1. Thomas K. Gallagher & Douglas J. Tate
Landlords & Tenants
Thomas K. Gallagher &
Douglas J. Tate

2. Working with Indigent Clients
Lack of Means
Reliable contact can be a challenge
Constantly changing phone numbers and addresses
Failure to follow through
Lack of Knowledge
Unfamiliar with the legal system
Varying levels of literacy
Often an inability to understand importance of issues
Language barriers
But a deep sense of gratitude
Even the playing field
Reliable contact be a challenge because our clients are constantly fighting to pay their cell phone bill or purchase new minutes. Their numbers are often disconnected. It may be prudent to set up meetings in advance or have a plan for alternate communication when the phones are dead.
Some clients speak English as a second language or not at all so communicating sophisticated legal issues can be tricky. Developing materials in Spanish can be a good alternative as well as making sure to have an official translator for important meetings

3. Rights and Duties Governed by Statutes & Codes & Terms of Lease
Federal Statutes / HUD Regulations
Public Housing
Section 8
Tax Credit
State law
Private Leaseholds
Chapter 42: Landlord & Tenant
Interpreted through Criminal Statutes & Common Law
City and County Ordinances
Buncombe County – Rental Housing Ordinace
Ordinance (Sections 8 and 9)
Municipal Ordinances
Asheville
Black Mountain
Woodfin

4. Chapter 42, NCGS (7) Articles in Chapter 42
Article 1 – General LL/T issues
Article 2 – Agricultural Tenancies
Article 2A – Ejectment of Residential Tenants
Article 3 - Summary Ejectment
Article 4 – Retaliatory Evictions
Article 5 – Residential Rental Agreements
Article 6 – Security Deposits
Article 7 - Expedited Eviction for Criminal Activity
These Articles are of particular interest because they provide the statutes used most often

5. Article 1 – Key Provisions
42-3 – Pay to Stay.
Implied forfeiture if Tenant Fails to pay within 10 days of Demand
42-4 – If no agreed terms:
LL is entitled to reasonable compensation for occupancy by Tenant
42-10 – Tenant not liable for accidental damage
42-11 – Tenant can be charged with misdemeanor for intentional destruction

6. Article 1 – (Notice Requirements)
Annual lease: 30 day notice to quit
Month to Month: 7 day notice
Weekly Tenancy: 2 day notice
Mobile Home Lot Lease:
60 days Notice
Provides tenant time to move home
Mobile Home Park closing
180 day Notice.
Must coincide with the end of the term.

7. Article 2A – Constructive Eviction and more
42-25 –
– No “self help”
Maintain the peace
No constructive eviction
Can’t turn off electricity, water, etc
– No Distress & Distraint
LL Can’t take T’s property
LL limited to remedies in and
– Can’t contract around these provisions
(Limitations – applies to this section – i.e. notice)

8. Tenant’s Remedies for Self Help Eviction
a & b –
Tenant entitled to actual damages but no punitive damages under this section
This is supplementary to all other C/L and Statutory Remedies.
Unfair Trade Practices et seq

9. LL’s Right to Abandoned Personal Property
(d) – Landlord can take abandoned personal property to Good Will or other Charity.
Post notice on door and send notice to tenant
Charity must keep property for 30 days
(g) – Landlord may
dispose of property after seven (7) days, or
sell it at auction, providing notice to Tenant

10. Lease Contracts Formation Performance Basis for Termination
Overview of Topics covered in this presentation

11. Types of Tenancies Tenancy for Term Tenancy at Will Week to week
Month to Month
Year to Year
Tenancy at Will
Less formal arrangement
fewer legal recourses for tenant
“when a landlord tells tenants at will to vacate the premises, their tenancy instantly expires ” Stout v. Crutchfield, 21 N.C. App. 387 (1974).
Tenancy at Will
- Less formal arrangement: sometimes no lease at all, only oral agreement

12. Does a LL/T relationship exist?
Requirement #1: The Parties
§42-40(7) Landlord: any owner having actual or apparent authority of an agent to perform duties
§42-59(10) Tenant: any natural person who is a named party, and who occupies, resides in, or has legal right to possess and use an individual rental unit
§42-40(2) Premises: a dwelling unit, including mobile homes, that is normally held out for the use of residential tenants

13. Hotels
Ch. 42 differentiates between a transient stay and dwelling unit
Ex: §42-56 Security Deposits: “this article shall apply to all residential dwelling units, excluding single rooms, on a weekly, monthly, or annual basis”
But see Baker v. Rushing 104 N.C. App. 240 (1991).
Court held that summary judgment was improper where the plaintiffs had resided in the hotel for six years and paid “rent” on a weekly basis pursuant to an oral lease

14. Guests Definition of Guest: When does a guest become:
§42-59(5) any person who has been given permission to enter an individual rental unit
When does a guest become:
A trespasser?
When there is no longer permission to enter the property
A Tenant at will?
When the property becomes a primary residence (see Baker v. Rushing, 104 N.C. App. 240 (1991))

15. Haphazard Tenancies What are the rules when there are no rules?
When a tenant enters into possession under an invalid lease and tenders rent which is accepted by the LL, a periodic tenancy is created.
The period of tenancy is determined by the interval between rent payments.
Kent v. Humphries, 303 N.C. 675 (1981).

