining possession or asserting a defense was moot. Therefore, that discussion is arguably dicta. Instead, the Missouri Court of Appeals for the then-Kansas City District concluded that “the defense of illegality of the lease is inconsistent with the affirmative defense of breach of warranty of habitability of that lease.”[9] Upon remand, the tenant would have to choose between the defenses, and the landlord would have an opportunity to assert a claim for reasonable value.

Whether it is dicta or precedent, the King court recognized that an “implied warranty of habitability and its breach, [is] an issue properly asserted as a defense and counterclaim to the landlord-respondent’s claim for rent.”[10] The King case further concluded that breach of the implied warranty of habitability “justifies retention of possession by the tenant and withholding of rent until habitability has been restored. A tenant who retains possession, however, shall be required to deposit the rent as it comes due in custodia legis [with the trial court in escrow] pending the litigation.”[11]

The 2018 case of Kohner Properties, Inc. v. Latasha Johnson presented a new opportunity to clarify the circumstances in which assertion of a warranty of habitability claim or defense was appropriate. Johnson withheld two months’ rent in an attempt to force her landlord to repair a leak in the ceiling of her apartment’s only bathroom. According to Johnson, the problem persisted for several months and included mold, a collapsed ceiling, and the inability to use the bathtub, which was below the impacted area. The landlord taped a large plastic bag over the hole in the ceiling to catch the water. Other habitability issues included cracks in the bathroom floor and an improperly working stove. Due to limited resources, Johnson was unable to obtain alternate housing, despite the health risks to her and her daughter associated with remaining in this premise.

According to the landlord, Kohner Properties, it responded promptly to each of Johnson’s maintenance requests. There was conflicting testimony regarding whether Johnson’s refusal to grant access to the apartment prevented Kohner’s proper repair of the ceiling and floor tiles. Kohner filed suit for rent and possession due to Johnson’s failure to pay rent or vacate the apartment. Johnson raised an affirmative defense and counterclaim based on Kohner’s breach of the implied warranty of habitability. After a hearing, the trial court held that Johnson was barred from raising the warranty of habitability as a defense because she did not continue to pay her rent or pay rent in escrow to the court, but the court did allow her to offset the costs of hotel nights where she stayed to shower because the landlord breached the maintenance clause of the lease.[12]

The Court of Appeals in Kohner held that a “tenant’s submission of the entire contracted-for rent to the court in custodia legis is not an automatic prerequisite to a tenant raising the landlord’s breach of the warranty as a defense or counterclaim in a rent and possession suit against her. [13] It viewed the King case’s prerequisite that a tenant deposit rent with the court as nonbinding dicta.[14] The appellate court in Kohner recognized the discretionary right of the trial court to (a) order the tenant to pay rent into escrow in a rent and possession case, and (b) “enter a suitable protective order upon either party’s request and after notice and an opportunity to be heard by the opposing party.”[15] The case was transferred to the Supreme Court of Missouri.

In affirming the trial court’s ruling, the Supreme Court in Kohner held that “circuit courts may exercise discretion [emphasis added] on a case-by-case basis to determine whether an in custodia legis [rent escrow] procedure is appropriate.”[16] The Supreme Court stated that the King ruling was dicta; thus, the Court set new precedent in Kohner by holding that a circuit court has the discretion to require rent escrow of part or all of the accrued or accruing rent when the tenant remains in possession of the premises. The Court, however, did not remand the case to provide the tenant with an opportunity to comply. Since the case was not remanded for a rehearing, the tenant was denied an opportunity to pay the rent into escrow or argue for rent abatement after the new precedent was established. In contrast, the tenant and landlord were allowed to clarify their claims and defenses on remand in the King case.[17]

A tenant needs to be told by the court that rent escrow is required prior to dismissal of the claim or defense for lack of escrow. Discretionary rent escrow may require some modifications to the sequences of pleadings and presentation of evidence to avoid barring the assertion of an affirmative defense that is plead before the trial court determines whether to require rent escrow. If the landlord and tenant are provided an opportunity to present evidence before the court makes a determination regarding rent escrow, the tenant’s compliance would then be a matter for the court to monitor or the landlord to assert.

In Jamerson v. Boone, the Missouri Court of Appeals for the Eastern District relied on the Supreme Court’s Kohner decision to uphold the trial court’s denial of a tenant’s implied warranty of habitability defense for failure to escrow withheld rent.[18] The Jamerson court stated, “… we will not fault this trial court for following the status quo in Missouri.”[19] Following the status quo defeats the purpose of the warranty of habitability and the right of the tenant to raise legitimate defenses to rent and possession cases.

Instead of developing a uniform standard for what constitutes a violation of the warranty of habitability, Missouri enacted the Enforcement of Minimum Housing Code Standards Act (MHCSA) [20] in 1969, which provided for enforcement of local housing codes. These local housing codes establish what constitutes conditions harmful to life, health, and safety of a tenant and require landlords to initiate repair of these conditions.[21] In interpreting the MHCSA, the Court of Appeals in King concluded that it “is consistent with these legislative policies that in every residential lease there be an implied warranty. . . Under contract principles a tenant’s obligation to pay rent is dependent upon the landlord’s performance of his obligation to provide a habitable dwelling during the tenancy.”[22] The Supreme Court of Missouri in Detling concluded that these legislative remedies co-exist with the common law implied warranty of habitability and were not intended to supersede it.[23] Based on this interpretation, tenants’ rights to asserting the implied warranty of habitability are not constricted to statutory notice, procedures, and remedies.

