Pham, a Seattle residential landlord, bought a rental property at foreclosure. It was metered for five units, so he assumed it was properly permitted for five living units. It turned out that the building was only permitted as a triplex.
Pham rented Unit 5 to Corbett and Morgan. The tenants often paid rent late or in installments. The tenants complained to the landlord about the rental unit’s condition, including rats, a lack of railings on an outside deck, and leaking water/sewage issues.
The tenants stopped paying rent after the lease ended, but remained in possession. The landlord served a notice to pay rent or vacate.
The tenants complained to the City of Seattle. A housing inspector mailed the landlord a Notice of Violation notifying him that the property was not permitted as a five-plex, and that he needed to take corrective action. The City required Pham to make various repairs in order to obtain permitting, including immediate repair of the sewage issue. The City informed the landlord that if the repairs were not made he would have to pay the tenant $2,000 in relocation assistance.
The trial court held that the habitability of the rental unit had been reduced by twenty-five percent during a nine-month period that the tenants lived in it with rodent and sewage issues. The tenants therefore had overpaid rent for this period, minus two months they had lived in the property without paying. The court also awarded relocation assistance and granted the tenants attorney fees. The landlord appealed.
The Court of Appeals upheld the trial court’s ruling in favor of the tenants. [1]
The landlord argued that tenants can not bring a counterclaim for relocation assistance in an unlawful detainer action (eviction). The Court of Appeals held that relocation assistance is intimately related to a tenant’s right to possession. The tenant’s right of possession has been compromised by the condition of the property, which gives rise to the claim for relocation assistance. Also, the relocation assistance here was based on breach of the warranty of habitability, which would excuse the tenants’ breach.
The landlord argued that relocation assistance only applies if government has declared the rental property unlawful to occupy. The Court of Appeals did not accept the landlord’s argument, and instead agreed with the trial court’s interpretation of the statute.
They held that the relocation assistance statute applies when a landlord has been notified that the dwelling will be condemned or will be declared unlawful to occupy due to conditions that violate applicable codes, statutes, ordinances, or regulations. At that point, a landlord who knew or should have known of the conditions is required to pay relocation assistance.
Pham also argued that tenants can sue for relocation assistance only if the landlord was ordered to pay relocation assistance and failed to pay. The Court of Appeals rejected that argument and ruled that the relocation assistance statute gives tenants a private right of action against landlords.
The judgment in favor of the tenants was upheld, and they were also awarded attorney fees for the appeal.
If you have questions about the warranty of habitability or relocation assistance you should consult with an attorney.
by attorney Travis Scott Eller
[1] Pham v. Corbett, ____ Wn.App. ____ (May 26, 2015).
