Law in Order

The Warren Report

William S. Warren,

Warren Kalyan Law Firm

PROCEEDING WITHOUT FEAR BY DISSECTING THE DEMAND

By William S. Warren, Warren Kalyan Law Firm

In the multifamily rental industry, it is inevitable that you will encounter individuals who contend that their residence is full of mold. Not just mold, but “toxic” mold. O ne of the consequences of the COVID-19 pandemic has been to look for ways to exaggerate facts and shift blame. The Internet provides endless possibilities to pursue. Since court access remains limited, the need to provide actual proof of one’s claims has lessened. An aggressive demand, and a bit of a bluff, therefore, could lead to unwarranted relief. A topic frequently involved in this strategy is fungi.

If you look up the “M” word on the Internet, you will find at least two significant variations. One is mildew, the other is mold. What is the difference? Mildew and mold are both fungi, but mildew is not as invasive or troublesome. Mildew is a surface fungus that can be easily treated with a storebought cleaner or bleach and a scrubbing brush.

Mildew often rests on the surface of a moist area. Surface moisture will often evaporate, thereby impairing continued growth of the fungi. Mold seeks a deeper moisture source, less subject to evaporation, hoping to sustain its growth.

There is also a difference in appearance between the two fungi. Appearances range from powdery to almost fuzzy. There are also color differences. Variable odors may also be present.

According to the U.S. Environmental Protection Agency (EPA), the difference between mildew and mold isn’t all that much. Both are types of fungi that thrive in moist environments. Both can be found in damp areas of dwellings, particularly those that have been subjected to water damage.

Mildew is a word often used generically to refer to mold growth, according to the EPA. Mildew is therefore another name for mold, specifically the kind of mold that lives on spots in your dwelling that are high in moisture.

According to the U.S. Centers for Disease Control and Prevention (CDC), standards for judging what is an acceptable, tolerable, or normal quantity of mold have not been established. Sampling for mold can be expensive. Yet once the samples are taken, standards for judging what is and what is not an acceptable quantity of mold have not been set.

The results of samples taken in your unique situation cannot be interpreted accurately or properly without there also being a thorough physical inspection of the contaminated area. The characteristics of the building where the fungi may exist, and the factors that led to the present condition, must also be considered in the overall analysis of the nature and extent of the possible environmental hazard.

Allow me to make a disclaimer. This author is not a mold expert. I seriously doubt, in addition, that many of the readers of this article are either. But given the conclusion of the CDC, that there are no standards for judging what is an acceptable, tolerable, or normal quantity of mold, we should not feel overly ill-informed.

According to a company named AWA Environmental, in every lab study, there needs to be a regular sample and a control sample. The control sample is a way of making sure your data is accurate. When testing for the existence of mold or mildew, an outdoor sample is the scientific equivalent of a control sample. There are always mold spores in the air, inside and out. When you take an outside sample, you can identify which mold spores occur naturally.

In the multifamily rental industry, it is inevitable that you will encounter individuals who contend that their residence is full of mold. Not just mold, but “toxic” mold. These individuals often reach this conclusion without proper professional mold testing. Many do “home” testing themselves, with a kit they purchased for that purpose. Rarely have those people tested for interior and exterior mold. Their tests are therefore incomplete. Since “mold” exists everywhere, inside and out, a mold claimant’s conclusions are frequently unprofessional, incomplete, and misleading.

Many individuals who insist they have a mold-infested residence

contend that their health has taken a significant turn for the worse. Yet when these individuals are asked to provide medical information to the property owner, to enable an accurate assessment of the overall situation, it is rarely forthcoming. Is there a reason such important facts are being withheld? Wouldn’t the allegedly ailing individual welcome a diagnosis, including the development of facts which may create causation for alleged damages?

Likewise, many individuals who contend their residence is infested with mold do not want their landlord to inspect or see the purported mold, mildew, or adverse condition. Many of these individuals insist that their rental unit may not be entered by management personnel. They demand secrecy even though most leases authorize entry by the landlord at reasonable times and for reasonable business purposes. If there is nothing to hide, these barriers to discovery appear illogical.

Even if manifestations of the “M” word are present, they can and should be eliminated. The CDC advises that you can keep mold out of buildings and dwellings in several ways. First, inspect buildings for evidence of water damage or the existence of conditions which may cause or encourage mold growth (e.g., water leaks, condensation, or flooding). Early detection of adverse conditions may prevent mold growth.

Additionally, the CDC recommends that mold growth can be regularly controlled inside your residence by controlling humidity levels, promptly fixing leaky roofs, windows, and pipes, thoroughly cleaning and drying after flooding, and ventilating shower areas. What is the common denominator here? It is moisture.

In Texas, the way in which mold and mildew is to be addressed from a liability and damages standpoint is through the Texas Property Code (TPC), sections 92.051 through 92.062, and the Texas Rules of Civil Procedure (TRCP), rule 509. Both authorities address claims which a residential tenant may assert to enforce a landlord’s duty to repair or remedy a condition materially affecting the physical health or safety of an ordinary tenant. Tenant actions under these authorities are commonly referred to as “repair and remedy cases.”