Initially the MHCSA allowed one-third of occupants in a building to petition the court to appoint a receiver to perform an abatement of code violations. To provide funds for repairs, the court could order rents be paid in escrow to the court for use by the receiver. A subsequent amendment allowed rent payments to be made directly to the receiver if the condition in the dwelling constitutes a nuisance.[24] This civil nuisance action by tenants was precluded with the 1998 amendments to MHCSA, however, so that now only the county, municipality, local housing corporation, or neighborhood association can pursue this remedy.[25]

Missouri’s rent and repair statute, § 441.234, RSMo, provides tenants with a limited right to compel repairs or deduct those repairs from rent. The tenant must have resided in the premise for at least six months and be current on rent payments. This tenant must provide the landlord with 14 days’ written notice that a condition warrants repair. If the landlord fails to repair the condition, the tenant must get written certification from the city that the local municipal housing or building code has been violated. If the landlord fails to repair that condition, the tenant can pay for the repair and deduct from rent the greater of $300 or one-half of one month’s rent. This remedy can only be exercised once in a 12-month period.[26]

Trial courts have significant discretion in evaluating what constitutes an insufficient compliance with the obligation to provide a premise in habitable condition and sufficient proof of damages.[27] The result is a variety of standards for determining the materiality of a landlord’s breach. Courts consider the nature of the defect, the length of time the condition has existed, and its impact on the safety or health of the tenants.[28] Using a housing or building code is one method to determine whether there is a material breach of the implied warranty of habitability. According to Chris Straw, former director of building development services for the City of Springfield, Missouri, codes are sometimes ineffective, conflicting, confusing, and hard to enforce.[29] Springfield’s building development department received 11,200 service requests in 2016. [30] Straw told city council members about a landlord who “complied” with the running water mandate in Springfield’s code by providing a bucket for the tenant to fill with water and pour into the sink.[31]

Further complicating matters, many communities in Missouri do not have codes, and courts are faced with imperfect methods of determining the existence of a breach. In Tolliver v. 5G Homes, the circuit court of Cape Girardeau County found a material breach when conditions in a basement apartment included mold in the bathroom, waterlogged drywall in another area, and water-saturated carpet and pad in several bedrooms that also had mold growth.[32] The landlord promptly attempted to make repairs, but the continued presence of mold forced the tenant to vacate the apartment.[33]

Statutory Models for the Warranty of Habitability

Historically, a lease was viewed as a conveyance of an estate in land; there was no warranty of habitability for the condition of the house that happened to be on the land.[34] Through statute or court interpretation, implied warranties of habitability have evolved and replaced the doctrine of caveat lessee in modern residential leases.[35] There has not been uniformity with regard to whether it is the propriety of the courts or the role of the legislature to take the lead in adopting the warranty of habitability and remedies to support it.[36]

The 1972 Uniform Residential Landlord and Tenant Act (“URLTA”) serves as model legislation for the recognition of the warranty of habitability in 19 states.[37] Another 27 states have enacted their own version of warranty of habitability laws.[38] This was sometimes accomplished by amending their existing summary eviction statutes.[39] Missouri, Massachusetts, Pennsylvania, and the District of Columbia have recognized implied warranties of habitability through case law.[40] Only Arkansas fails to provide tenants with remedies against landlords who do not provide safe and habitable conditions,[41] and it has even imposed criminal liability on tenants who fail to pay rent and vacate the premises.[42

States Using URLTA Model for Landlord’s Duty to Maintain Premises[43]


Alabama Kentucky Ohio
Alaska Montana Oklahoma
Arizona Nebraska Rhode Island
Connecticut New Mexico South Carolina
Hawaii North Carolina Tennessee
Iowa North Dakota Virginia
Kansas + CL    

States Using Non-URLTA Model for Landlord’s Duty to Maintain Premises[44] 


California Louisiana New Hampshire Utah
Colorado Maine New Jersey Vermont + CL
Delaware Maryland New York Washington + CL
Florida Michigan Oregon West Virginia
Georgia Minnesota Pennsylvania Wisconsin
Idaho Mississippi South Dakota Wyoming
Indiana Nevada Texas  

Jurisdictions Using Common Law or Court Rulings for Landlord’s Duty to Maintain Premises[45] 


District of Columbia Massachusetts Pennsylvania
Illinois Missouri  

Uniform Residential Landlord Tenant Act

The URLTA is the first model legislation to incorporate the warranty of habitability and to require statutory remedies for its breach.[46] It requires residential landlords to make repairs and do what is necessary to maintain fit and habitable premises.[47] It serves as the model legislation for laws in 19 states.[48]

Under the URLTA, the tenant must first give the landlord written notice of the problems, after which that landlord has 14 days to initiate corrective action.[49] If the landlord fails to remedy the habitability problem within 30 days of the original notice, the tenant can terminate the lease.[50]

