Rent it Right
A good argument could be made for treating the play yard no differently than the workplace, where such conduct among workers would be considered a "hostile work environment," which the employer would be expected to address. But although there are many cases based on the "hostile work environment" theory, it's harder to find cases alleging hostile living situations, in which the hostility is the result of bad behavior by tenants, not management.
For this reason, your tenants (or their lawyers) might want to use a simpler and more effective argument: The bullying has interfered with their children's right to quiet enjoyment of the premises. Though it sounds rather quaint, this sturdy right is very powerful. It means that landlords must maintain enough peace and quiet so that tenants can reasonably enjoy the premises.
A breach of quiet enjoyment is frequently invoked by landlords when they have to terminate troublemakers, or by tenants who leave in disgust (without future liability for rent) when landlords fail to deal with problems.
The complaining families may well have grounds to break their leases and leave if you don't address the problem. Whether they could also hold you civilly liable for permitting the bullying to continue on the property is a more difficult question. But rather than take chances -- and for the sake of all involved, including the tormentor -- consider some affirmative steps. Begin by going to stopbullying.gov for excellent suggestions that you can pass on to your tenants.
If conditions don't improve, you may find yourself considering a termination based on interference with other residents' rights to quiet enjoyment.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at firstname.lastname@example.org.
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