In most cases, for legal liability to arise one must: (1) owe another a duty; (2) then breach that duty; (3) which breach in turn proximately causes; (4)

damages. Another essential element of this formula is that (5) there may be more than one proximate cause of an event.

What may proximately cause damages in a repair and remedy case? TPC Section 92.056(b) provides that a landlord may be liable to a tenant (1) if the tenant gives the landlord proper notice of a condition; (2) which materially affects the physical health or safety of an ordinary tenant; and (3) despite having had a reasonable time to repair or remedy the condition after receiving the tenant’s notice; (4) the landlord has not made a diligent effort to repair or remedy what was reported. Stated another way, it is not the mere existence of the condition which creates liability. Liability comes into existence due to a landlord’s failure to make a diligent effort to repair or remedy a reported condition.

Many of you may have received communications, either from tenants or lawyers representing them, suggesting that you must permit your resident to terminate their lease immediately and without penalty, regardless of how much time may be left before the lease term expires. These communications may also insist that you pay monetary damages to your resident for things like medical expenses, costs incurred for testing of a residence, mental anguish your resident claims to have suffered, free rent, and of course attorney’s fees. Do these demands adhere to the damage formula set forth in the TPC? Often, they do not. In 2016 the Texas Supreme Court, in a case entitled Philadelphia Indemnity Insurance v. White, weighed in on who must prove what in a repair and remedy type of case. The Court noted that a rebuttable presumption exists that damages to premises under the tenant’s control are caused by the tenant. To establish that the landlord caused the alleged loss, the tenant must overcome this presumption with proper evidence. Stated another way, the tenant bears the burden of proof in a judicial action to enforce a right resulting from the landlord’s failure to repair or remedy condition. The TPC supports this conclusion.

Perhaps the fact that the burden of proof falls on the tenant provides some insight into the reluctance of many tenants to allow their landlord access to the premises. The less the property owner sees the purported adverse condition for themselves, the more the owner may be persuaded to accept the tenant’s version of the facts.

It is not the mere existence of the condition which creates liability. Liability comes into existence due to a landlord’s failure to make a diligent effort to repair or remedy a reported condition.

You should insist upon always getting “the rest of the story.” You should insist upon always getting “the rest of the story.”

With that in mind, let us bore down somewhat into the TPC’s repair and remedy provisions. One very notable provision is contained in TPC section 92.061, entitled “effect on other rights.” That statutory provision provides that the duties of the landlord and the remedies of the tenant, as stated in TPC sections 92.051 through 92.062, are the ones which will govern the complaint of the resident.

There exists many common law (i.e., those arising from the rulings of courts) and other statutory law warranties relevant to repair and remedy issues. TPC section 92.061, however, states that those found in the pertinent TPC provisions are in lieu of existing common law, or other statutory law warranties. They are also in lieu of duties of landlords for maintenance, repair, security, habitability, and non-retaliation, and remedies of tenants for violation of those warranties and duties.

Stated another way, except insofar as the right to bring an action for personal injury may be concerned, all claims are to pass through the gate of the TPC repair and remedy statute and be governed by what is found on the other side of that gate. Clearly, the strict reading of TPC section 92.061 guides one to assess liability and damages nearly exclusively by the TPC provisions.

Yet tenant demands under the repair and remedy statute often ignore the mandate of TPC section 92.061. The demands allege that statutes like the Texas Deceptive Trade Practices Act, and common law legal doctrines like breach of contract and constructive eviction, must be dealt with. That is rarely the case.

Damage demands based upon the “M” word and environmental issues often overreach. These claimants frequently want more damages than are authorized under applicable law.

For example, many tenants who contend their residence is mold-infested want lease termination, plus judicial remedies. Yet they rarely think they need a judicial determination of those alleged damages. There are two problems with this misguided approach.

First, if the adversely affected tenant elects to terminate the lease, that tenant would be entitled to a pro rata refund of rent, from the date of termination or the date the tenant moves out, whichever is later. Since rent is typically paid monthly by a residential tenant, we are talking of only the rent

for the days in that month following the surrender of the premises, if any.

In addition, TPC section 92.056 specifically states that the tenant who elects to terminate the lease is not entitled to the other repair and deduct remedies provided for in the section called “tenant’s judicial remedies” (section 92.0563) and the section which enables a tenant to make repairs themselves and then deduct the cost of the repair or remedy from their monthly rental payment (section 92.0561).

There are more interesting and important TPC provisions in the repair and remedy statute. First, for a landlord to even have a duty to repair or remedy a condition, the tenant cannot be delinquent in the payment of rent at the time the tenant’s notice is given to the landlord.