More than half of the states recognize a right similar to the URLTA for the tenant to terminate the lease and recover damages.[51] Tenants may receive damages for (a) diminished property value between the time of the notice and termination of the lease, (b) loss of benefits for the remainder of the lease, and (c) expenses associated with obtaining alternate housing.[52] Punitive damages are also possible in 21 states if the tenant can establish fraud, intentional, malicious, or willful and wanton conduct on the part of the landlord.[53] The URLTA [54] and statutes in several other states recognize the right to attorney’s fees if the landlord’s conduct is willful or unreasonable or the lease contains a clause permitting attorney’s fees.[55]

Constructive eviction is also a common remedy that allows the tenant to terminate the lease if the landlord breaches the implied warranty of habitability. As recognized in King, constructive eviction is an insufficient remedy for low-income tenants.[56] Where tenants lack the means to pay rent in escrow while simultaneously coming up with down payments and rent for a new residence, they face living in conditions that substantially affect the health or safety of their family or substantially compromise the use of the property. These are the very conditions that the warranty of habitability was intended to avert. Even the rent escrow requirements place the tenant in the Hobson’s choice of staying in the current housing despite the habitability problem or moving to another residence he or she cannot afford while waiting for the court to compel a remedy.

Constructive eviction is not always an adequate remedy for low-income tenants who may have difficulty finding alternate habitable and affordable housing. Often, there are limited options for individuals with physical disabilities and there may be waiting lists (of six months or longer) for units that will accommodate wheelchairs.[57] The stigma of being part of an eviction proceeding may result in denial of future subsidized housing (even when the landlord’s failure to maintain a habitable premise was the catalyst for the dispute).[58] As a result, low-income families often have to migrate to neighborhoods with potentially greater likelihood of habitability issues.[59]

In response to these issues, the URLTA and many states also allow tenants to retain possession of the residential property and withhold rent during the pendency of the implied warranty of habitability claim. If the tenant is allowed to withhold rent from the landlord, URLTA and most states require payment of that rent into an escrow account. The escrow account is frequently overseen by the court (hearing the eviction or habitability claim).[60] That court typically has discretion regarding the amount paid into escrow and the use of those funds, with the option of requiring some of the escrowed funds to be used to abate the habitability problem.[61] The rent escrow requirement prevents bad-faith tenants from avoiding rent payment, but also prevents bad-faith landlords from receiving revenues when they are not complying with warranty of habitability expectations.

URLTA § 4.105 specifically permits a tenant to assert a counterclaim in a rent or possession suit.[62] It allows the tenant to assert the warranty of habitability as a counterclaim and to withhold rent because of it. The accrued and continuing rent payments are instead paid to the court in escrow, at the discretion of the judge. When the counterclaim is filed, the court has discretion to address the rent payment issue “to protect the interests of (both) parties,” including determining whether the tenant’s claim has merit and is made in good faith.[63] Had a similar statutory requirement existed in Missouri, Johnson’s counterclaim for breach of the warranty of habitability in Kohner arguably might have had a different outcome.

Recommendations

The warranty of habitability is the cornerstone assurance that rental residences are safe and healthy. After almost 50 years in existence in Missouri, however, there are still tenants who are unable to benefit from the implied warranty of habitability because of its procedural deficiencies. Enforcement of the underlying rights of habitability are highly dependent on the actions of the courts. A workable strategy will require changes in legislation and in our courts aimed at reducing a tenant’s barriers to enforcement while incentivizing landlords to use rental funds to fix the habitability problems.

Legislative Implementation

A statewide statutory warranty of habitability, with clear standards and procedures to assure safe and habitable living conditions for residential tenants, would create uniform local housing codes in all communities. Currently, not all communities have local housing codes, and those that do vary in scope and the nature of the problems addressed. Although the MHCSA is an example of a rent escrow procedure that is already in place in Missouri,[64] the act only applies to dwellings that are subject to a housing code.[65] The rights and duties of landlords and tenants pursuant to the implied warranty of habitability require a much more detailed and comprehensive approach.

The Revised Uniform Residential Landlord Tenant Act (RURLTA) can serve as a model for a statewide standard for habitability requirements. RURLTA § 302 sets forth a list of what makes a premise “habitable.” In addition to complying with building codes, landlords must provide access to essential services, including heat, electricity, plumbing, and water. They must keep in good repair floors, ceilings, windows, locks, and appliances. Maintenance of the common area, trash removal, and safety equipment are also required.[66]

Warranty of habitability laws can establish clear standards and procedures that protect a landlord’s due process right to rent payments while providing the tenant with clear procedures for enforcing the warranty of habitability. The landlord’s interests are protected when the tenant must follow a statutory notice requirement to inform the landlord of the habitability problem and allow a reasonable period of time for the repair, in accord with RURLTA § 410. These prerequisites to withholding rent protect both the rights of the landlord and tenant. If the premises is not restored to habitable condition promptly, RURLTA § 402(a)(2)(A) lets the tenant continue in possession while raising the landlord’s warranty breach as a defense to nonpayment of rent in a rent and possession action. It does not, per se, require rent escrow as a prerequisite for tenants to raise a defense or counterclaim for a breach of the implied warranty of habitability.