16. Employer-Employee Relationship
What are the tenant’s rights after the employer terminates his employment?
Tenant at will?
Trespasser?
Standard LL / T relationship?
Fact dependant -

17. STATUTORY OBLIGATIONS

18. Obligations of each party
§42-41 Mutuality of Obligations
Tenant’s obligations: (1) to pay rent under the rental agreement, (2) to maintain the premises (42-43)
Landlord’s obligations: to provide fit premises and make repairs(42-42)
Shall be mutually dependent
§42-44(c): Tenant may not unilaterally withhold rent prior to judicial determination

19. §42-42(a) Landlord Obligations:
Comply with all applicable housing codes
Make all repairs and keep premises in a fit and habitable condition
Keep all common areas in safe condition
Provide operable smoke alarms
Repair or remedy any imminently dangerous condition on the premises
Unsafe wiring, flooring, ceiling, chimney
Lack of potable water, operable locks, heating, operable toilet and bathtub or shower
Complete list in Statute
Dean v. Hill, 171 N.C. App. 479 (2005); Miller v. C.W. Trading Post, Inc., 85 N.C. App. 362 (1987).

20. §42-43 Tenant Obligations
Pay Rent
Maintain Dwelling Unit
Keep premises safe and clean
Dispose of all garbage
Keep all plumbing fixtures as clean as their condition permits
Be responsible for all damage in the tenant’s exclusive control
Notify the Landlord in writing of the need for replacement or repairs to a smoke alarm
Landlord must provide written notice to tenant of any violation of this section.
See Diorio v. Penny, 103 N.C. App. 407 (1991).

21. Buncombe County Rental Housing Ordinance
Section 8 – Unsafe Conditions
Section 9 – Unfit Conditions
Fire Marshal’s office to deal with these later.

22. THE LEASE

23. Enforceability: Oral Agreements
Statute of Frauds
Lease must be in writing if term is longer than 1 year
Wright v. Allred, 226 N.C. 113 (1946).
Satterfield v. Pappas, 67 N.C. App. 28 (1984).
Kent v. Humphries, 303 N.C. 675 (1981).
Basic rules of Contract Law apply
mutual assent, consideration, performance
Where a tenant pays rent and it is accepted by the landlord, a periodic tenancy is created. Kent v. Humphries, 303 N.C. 675 (1981).

24. Enforceability: Written Leases
Essential Terms include:
(1) names of parties; (2) description of demised premises; (3) term of lease; (4) rent or other consideration
Helicopter Corp. v. Realty Co., 263 N.C. 139, (1964); Stallings v. Purvis, 42 N.C. App. 690 (1979).
Landlord is master of his own contract, but certain terms are non-negotiable
§42.46 provisions on late fees
Art. 6: Security Deposits
Self Help issues
Bad Check Fees
Etc

25. Enforceability cont’d
When the lease is silent?
Some terms are implied in every lease
§42-27: willful neglect or refusal to perform the terms of the rental contract shall forfeit the right to possession
§42-4: in an occupation without express agreement for rent, the landlord may recover a reasonable compensation for such occupation
42-3: Rent due ten days after demand or eviction
When will the court supply a lease term?
When there is no statute on point, the court may supply a reasonable gap-filler

26. Termination of Tenancy

27. Basis to terminate tenancy
Failure to Pay
Breach of Contract
Holdover Tenants
Criminal Activity

28. Tenant’s Failure to Pay to Rent
(§42-3) there shall be implied a forfeiture of the term upon failure to pay the rent within 10 days after a demand is made by the lessor
A demand by Landlord must be clear and unequivocal:
either oral or written, requiring the lessee to pay all past due rent
made with sufficient authority to place the lessee on notice that the landlord intends to exercise his statutory right to forfeiture for nonpayment of rent.
See Snipes v. Snipes, 306 N.C. 373 (1982).
But, if the lessee waives all notice to vacate, he cannot claim the benefit of this section
Tucker v. Arrowood, 211 N.C. 118 (1937).

