How to Respond When Households Withhold Rent over Unit Problems

One of the toughest situations you can face is when a household withholds rent over a claimed problem in a unit. Sometimes the problem is something major, such as no heat or hot water for an extended time. Other times the problem is something minor, such as a broken dishwasher. And still other times, there’s no problem, but the household claims that there is one as an excuse not to pay rent.

You should never just sit back and accept a rent-withholding situation. Instead, you should investigate the legitimacy of the complaint, determine whether the household is withholding rent in accordance with applicable law, and take appropriate action. We’ll give you a rundown on the basics of rent withholding and what you should do when a household withholds rent. Also, we’ll give you Model Letters: Send Letters to Households Who Improperly Withhold Rent to use in the different rent-withholding situations that may arise.

Rent Withholding Basics

Households can’t withhold rent for just any reason—for example, because they think they need new carpeting or because they don’t like their neighbors. But in most states, households can withhold rent if an owner breaches what’s called an implied “warranty of habitability.” This occurs if an owner fails to provide and maintain livable housing.

Courts vary in what they consider a breach of an implied warranty of habitability. Some courts consider only more serious problems, such as no heat for an extended period of time or an environmental hazard, breaches of the warranty. Other courts may consider less serious problems breaches of the warranty. But most courts rule that if an owner breaches the implied warranty of habitability, the household is entitled to a rent abatement of either some or all of his rent for the time the problem exists.

Action to Take

Follow the advice given below, when appropriate.

Immediately investigate complaint. When a resident tells you he’s withholding rent because of a problem in his unit, you need to immediately investigate the claim to determine whether the problem really exists and if so, whether the resident is entitled to a rent abatement for it, says New York attorney Todd Nahins.

The investigation serves two purposes. First, you’ll be able to find out if the resident’s complaint is legitimate or simply a means to avoid paying rent. Second, if the resident’s complaint is legitimate, you’ll be able to pinpoint the problem so that you can immediately fix it.

In addition, make sure you send the resident written notice to get access to inspect his unit. Send the notice by both regular and certified mail, so it has greater impact in case you need to go to court, Nahins advises. And if the resident refuses the inspection, document this in his file. This way, if you end up in court, you’ll have proof that you tried to rectify the problem but couldn’t because the household refused you access. In such situations, courts typically view a household’s withholding rent as an excuse and not legitimate.

If complaint isn’t legitimate, take steps to get paid withheld rent. If your maintenance employee discovers no problem in the household’s unit, immediately take steps to make the household pay the withheld rent or move to evict the household. If you wait too long, you may lose your right to object to the household’s withholding. This is called “laches” or “estoppel” in some states.

Before suing the household for rent or eviction, send the household a letter, like our Model Letter #1, that: (1) states that you’ve conducted an inspection of the household’s unit; (2) states that your maintenance representative found no problem in the unit to support the household’s complaint; (3) gives a deadline for the rent owed; and (4) details ramifications if the household doesn’t pay rent.

If complaint is legitimate, check if household is withholding rent in compliance with state law. Your maintenance employee may find that the household’s problem is indeed a serious one that requires immediate attention. But in most states, a household can’t simply stop paying rent, even if doing so is justified. State or local landlord/tenant law usually sets some guidelines that a household must follow when withholding rent. For example, in Ohio, a household who withholds rent must put it into an escrow account until the dispute is settled, says Ohio attorney Jim Bownas. Other states require that the household petition a local court for permission to withhold rent, or place the withheld rent money in an escrow account at the courthouse.

So when a household withholds rent, even if it’s for a legitimate reason, find out if the household has followed the proper steps. A good way to do this is to ask your attorney what your state or local law requires a household to do before he can withhold rent. If you find that the household hasn’t followed the right steps for withholding rent, you send the household a letter such as Model Letter #2 telling him this.

If problem is minor, fix it but demand payment of withheld rent. Your maintenance employee may find that the household’s complaint is legitimate, but that it’s over a minor problem that doesn’t amount to a breach of the implied warranty of habitability and probably doesn’t justify the withholding of rent. In such a case, make sure you act as quickly as possible. Otherwise, the household will continue to use rent as a “weapon” to get what they want.

First, immediately repair the problem, if possible. Then send the household a letter if you feel that they’re unjustly withholding rent. Your letter, like our Model Letter #3, should tell the household that while the household has a legitimate complaint that you’ve already fixed or will fix as soon as you can, the complaint doesn’t rise to a level that justifies the withholding of rent and that you expect the household to pay all the rent owed up to the current date within seven days of the date of the letter.

If problem is serious, fix it and consider giving rent abatement. Your maintenance worker may discover that the household’s problem is legitimate and serious—for example, that there’s a leak that has caused three inches of water to flood the household’s unit that hasn’t been fixed yet. If you’ve determined that the household is properly withholding rent in accordance with state or local law and that the problem is serious enough to justify withholding of rent, you need to take additional steps. You should try to rectify the problem immediately—preferably within 24 hours. And if the household has been withholding rent, or threatening to withhold rent, you may want to appease the household by offering some type of rent abatement, says Nahins.

If you do this, make sure you get the household to sign off on it so that the household knows that you’re fixing the problem and that their accepting the rent abatement signifies the end of the conflict. This will prevent the household from taking you to court over something you’ve already rectified. Nahins suggests having the household sign something containing the following language:

  Model Language

It is understood that in consideration of a rent abatement in the amount of [insert $ amount] for the month(s) of [insert months during which problem existed], household agrees to settle all claims against XYZ Site through and including [insert date]. Household further recognizes that repair to [insert problem household complained about, e. g., leaky faucet] in Household’s unit has been completed satisfactorily.

Insider Sources

James Bownas, Esq.: Lane, Alton & Horst LLC, 2 Miranova Place, Columbus, OH 43215; www.lanealton.com.

Todd Nahins, Esq.: Borah, Goldstein, Altschuler, Nahins, and Goidel PC, 377 Broadway, New York, NY 10013; www.borahgoldstein.com.