This Week's Q & A

Q: I am a new landlord with a not so unusual property owner-tenant dispute. My tenant inquired about the possibility of making some improvements to his apartment. I agreed that the work would improve the property, and said I was willing to do it, but I told them the work would require a long weekend, during which the room in question would have to be vacant. In further discussions, I suggested that I expand the scope of the project to include work on another room and the tenants agreed enthusiastically to that idea. I then drew up a work schedule, pointing out that the project now would require more than the long weekend, and also noting that the I couldn’t give them a precise estimate of the time required, because there was no way to predict what we would find behind some wall covering we were planning to remove.

As it turned out, the walls were in worse shape than we thought, and the work required one day longer than I had projected – we finished the “messy” part of the project on Tuesday instead of Monday. And on one of those days, the tenants returned to find the room in less than desirable condition. Although the room was essentially habitable, they stayed with friends that night. Once the first phase was completed, I was able to schedule the subcontractors to do the finish work. I had arranged originally for them to come on Thursday, two days after the initial work was finished. But the tenants asked for a delay because of their work schedule; I agreed, but pointed out that rescheduling the first subcontractor also would require rescheduling the second one. The net effect was to extend the project by about two weeks. I didn’t think much about it at the time, because the apartment was basically in a habitable condition.

I came by the apartment every day while the work was in progress to do extra clean-up, check on the progress, and make sure the tenants weren’t being inconvenienced unnecessarily. They never indicated that there was any problem, except for the one evening when they spent the night with friends. But at the beginning of the next month, they informed me that they were withholding $500 in rent, because the project took longer than I had estimated. I pointed out that the project stuck pretty much to the schedule I had outlined; the major delay resulted from their request that I reschedule a subcontractor. I truly felt I had adhered to both the letter and the spirit of the agreement, but their dissatisfaction was genuine, so I proposed rebating $150 of the month’s rent, to compensate them for their inconvenience. They said they would settle for $400, which I said was unacceptable. That’s where we left it. My plan now is to deduct the outstanding rent from their security deposit at the end of the lease. Is that a legally justifiable position? I’d appreciate your input as a neutral third party.

A: I usually do try to maintain some level of neutrality; but in this case, I confess, I’m inclined to support your position. This looks like a classic illustration of a lesson many landlords learn the hard way: “No good deed goes unpunished.”

Your tenants undoubtedly have a different view of the circumstances, and I’m only hearing your side of the dispute, but it appears from your description that you agreed to make some totally voluntary improvements in the property, encountered problems that are typical of any construction project, and did everything you could to minimize the inconvenience to your tenants. They repaid you by using a relatively minor delay as an excuse for withholding a large chunk of their rent. Presumably, this will make you think twice about entering into a similar voluntary arrangement with other tenants in the future. It might even make you think twice about whether you want to be a landlord at all.

Your objection to your tenants’ decision to withhold a portion of their rent is understandable; I suspect that no jury of your peers would disagree with you. But deducting the amount in dispute from the security deposit at the end of the tenants’ lease may not be the best strategy, the attorneys I consulted suggested. The security deposit statute allows landlords to deduct from the deposit “unpaid rent that was not validly withheld or deducted.” If you make that deduction, your tenants, presumably, will claim that their withholding was justified. While judges probably wouldn’t, and arguably shouldn’t, give tenants that much leeway, you can’t predict what any given judge might do. And if the decision went against you, you be liable for up to triple their damages, plus attorneys’ fees.

Another, probably safer option is to go act now and move to evict your tenants for nonpayment of rent. Either way, you and your tenants are probably are going to end up fighting in court over whether their rent withholding was legal; the only questions are when that battle will occur and what the stakes are going to be. By waiting until the end of the lease to press your claim, you’re just postponing the inevitable. And by fighting over the security deposit rather than over the eviction, you incur a far greater down side risk if you lose. Lose on the security deposit, and you could be out triple damages plus attorneys' fees. Lose on the eviction, and you’ll lose the satisfaction of telling your tenants now that they will have to find somewhere else to live; you’ll have to wait until the current lease expires to deliver that message.