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What Is The Implied Warranty Of Habitability?

Property Management and Tenant Placement

What Is The Implied Warranty Of Habitability?

Implied Warranty Of Habitability

In the rental property world, every tenant starts renting a property with the sometimes-unspoken law of the implied warranty of habitability.

What does this warranty mean? It simply means that the rental property will be inhabitable condition and have things like running water, heat, electricity and be sheltered from the elements.

Learn More About The Implied Warranty Of Habitability

Housing codes were established to ensure that residential rental units were habitable at the time of rental and during the tenancy. Most states have an implied warranty of habitability. This requires a landlord to substantially comply with building & housing code standards. If the lease contains a clause waiving the implied warranty of habitability, a court will typically refuse to enforce the clause. 

When the warranty of habitability is breached, courts will typically allow for 1 of 3 remedies:

  1. The tenant will be able to withhold rent until the landlord repairs the property
  2. The tenant will be able to withhold rent and can use the money to pay for repairs instead
  3. The tenant will be able to sue for damages

Under the third method (sue for damages), there are typically 3 methods for recovery:

  1. The court will deduct the damaged property’s value from the property’s undamaged value
  2. The court will deduct the amount of damaged rent from the cost of rent when undamaged
  3. Percentage diminution 
    1. This refers to the percentage by which the tenant’s use and enjoyment of the premises have been reduced by the uninhabitable conditions. For this, a court will review the defects’ materiality and the length of time such defects have existed.

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The Warranty

The point of the Oregon warranty is not to oppress the landlord by requiring exact compliance with codes. Instead, it only requires substantial compliance, which means minor and temporary issues will not amount to a breach of that warranty, nor will they excuse the renter from paying full rent.

On the other hand, public policy and the implied warranty of habitability dictate that slumlords should not profit from maintaining an uninhabitable property. A substantial departure from the building code, such as a lack of heat or running water, would justify the renter taking further action, such as withholding the rent or breaking the lease.

The Remedies

Should an apartment’s condition fall below the minimum required by the local building code, there are a few legal remedies for an aggrieved tenant. The first is to request repairs from the landlord in writing. Should the landlord refuse or neglect to make the repairs, another step to consider is to report the landlord to your local building inspector.

If all else fails, there is also the possibility of withholding rent. A portion of the rent, equal to the diminution in value of the apartment from the code violation should be placed into a separate bank account. If the full amount of rent has been paid, a tenant might be able to recover part of the paid rent as overpayment due to the violations. Finally, if the landlord attempts to evict the tenant for non-payment or underpayment of rent, the code violations will serve as a defense.

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