Under RURLTA § 408(b), both the landlord and tenant have the right to request court-ordered escrow of rent. The court has discretion in releasing some of the escrowed funds to the landlord to facilitate the repair or to compensate tenants for making the repairs under § 408(d). This section also allows the court to use escrowed funds to compensate the tenant for actual damages suffered as a result of the lack of habitable conditions. If the rent escrow requirement is required when the tenant retains possession of the premises, the landlord’s property rights are protected by requiring the tenant to be current on rent payments, but it also assures that the tenant may recoup some or all of these funds once the court has determined the warranty of habitability has been breached.

Giving courts the discretion to require landlords to pay money into escrow when there is prima facie evidence of the breach of the warranty of habitability is another potential way to address the problem. Especially where the property becomes uninhabitable, necessitating that the tenant vacate the premises for health and safety reasons, these escrowed funds could be used to pay the tenant’s expenses in living elsewhere while the original premise is being repaired. Since a goal of the warranty of habitability is to assure that landlords repair the premise, instead of just renting it to a new tenant in the same inhabitable condition, the landlord escrow alternative is especially important to incentivise landlords who repeatedly violate the warranty. Landlords of low-rent housing may receive federal subsidies more substantial than the rent they receive from tenants. Where these landlords have been involved in multiple disputes concerning habitability of their rental units, the federal subsidies should also be paid into escrow during the dispute.[67] The lack of coordinated databases, however, exacerbates the problem of determining when landlords are chronic repeat offenders and results in continuing subsidies to many of these landlords.[68]

Making more information available to both landlords and tenants regarding their rights and responsibilities would also be helpful. Many court websites provide information and forms for landlords but not for tenants. Clay County and Greene County, for example, provide a sample petition for rent and possession.[69] Jackson County provides a five-page Landlord Complaint Court Filings booklet.[70] There are no corresponding forms or “how to” guides to assist a tenant with initiating an implied warranty of habitability case or pleading the breach as a defense.

Guides from the Attorney General’s office and The Missouri Bar could also more clearly address tenant rights and remedies. Currently such information is limited, and in some cases appears to discourage tenants from asserting their rights. Missouri’s Landlord-Tenant Law guide, published by the Missouri Attorney General’s office, does not even mention the implied warranty of habitability and succinctly states that if a landlord fails to make repairs, “… the tenant may seek legal assistance.”[71] It further provides:

If a tenant withholds rent payments until repairs are completed, the renter may be in violation of the lease and may be subject to eviction. In most circumstances, a tenant has no right to withhold rent. Missouri law provides only a very narrow exception to this rule for dangerous or unsanitary conditions that a landlord fails to fix.[72]

The Missouri Bar also publishes a brochure regarding tenants’ rights. In the section discussing what a tenant should do if a landlord does not make needed repairs, it provides in part:

… unfortunately, the tenant’s remedies are limited and, to some extent, cost-prohibitive.… Generally, … the tenant does not have the right to withhold rent. The preferred remedy under the law is that the tenant pays rent and brings a claim against the landlord for the damages. Unfortunately, the cost and inconvenience of bringing a claim to court against a landlord is frequently more trouble than the cost of the repair is worth.[73]

Some jurisdictions (such as New York City) are providing programs to educate tenants and enhance opportunities for their legal representation.[74] This is an example Missouri could emulate by requiring landlords to post tenant rights and HUD standards in the common area and to include a list of those rights with any delinquent rent or eviction notice.

Court Reform

Ideally, each county could establish a separate housing court to expedite rulings in habitability cases, provide independent property inspections, and counsel tenants. These court systems would need databases to verify the condition of the property, determine whether this is a landlord with serial habitability cases, and assess whether rent subsidies are involved.[75] This process could be facilitated by requiring prompt assessment by a certified independent inspector of the health and safety risks posed by potential breaches of the warranty of habitability. The filing of a warranty of habitability claim, counterclaim, or defense should trigger this prompt assessment. If the independent inspector determines that there is a substantial health or safety risk posed by the condition of the rental property, (a) a hearing would be expedited, and (b) the burden would shift to the landlord to prove that there is no habitability problem.

If the court orders rent to be paid in escrow, those escrow payments could promptly be made available to pay for alternative housing for the tenant while the landlord is remediating the habitability problem. Such payments could be made directly to the hotel or landlord providing the temporary housing, especially for the benefit of lower-income tenants, rather than being delayed and paid as subsequent reimbursement. If rent escrow is not ordered, the tenant should still be able to file a defense or counterclaim, with the evaluation of the independent inspector serving as prima facie evidence that a genuine issue of habitability exists. Such procedures could be implemented regardless of whether the circuit court has a separate housing court division.

The City of St. Louis and Jackson County are authorized by statute to establish a landlord/tenant court with up to two court commissioners.[76] Just as drug courts have been quite successful in reducing recidivism,[77] an effective landlord-tenant court might reduce both repeat habitability problems and delinquent rent issues. The Jackson County Circuit Court is also developing a pilot mediation program to help resolve landlord/tenant cases without litigation.[78] The use of social workers as part of this system could help reduce recidivism in both situations.[79] New York City saved an estimated $27 million in homeless shelter costs when eviction rates were reduced.[80] Of course, larger metropolitan areas are more likely to benefit from economies-of-scale and enhanced funding. These programs require an adequate source of funding. Federal grants, increased filing fees, or fines assessed against repeat offenders may provide a partial solution.

