Should They Stay or Should They Go?

October 25, 2016

One of the most common questions facing residential landlords and property managers is what to do when a tenant withholds rent. Can a tenant withhold rent from you if there are “problems” with the rental property? What does it mean if a tenant tells you they have issues with, “mold,” “heat,” or “infestation?” Are these types of issues enough to enable your tenants to just stop paying rent all together?  The short answer is no.

Generally, most jurisdictions, including Pennsylvania, have an “implied warranty of habitability” in residential leases. This means that all landlords and property managers in Pennsylvania must comply with this warranty. It is non-waivable and typically tied to your local housing code standards.  Keep in mind that the implied warranty of habitability does not apply to any commercial leases you may have.

So what exactly are landlords and property managers responsible for under the implied warranty of habitability?  The Supreme Court of Pennsylvania has specifically addressed the duties of a landlord in Pugh v. Holmes, 405 A.2d 897, 905 (Pa. 1979).  In Pugh, the Court found that in order for a landlord to breach the warranty, “the defect must be of a nature and kind [that] prevent[s] the use of the dwelling for its intended purpose [of providing] premises fit for habitation by its dwellers.” Id. “At a minimum, this means the premises must be safe and sanitary [however], there is no obligation on the part of the landlord to supply a perfect or aesthetically pleasing dwelling.” Id.  Essentially, the language in Pugh states that in Pennsylvania, you can breach the implied warranty of habitability by failing to provide things like:

  • Drinkable water,
  • Hot water,
  • Working electricity,
  • Heat during cold weather,
  • Smoke detectors,
  • A working bathroom or toilet,
  • A sanitary premises, including the removal of insect infestation or mold, or
  • Specific violations of local building codes.

So if you fail to provide the things listed above, does that mean a tenant can automatically stop paying rent? Not necessarily. Before a tenant can assert that you have breached the implied warranty of habitability, they must first show:

  • they gave you notice of the defective condition,
  • that you had a reasonable opportunity to correct the condition, and
  • that you failed to correct the condition. See Pugh v. Holmes, 405 A.2d 897, 906 (Pa. 1979).

Furthermore, if a tenant asserts you have breached the implied warranty of habitably, they only have one of three options available in Pennsylvania.  They can:

  • surrender possession and terminate the obligation to pay rent,
  • remain in possession and “repair and deduct” the cost of repairs against future rent, or
  • remain in possession and place rent into an escrow account. See Echeverria v. Holley, 142 A.3d 29, 35 (Pa. Super. 2016); Kuriger v. Cramer, 498 A.2d 1331, 1334 (Pa. Super. 1985)

None of the options above include withholding rent all together.  In fact, the Pennsylvania Rent Withholding Act, 35 Pa. Stat. Ann. § 1700-1, states that “during any period when the duty to pay rent is suspended, and the tenant continues to occupy the dwelling, the rent shall be deposited by the tenant in an escrow account in a bank or trust company approved by the city…and shall be paid to the landlord when the dwelling is certified as fit for human habitation.”  (emphasis added).

So what’s the bottom line for landlords and property managers?

  • Tenants cannot withhold rent from you without justification;
  • You should make sure you don’t have any structural deficiencies at your leased properties;
  • You should make sure that all major amenities are working properly at your leased properties;
  • If a tenant notifies you of a defect, inspect it quickly, and then remedy if needed.

It is important to consult with your attorneys while negotiating lease agreements with tenants.  SMGG can help ensure that your residential lease agreements are providing you with the best protections available and can help you make sure that your tenants are paying on time, every time.

If you have a question about what to do with residential leases, or tenants who are withholding rent, please contact Jordan P. Shuber of Strassburger McKenna Gutnick & Gefsky at jshuber@smgglaw.com or (412) 281-5423.