Imagine that you are a landlord and your tenant vacates the leased property in the middle of the lease period and stops paying rent. You might assume that you have an iron-clad legal case against the tenant for breaching the lease. However, if an allegation of “constructive eviction” arises, things might not be so simple.
Constructive eviction is a concept which means that, when the premises are intolerably bad due to the fault of the landlord, the tenant will be allowed to vacate without being responsible for breaking the lease. In other words, the conditions are so bad that the landlord is effectively forcing the tenant to leave. Or stated another way, the landlord is “evicting” the tenant by failing to provide decent premises, even if the landlord has not actually asked for the tenant to vacate (and, in fact, wants to the tenant to stay).
Under North Carolina law, constructive eviction occurs when a landlord “breaches a duty under the lease which renders the premises untenable.” Although the North Carolina courts have not defined the term “untenable,” presumably this term means that the premises are in such a condition that no tenant could reasonably be expected to stay there. Exactly what conditions constitute constructive eviction are usually subject to debate. Problems such as persistent building code violations, serious ongoing roof leaks, electrical problems or other safety hazards might provide a strong argument for constructive eviction. Other problems (such as a bad odor, noise issues, etc.) may provide a less compelling argument, depending on the circumstances.
Importantly, if a tenant claims constructive eviction, the tenant must show that it “abandoned the premises within a reasonable time” because of the condition of the premises. If a tenant stays in the premises for a long time, an argument of constructive eviction is unlikely to succeed. After all, if a tenant actually stays in purportedly intolerable premises for many months before finally vacating, it seems hard to say that the tenant “had to” leave.
An allegation of constructive eviction can radically change the dynamics of a landlord-tenant case. Whereas a tenant might usually owe the landlord money for prematurely vacating the premises, a tenant arguing constructive eviction can assert that the landlord was the party that breached the lease and seek money in court from the landlord for damages such as moving expenses and lost profits associated with being “forced” to move.
The merits of a constructive eviction allegation will depend on the facts of each case. Parties in a dispute about constructive eviction should consider, among other things:
- Does the case involve a residential or commercial lease? The expectations for what is intolerable may differ. For instance, having no hot water for an extended period of time may be seriously problematic for a home, but only a minor nuisance for an office that rarely uses hot water.
- What are the terms of the Lease? Particularly in landlord-friendly commercial leases, the landlord’s obligations to the tenant may be extremely limited.
- Did the tenant timely abandon the premises? There is no set duration for what constitutes a “reasonable” time. Sometimes, it may be infeasible for a tenant to immediately vacate when intolerable conditions arise. However, the more time it takes to vacate, the less likely a constructive eviction argument will succeed.
- Did the tenant sign anything confirming that the premises were indeed satisfactory? In commercial leases, tenants are sometimes required to sign “estoppel” certificates to confirm that they are satisfied with the premises. Once an estoppel is signed, the tenant may not be able to “change its tune” later and say that the premises were defective.
- Are there facts that show that the tenant really left the premises for reasons other than the condition of the premises? A business that has failed because of its own bad management or poor business model may attempt to use constructive eviction as an excuse to stop operating without incurring liability for a broken lease. In a lawsuit, the landlord may want to explore relevant facts through “discovery” techniques such as document requests and depositions.
Elliot has a broad range of experience with landlord-tenant law and has assisted many of North Carolina’s premier shopping centers in matters ranging from routine collection issues to complex jury trials.