Approximately 35,000 eviction lawsuits were filed in Missouri in 2016, including more than 20 eviction judgments per day in St. Louis city and county.[81] A joint study (the Washington University Study) between the Washington University Civil Rights Community Justice & Mediation Clinic and the Metropolitan Saint Louis Equal Housing and Opportunity Council reviewed 6,369 landlord/tenant cases from 2012 and discovered only two cases (0.03%) in which there was a ruling in favor of the tenant.[82] Many of these tenants are pro se. In the Washington University study, 68% of landlords were represented by attorneys, while only 2.7% of tenants had legal counsel.[83] Often these tenants cannot afford to hire an attorney and are unable to secure legal aid representation, as funding for legal aid cannot keep pace with demand.[84] Under Missouri law, corporate landlords must be represented by an attorney in an eviction suit, but the Washington University study discovered that only 44 of the 188 cases were dismissed when corporate counsel was lacking.[85]

Such studies conclude that landlord/tenant courts are more likely to rule in favor of landlords.[86] A Baltimore study found that judges ruled in favor of landlords who were often given inappropriate latitude in evading their burden of proof or circumventing housing regulations.[87] Even though some of these rulings in favor of the landlords are justified, judges could be more diligent in holding landlords responsible for maintaining habitable rental property and compelling the landlords to notify tenants of their rights and remedies.

To promote access to justice, tenants need assistance with understanding court procedures.[88] For example, in Cleveland’s Community Court, the judge in a landlord/tenant case doesn’t just ask the tenant if she is behind on her rent, but asks why she is behind.[89] In this way health and safety concerns can be addressed. More training would allow judges to better address and balance interests of landlords and tenants.[90]

Conclusion

The implied warranty of habitability was recognized by Missouri courts nearly 50 years ago,[91] but Missouri is still waiting for an effective housing strategy that implements its goals. The goals of the warranty of habitability are achieved more effectively when independent inspectors promptly determine the need for repairs, courts monitor completion of the repairs, and judges manage the escrow accounts to expedite those repairs. Although rent escrow is within a trial judge’s discretion, tenants are precluded from filing a warranty of habitability counterclaim based on failure to pay rent into escrow. The purpose of the warranty of habitability is to encourage landlords to maintain property so it does not pose safety or health hazards to tenants. Inherent within that purpose is the ability of tenants to assert claims and defenses based on violations of the warranty of habitability without undue burdens. Both landlords and tenants may benefit when implied warranty of habitability procedures, including rent escrow, are clear and known in advance by all parties.

 

Endnotes

 Jana Ault-Phillips  Carol J. Miller
Jana Ault-Phillips Carol J. Miller

1 Jana Ault-Phillips is an instructor at Missouri State University in Springfield. She earned her J.D. in 1990 from Washington University in St. Louis, an M.B.A in 2018 from Missouri State University, and practiced law in Kentucky, Indiana, and Missouri. Carol J. Miller is a distinguished professor at Missouri State University. She earned her J.D. in 1978, and an M.B.A. in 1984 from the University of Missouri-Columbia. She is a past national president of the Academy of Legal Studies in Business.

2 Minton v. Hardinger, 438 S.W.2d 3 (1968).

3 See Enforcement of Minimum Housing Code Standards Act, §§ 441.500-441.640, RSMo (1969) and Housing Authorities Law, §§ 99.010-99.230, RSMo (1969).

4 Kohner Properties, Inc. v. Johnson, 553 S.W.3d 280 (Mo. banc 2018).

5 Id. at 281.

6 Detling v. Edelbrock, 671 S.W.2d 265, 270 (Mo. banc 1984).

7 Sections 441.500-441.640, RSMo; Detling, 671 S.W.2d at 271.

8 495 S.W.2d 65, 68 (Mo. App. K.C.D. 1973).

9 Id. at 79.

10 Id. at 77.

11 Id.

12 Kohner, 553 S.W.3d at 282.

13 Kohner Properties, Inc. v. Johnson, 535 S.W.3d 351, 363 (Mo. App. E.D. 2016).

14 Id. at 359.

15 Id. at 363.

16 Kohner, 553 S.W.3d at 285 (citing URLTA §4.105(a)). In contrast, the Court of Appeals in King held a tenant in possession shall be required to deposit rent as it becomes due during pending litigation. See King, 495 S.W.2d at 78. The current ruling of the Supreme Court of Missouri in Kohner, however, is now the ruling that would serve as precedent for future cases and it held that the trial court may require rent to be paid into escrow (in custodia legis).

17 See King, 495 S.W.2d at 79.

18 554 S.W.3d 899 (Mo. App. E.D. 2018).

19 Id. at 903.

20 Sections 441.50-441.640, RSMo.

21 King, 495 S.W.2dat 73-74.

22 Id. at 75.

23 Detling, 671 S.W.2d at 272.

24 Section 441.570(1), RSMo, as amended in 1998, allows the court to appoint a receiver and to order present and future rents paid to the receiver if the court finds that the dwelling unit or building constitutes a nuisance. The rent payments are to be applied to “costs incurred due to abatement and receivership” and the surplus is returned to the owner (landlord). It does not provide for damages to the tenant.