In addition, unless the adverse condition was caused by normal wear and tear, the landlord may not even have a duty during the lease term to repair or remedy a condition. Specifically, if the adverse condition was caused (1) by the tenant, (2) a lawful occupant in the tenant’s dwelling, (3) a member of the tenant’s family, or (4) a guest or invitee of the tenant, there may not even exist a landlord duty to have the condition in question repaired. Stated another way, a tenant insisting upon landlord repairs must (1) be current in rent and (2) not be responsible for causing the condition to exist in the first place (section 92.052). Yet another important TPC provision is contained in section 92.054. This states that if a condition in need of repair results from an insured casualty loss (perhaps a disaster involving fire, smoke, hail, explosion, or similar cause), the period for repair does not begin until the landlord receives the insurance proceeds. This provision emphasizes that the owner of the leased premises has likely incurred significant losses of its own. In the presence of an insured casualty loss, therefore, there is a sort of grace period (while awaiting insurance proceeds) before the property can be compelled to expend its own funds.

That same section, relating to casualty loss, provides that if the rental premises as a practical matter are totally unusable for residential purposes, the appropriate remedy is lease termination. If the lease is terminated, according to the TPC, the tenant is only entitled (1) to a pro rata refund of rent from the date the tenant moves out, and (2) to a refund of any security

deposit otherwise required by law.

There will be situations where, following a casualty loss, the rental premises are as a practical matter only partially unusable for residential purposes. In that situation, a tenant may be entitled to rent reduction in an amount proportionate to the extent the premises are unusable because of the casualty.

Proportionality is very fact specific. Seldom will a landlord and tenant agree upon the appropriate measure of damages. The statutory provision pertaining to partial useability, therefore, provides that if there is to be a rent reduction, it must be done via a judgment of a county or district court (i.e., a court of record in which the rules of evidence and procedure must be applied). A justice court is noticeably excluded from the statutory provision.

While this article addresses two distinctly separate topics, in the multifamily context they unquestionably correlate with one another. The first part of this article dealt with a discussion of fungi, the “M” word, and the ambiguity which surrounds the quest for black-and-white answers.

The second part of this article focused on the legal requirements imposed before a resident is entitled to remedies, monetary or otherwise, for conditions which are rarely disclosed with a proper level of detail and candor.

Hopefully, some degree of comfort should have resulted from both parts of this article. Both should have clarified and emphasized that a claimant’s burden to establish causation and the right to inflated monetary damages is a formidable task.

As stated earlier in the article, TRCP 509 also comes into play for a repair and remedy case. What happens under that rule is the imposition of specific pleading and proof requirements a tenant seeking monetary relief must satisfy at a trial.

For example, the petition in a repair and remedy lawsuit must: (1) identify all notices the tenant gave to the landlord requesting that the condition be repaired or remedied; (2) the date of each notice; and (3) the name of the person to whom the notice was given or the place where given. The plaintiff (the tenant) must also: (4) establish whether the tenant’s lease is in writing and requires written notice, (5) whether the notice actually given was in writing or oral, and (6) whether any written notice was given by certified or registered mail.

In addition, the lawsuit requires the plaintiff to plead and prove: (7) whether the rent was current or had been timely tendered at the time notice relating to the adverse condition was given. There must also: (8) be detailed descriptions of the property condition that the tenant, whose physical health and safety has allegedly been impaired, seeks to have repaired or remedied.

The complaining party must also: (9) make a detailed statement of the relief they request, including what orders they request the court to enter concerning repair or remedy, and set forth the amount of rent reduction they seek, the amount and basis for actual damages and civil penalties sought, and a statement as to attorney’s fees requested, if any. In that regard, the justice court caps the total relief it may award at $20,000, including attorney’s fees.

You should feel empowered by the contents of this article. It has hopefully provided insight and understanding of the most common adverse condition alleged by a tenant who seeks to terminate the lease early and without penalty, recover large amounts of monetary damages, or both.

Never underestimate the importance of dissecting the demand. Insist upon details of the condition. Freely exercise your contractual rights to enter at reasonable times for reasonable business purposes. Absolutely rely upon lease provisions which state that you control whether and when inspections and repairs get done, their scope, and what contractors you will use.

With your newly enhanced understanding of the key issues and obligations, you will be able to determine what tenant complaints are legitimate and need immediate attention to prevent them from getting worse. You will also be able to determine when the complainant’s demand is based on a bluff, knowing as you now do the statutory and rule provisions set forth throughout this discussion. Proceed without fear.

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Never underestimate the importance of dissecting the demand. Insist upon details of the condition.

The year 2021 marks BILL WARREN’s 41st year of practicing law. His law practice focuses on a variety of issues and cases, the majority of which address the concerns of those active in the multi-family industry. He founded and manages Warren Kalyan Law Firm. In addition, he serves as Of Counsel for the Texas Apartment Association and as Legal Counsel of the Austin Apartment Association. Bill is also a Credentialed Mediator in Texas. He writes and speaks regularly, and as author of Law In Order: The Warren Report he has had over 120 articles published. His topics cover all nature of issues pertaining to rental housing, from onsite to the boardroom to the courtroom. Bill has been Board Certified in Civil Trial Law by the Texas Board of Legal Specialization for 30 years, and is also a Fellow of the College of the State Bar of Texas. He can be reached at Warren Kalyan Law Firm, 1011 Westlake Drive, Austin, Texas 78746, (512) 347-8777, or through his firm’s website at www.WarrenKalyan.com.