Rent protections for illegal units

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Dec. 8, 2010

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Rent it Right

Janet Portman
Inman News™

Q: I've been renting a cottage that sits behind my landlord's house (my landlord is a lawyer). We have rent control, and I challenged the owner when he raised the rent to a level that I thought was illegal.

I went to the rent board, and it turns out that the owner never got building permits or a certificate of occupancy for the cottage. My landlord is arguing that because he didn't have the right to rent it in the first place, the lease was invalid, the rental wasn't subject to rent control, and I'm not entitled to the triple damages that the rent control ordinance provides for illegal rent hikes. If that's so, it's outrageous. --Jenny P.

A: My, that's some tricky lawyering. But I'm not sure it will prevail.

Your landlord appears to be arguing that the lease is void and unenforceable because he lacked the legal right to rent the cottage. He'll add that allowing you to collect damages as specified under the rent control ordinance would have the effect of enforcing this lease.

In your landlord's defense, it is true that judges are loathe to enforce void contracts. They want to deter illegal conduct, and they reason that parties are less likely to enter into an illegal agreement in the first place if they know it won't be enforced. Knowing that they will have to resolve their disputes with each other, without help from a court, contracting parties are less likely to knowingly write unenforceable contracts.

But this rule is not absolute. There are exceptions, especially when the transaction is over and done with and applying the rule would allow the contract-writer to be unjustly enriched (to benefit from his illegal action).

A prime example involves the universal ban on usury -- a law designed to protect borrowers, and one that is often broken by unscrupulous lenders.

While a loan contract that specifies a usurious interest rate won't be enforced, that's not to say that the borrower won't be able to enforce other aspects of the agreement, such as an attorney's fee clause that awards costs and court fees to the winner in a dispute over the loan.

Your situation strikes me as a good candidate for this exception. The rent control ordinance was designed to protect tenants from excessive rent increases. Although a rent agreement concerning an unpermitted unit is unlawful, it would be unjust to allow the landlord to benefit from his illegal act by getting away with an illegal rent hike.

In your appearance before the rent board, point this out ... and make sure they know your landlord is an attorney. His supposed superior knowledge of all things legal makes his rental and his theories look even shadier.

Q: I've had a family living in my single-family rental for many years. We just renew the lease every year, and the lease lists the parents and their son (he was a minor when they moved in). The son turned 18 two years ago, though I never formally added him to the lease, and he doesn't pay me rent (or pay his parents, apparently). He doesn't have a job and his parents want him out. Can they lock him out? Can I evict him? Should I get involved? --Richard R.

A: Unless you want to become involved as a family counselor, you should stay away from this problem. Odd as it may sound, this freeloading son has all the rights of a co-tenant, whom you may not evict unless he has done something that would legally justify an eviction, such as breaking the law on the premises, keeping a pet in violation of the lease, or causing a nuisance. Merely sponging off his parents doesn't qualify.

And how, you may ask, did this fellow become a co-tenant? He did so when he turned 18 and continued to live on the premises, with your knowledge and consent. That you never "formally" added him to the lease doesn't matter; his open and accepted presence on the property is enough to give him the status of a tenant.

Because the son is a co-tenant, even his own parents cannot force him to move. This is true of any co-tenancy situation -- roommates cannot evict each other.

The most they can do is have an agreement among themselves regarding the rent; and if one fails to pay his share, the others can use that agreement as the basis for a small claims lawsuit asking that the freeloader be ordered to pay up. But they cannot force him to leave: Only landlords have that power, and only when there's cause to evict.

You can, if you wish, aid your tenants when it comes time to renew their lease. Simply offer the lease to the parents only. Even if you live in a city or state that requires "just cause" for a landlord's refusal to renew a lease, you can probably point to the son's dismal financial picture as a justifiable reason to exclude him from the lease.

Incidentally, it might be wise to anticipate this situation with tenants in the future. Children who turn 18 and who want to keep living in their parents' rental can be rightfully asked to fill out a rental application, asking to be added to the lease. Once you accept them, they become full-fledged tenants (responsible for the entire rent and for any damage, just like any co-tenant).

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