25 Section 441.520.1, RSMo, H.B. 977, 1998 Mo. Laws. The authors were unable to find any appellate cases involving a tenant action against a landlord pursuant to the former 1/3 provision of the MHCSA.

26 Section 441.234, RSMo allows a tenant to deduct repair costs from rent up to the greater of $300 or one-half of one month’s rent once a year. H.B. 848, introduced on Feb. 6, 2017, attempted to amend § 441.234, RSMo by including a provision through which a tenant would assert a breach of an implied warranty of habitability as an affirmative defense with a rent escrow payment, with the inclusion of the four elements of an implied warranty of habitability claim. H.B. 848, 2017 Mo. Laws. The bill did not make it out of the House Committee in 2017, but was pre-filed on Dec. 1, 2017, as H.B. 1401, with the same result. H.B. 1401, 2018 Mo. Laws 22.

27 Donald E. Campbell, Forty (Plus) Years After the Revolution: Observations on the Implied Warranty of Habitability, 35 U. Ark. Little Rock L. Rev. 793, 836 (2013).

28 King, 495 S.W.2d at 76.

29 Alissa Zhu, Citing Safety Concerns, Springfield Department Head Wants to Bolster Housing Code, Springfield News-Leader, January 19, 2017, at A1.

30 Id. at A6.

31 Id. at A1.

32 563 S.W.3d 827 (Mo. App. E.D. 2018).

33 Id.

34 King, 495 S.W.2d at 70.

35 Memorandum from Alice Noble-Allgire, Reporter, to the Members of the URLTA Drafting Comm., 50 State Survey of the Warranty of Habitability 1, 2 (Feb. 12, 2012); Michael A. Brower, Comment, The “Backlash” of the Implied Warranty of Habitability: Theory vs. Analysis, 60 DePaul L. Rev. 849, 862 (2011).

36 David A. Super, The Rise and Fall of the Implied Warranty of Habitability, 99 Calif. L. Rev. 389, 398-399 (2011). Finding that it is the prerogative of the legislature, some courts are hesitant to judicially adopt the implied warranty of habitability. Campbell, note 27 at 806 (citing Blackwell v. Del Bosco, 558 P.2d 563, 565 (Colo. 1976)). See also, Campbell, supra note 27 at 827 (citing Roche v. Lincoln Property, 373 F.3d 610 (4th Cir. 2006) and Jesse v. Lindsley, 233 P.3d 1 (Idaho 2008)). See Noble-Allgire, note 35 at 398-399.

37 Alabama 35-9A-204; Alaska 34.03.100; Arizona 33-1324; Connecticut 47a-7; Hawaii 521-42; Iowa 562A.15; Kansas 58-2553; Kentucky 383.595; Montana 70-24-303; Nebraska 76-1419; New Mexico 47-8-20; North Carolina 42-42; North Dakota 47-16-13.1; Ohio 5321.04; Oklahoma 41-118; Rhode Island 34-18-22; South Carolina 27-40-440; Tennessee 66-28-304; Virginia 55-225.3.

38 California 1941.1; Colorado 38-12-503; Delaware 5305; Florida 83.51; Georgia 44-7-13; Idaho 6-320; Indiana 32-31-8-5; Louisiana 2682; Maine 6026; Maryland 8-211; Michigan 554.139; Minnesota 504B.161; Mississippi 89-8-23; Nevada 118A.290; New Hampshire 48-A:14; New Jersey 2A:42-88; New York 235-b; Oregon 90.320; Pennsylvania 1700-1; South Dakota 43-32-8; Texas 92.052; Utah 57-22-4; Vermont 4457; Washington 59.18.060; West Virginia 37-6-30; Wisconsin 704.07; Wyoming 1-21-1203.

39 Super, supra Campbell, supra note 36.

40 Often the repair and deduct statutes provide limited remedies that do not supersede the common law implied warranty of habitability. Noble-Allgire, supra note 35 at 2.

41 Civil and criminal statutes in Arkansas are very pro-landlord, and Arkansas is the one state that does not recognize the implied warranty of habitability. When Arkansas enacted the Uniform Residential Landlord Tenant Act (URLTA) in 2007, it only adopted the half favorable to landlords; it excluded all pro-tenant provisions. Lynn Foster, The Hands of the State: The Failure to Vacate Statute and Residential Tenants’ Rights in Arkansas, 36 U. Ark. Little Rock L. Rev. 1, 45 (2013); Ark. Code Ann. §§ 18-17-101 – 18-17-913 (2017). Section 18-17-601 requires a tenant to comply with housing code obligations, including the requirement to keep the property safe and reasonably clean, but commensurate duties are not imposed on landlords. Noble-Allgire, supra note 35 at 2 n.3. In Arkansas, the landlord is not liable for any repairs at common law, unless there is a provision in the lease adding that obligation. Foster, supra at 36.

42 If a tenant has failed to pay rent and then fails to vacate within 10 days of notice from the landlord, the tenant has committed a criminal misdemeanor, violating Arkansas §18-16-101. From 2001 to 2007, a rent escrow deposit with the court was required if a tenant who enters a not-guilty plea remains in possession. Any tenant who plead guilty, or nolo contendre, or who was found guilty, and who had not paid rent into the court registry was guilty of a Class B misdemeanor. This provision was declared unconstitutional on due process and equal protection grounds in 2015 in Arkansas v. Artoria Smith, where the judge also held the provision to be unusual punishment that violated the Eighth Amendment. State v. Smith, No. CR 2014-2707, 2015 WL 991180 (Ark. Cir. Ct. Jan. 20, 2015). See also Lynn Foster, Arkansas v. Artoria Smith, The Encyclopedia of Arkansas History & Culture (Jan. 6, 2016), http://www.encyclopediaofarkansas.net/encyclopedia/entry-detail.aspx?entryID=8472 (last visited Feb.16, 2018, at 3:00 p.m.).

43 Supra note 37.

44 Supra note 38.

45 Supra note 40.

46 Brower, supra note 35 at 859.

47 Uniform Residential Landlord and Tenant Act § 2.104(a)(2) (Unif. Law Comm’n 1974) (“URLTA”).

48 Supra note 37.

49 URLTA § 4.101(a).

50 Id.

51 Noble-Allgire, supra note 35 at 15. Where a breach of the implied warranty of habitability is viewed as a contract claim, the tenant should be excused from performing (paying rent) or should be entitled to damages since the landlord has materially breached an implied term of the lease. Campbell, supra note 27 at 834. This material breach of the implied warranty of habitability has been imputed as a constructive eviction at common law, permitting the tenant to terminate the lease with a release from additional rent liability. Noble-Allgire, supra note 35 at 14 (citing Kold v. DeVille, 326 S.W.3d 896 (Mo. App. W.D. 2010) and Mease v. Fox, 200 N.W.2d 791, 797 (Iowa 1972)).

52 Noble-Allgire, supra note 35 at 15, 27-28. URLTA § 4.104.

53 Noble-Allgire, supra note 35 at 30.

54 URLTA § 4.101(b).

55 Noble-Allgire, note 35 at 31-32. If tenant’s claim for rent withholding was without merit, the landlord may recover attorney’s fees in some jurisdictions. Id. at 31.

56 King, 495 S.W.2d at 77.

57 Mo. Hous. Dev. Comm’n, MHDC Housing Needs Assessment Report at 6 (2015) [hereinafter Mo. Housing Report].

58 Brief for ACLU of Mo. Found. et al. as Amici Curiae, Kohner Props., Inc., v. Johnson, No. ED103133, 2016 WL 4760904 (Mo. App. E.D. Sept. 13, 2016), No. SC94944, 553 S.W.3d 280 (Mo. banc July 3, 2018) [hereinafter ACLU Brief] at 56 (citing Hous. Auth. of Kansas City, Mo., Admission and Continued Occupancy Policych. 3 at 9-10, http://www.hakc.org/affordable_housing/liph_acop.aspx).

59 ACLU Brief at 54. Renters who were involuntarily evicted migrated to neighborhoods with a poverty rate 5.4 percentage points higher and a crime rate nearly 1.8 percentage points higher than those of renters who moved by choice. Matthew Desmond & Tracey Shollenberger, Forced Displacement from Rental Housing: Prevalence and Neighborhood Consequences, 52 Demography 1751, 1763 (2015).

60 Noble-Allgire, supra note 35 at 13, 16, 17. See also URLTA § 4.105. Kentucky, New Mexico, Oklahoma, and Tennessee omitted the rent escrow requirement when they adopted URLTA. See note 37.

61 Noble-Allgire, note 35 at 17. Super, note 36 at 429 (citing Scroggins v. Solchaga, 552 N.W.2d 248, 252 (Minn. Ct. App. 1996); King, 495 S.W.2d at 79; City of Mount Vernon v. Brooks, 469 N.Y.S.2d 517, 519 (City Ct. 1983). In Maryland, the court has the flexibility to order rent escrow funds be paid to the landlord, the tenant, or any other appropriate person or agency to make the necessary repairs after an appropriate hearing. Md. Code Ann., Real Prop. § 8-211(n)(2) (LexisNexis 2017). Under RURLTA, a court may order escrowed rent be used for damages or to compensate tenants for repairs they made, or to be used by the landlord to make the repairs. RURLTA §408(d).

62 URLTA § 4.105(a).

63 Id., noting that if the tenant’s defense is without merit and is not raised in good faith, landlord may recover reasonable attorney fees.

64 Section 441.510.1, RSMo.

65 That is one reason why reinstating occupants of one-third of the dwelling units in a building as potential plaintiffs in the MHCSA will not be sufficient. See note 26.

66 RURLTA § 302(a)(2)-(a)(13). Requirements such as these need to be specified, since some cities and counties do not have building, housing, or health codes applicable to rental housing. RURLTA § 302 cmt. at 28.

67 When the majority of rent comes from government subsidies and is not withheld from the landlord when there is a breach of the implied warranty of habitability, the incentive of a rent escrow is sharply reduced. This exacerbates the low rate of relief granted to low-income tenants. Super, note 36 at 432. See also Super, note 36 at 427 (citing Cooks v. Fowler, 459 F.2d 1269, 1272, 1274 (D.C. Cir. 1971) upholding a landlord protection order when the tenant is required to deposit as security more than the landlord could legitimately recover). HUD has a procedure for notification, inspection, and rent withholding for the Housing Choice Voucher Program, so HUD should also receive notice of the pending warranty of habitability claim. 24 C.F.R. § 982.401 (2017).

68 Paula A. Franzese, et al., The Implied Warranty of Habitability Lives: Making Real the Promise of Landlord Tenant Reform, 69 Rutgers L. Rev. 1, 18 (2016).

69 See https://www.circuit7.net/landlord and http://www.greenecountycourts.org/tenantslandlords/.

70 See https://www.16thcircuit.org/Data/Sites/1/media/landlord-tenant-booklet.pdf.

71 Josh Hawley, Missouri Attorney General, “Missouri’s Landlord-Tenant Law,” 12 (April 2017), https://www.ago.mo.gov/docs/default-source/publications/landlord-tenantlaw.pdf?sfvrsn=4.

72 Id.

73 The Missouri Bar, “Your Rights as a Tenant,” (March 2012), http://missourilawyershelp.org/wp-content/uploads/2017/11/Rights-as-Tenant.pdf.

74 The Metropolitan Council on Housing in New York City provides free tenants’ rights clinics, a hotline, and various guides on evictions, repairs, and rent. Franzese, supra note 69 at 33 n.115.

75 Franzese, note 69 at 22. Each housing court judge in New York City has computer terminal access to a database of dwelling inspection reports, which can be accepted into evidence. The courts also can order inspection of the units by members of the housing court inspection personnel. Id. at 27 n.106.

76 Sections 535.200 and 535.210, RSMo. Latasha Johnson’s case began in St. Louis County, which does not have a landlord/tenant court.

77 According to Judge Peggy Davis of the Greene County drug treatment court, “Greene County’s treatment program showed [a] 49% reduction in felony conviction recidivism compared to the normal criminal process. [In addition,] rates of re-arrest and police contact were two-thirds lower.” Will Schmitt, Drug Court Bill with Springfield Roots Gets Second Chance in Special Session, Springfield News-Leader, Sept. 4, 2018.

78 Jessica Shumaker, 16th Circuit to Test Mediation Program, Missouri Lawyers Weekly, Jan. 28, 2019 at 3.

79 Terry Gross, First-Ever Evictions Database Shows: 'We're In the Middle of A Housing Crisis,' National Public Radio (Apr. 12, 2018), https://www.npr.org/templates/transcript/transcript.php?storyId=601783346.

80 The New York City Bar Association found that use of civil legal aid to prevent eviction saved the city more than $27 million in homeless shelter costs in 1996. In 2009, a Massachusetts Legal Aid Corporation study reported that state similarly saved $8.4 million. The San Francisco Right to Civil Counsel Pilot Program in 2014 estimated that the city saved more than $1 million in shelter costs as a result of providing 609 tenants with representation to avoid judicial eviction. Public Justice Center, How Renters are Processed in the Baltimore City Rent Court, 49-50 (2015) [hereinafter Baltimore Rent Ct.]

81 Jacki Langum, Preventing Evictions and Protecting Tenants, St. Louis American, May 24, 2018, http://www.stlamerican.com/news/columnists/guest_columnists/preventing-evictions-and-protecting-tenants/article_785ff57e-5efc-11e8-966c-c7ef3f8f79b1.html.

82 Karen Tokarz and Zachary Schmook, Law School Clinic and Community Legal Services Providers Collaborate to Advance the Remedy of Implied Warranty of Habitability in Missouri, 53 Wash. U. J. L. & Pol’y 169 (2017), http://openscholarship.wustl.edu/law_journal_law_policy/vol53/iss1/19.

83 Id. at 177.

84 Campbell, supra note 27 at 819. Legal Services Corporation’s funding decreased by nearly 11% ($45 million) from 2010 to 2015. As a result, 99% of tenants are unrepresented in eviction proceedings in New York City and 91% of tenants are unrepresented in eviction proceedings in the state of New York. Legal Servs. Corp., FY 2016 Budget Request, http://www.lsc.gov/media-center/publications/fy-2016-budget-request (last accessed Aug. 20, 2017 at 11:45 a.m.) (citing Task Force to Expand Access to Civil Legal Servs. in N.Y., Report to the Chief Judge of the State of New York, State of New York Unified Court System, Nov. 2014).

85 Tokarz, supra note 83 at 177-178.

86 Super, supra note 36 at 414-416.

87 Baltimore Rent Ct., note 84 at 51. A Baltimore landlord/tenant court study revealed that half of the landlords submitted invalid registration and licensing credentials to the court to get their lawsuit docketed. Four out of five landlords provided the court with incorrect information about their mandatory lead risk reduction compliance or provided outdated or unsupported data. Id. at v.

88 Gary Blasi, How Much Access? How Much Justice?, 73 Fordham L. Rev. 865 (2004).

89 First-Ever Evictions Database Shows: 'We're In the Middle of A Housing Crisis,' NPR, supra note 80.

90 Baltimore Rent Ct., note 84 at 52.

91 See Detling note 6 and evolution from Minton note 2.