29. Breach of Contract Material breach
Not every breach of a contract justifies a cancellation and rescission. The breach must be so material as in effect to defeat the very terms of the contract.
See Childress v. C.W. Meyers Trading Post, Inc., 247 N.C. 150 (1957) for discussion of the distinction between material and non-material breaches

30. Breach of Contract cont’d.
Non-Material breach
If the breach is not so material as in effect to defeat the purpose of the contract, the injured party is compensated by monetary damages.
See Troitino v. Goodman, 225 N.C. 406 (1945)
Failure to pay rent may not result in eviction “for breach of lease” if no forfeiture provision in the lease.

31. Holdover Tenants Who is a holdover tenant?
(§42-26) A tenant in possession of real estate holds over after his term has expired.
If a Tenant holds over after the term expires  then the Landlord has an choice:
Treat as a trespasser and bring an action to eject and recover reasonable compensation, or
Recognize as a tenant, having the same rights and duties as under the original lease, with the term identical to original lease.
If LL accepts rent following the end of the term, a new lease is formed for the term of the preceding lease.

32. Criminal Activity – limited right to eviction
§42-59(2) Definition: Any activity that would constitute a violation of G.S other than 90-95(a)(3)
under N.C. Controlled Substances Act
to manufacture, sell or deliver, or possess with intent to manufacture a controlled substance
§42-59(2) Other criminal activity that threatens the health, safety, or right of peaceful enjoyment of the entire premises by other residents

33. Criminal Activity cont’d.
§42-63(a) Grounds for Complete Eviction:
Criminal activity that occurred within or in the immediate vicinity of the rental unit
Rental unit used in any way to further criminal activity
Allowing the reentry of a person who was previously ejected from the premises
72 hour Notice Provision* –
Unless lease does not require notice.
Expedited Procedings section 42-68

34. Criminal Activity cont’d
What does not cause forfeiture?
Domestic violence
§ : LL cannot terminate the tenancy of a victim of domestic violence or retaliate against him or her in any way
“Good faith”
§42-64(a)(1): the tenant did not have knowledge of any criminal activity
§42-64(a)(2): the tenant did everything he could to prevent the criminal activity including:
Asked the LL to remove the offending household member’s name from the lease
Reported prior criminal activity
Sought assistance from social service or counseling agencies
§42-64(c) The court is clearly convinced that immediate eviction or removal would a serious injustice

35. Criminal Activity: Landlord’s responsibility to protect Tenant
In general, landlords must comply with a reasonable care standard, however they are not responsible for preventing criminal activity
Allen v. Equity & Investors Mgt. Corp., 56 N.C. App. 706 (1982); Davenport v. D.M. Props., 718 S.E.2d 188 (2011). **

36. DEFENSES TO EVICTION ACTION
Retaliation
Set off
Waiver
Inadequate notice
Unconscionability
Protected Tenant Status
LL’s prior breach

37. Retaliatory Eviction: N.C.G.S. § 42-37.1
Overview:
The purpose of a retaliatory eviction claim is to protect tenants or other individuals who reside in the household and are known to the landlord who “seek to exercise their rights to decent, safe, and sanitary housing.”
Protected Actions: N.C.G.S (a)(1-5):
Certain specific actions taken by tenants are statutorily protected, such as complaints to government agency and request for repairs.
Restrictions on the Defense of Retaliatory Eviction: N.C.G.S (b-c)
In order to prevail the eviction must be occurring within 12 months of a protected action and the tenant must have continued to perform his/her obligations.
Remedies for Retaliatory Eviction: N.C.G.S :
If the court finds that an ejectment action is retaliatory, “it shall deny the request for ejectment.” An action is retaliatory if it is “substantially in response to the occurrence. . . of the protected acts.”

38. Additional Notes When Dealing With Retaliatory Eviction
Hold over Tenancy - What happens when LL refuses to renew term lease due to retaliation?
Compulsory Counterclaims: Because the issues of fact and law in a claim for summary ejectment and claim of retaliatory eviction, res judicata bars a plaintiff from asserting retaliatory eviction AS AN AFFIRMATIVE CLAIM in an independent action.

39. Set-Off
North Carolina courts will award set-offs when there is a valid claim for rent abatement and a valid claim for the tenant’s nonpayment of rent. Surratt v. Newton, 99 N.C. App. 396, 393 (1990).

40. Inadequate Notice End of Term:
Year-to-Year: Notice to quit must be given at least one month before the end of the current year of the tenancy.
Month-to-Month: Notice to quit must be given at least seven days before the end of the current month of the tenancy.
Week-to-Week: Notice to quit must be given at least two days before the end of the current week of the tenancy.
Failure to pay rent or breach
Notice must be specific,
Notice must comply with terms of lease
Notice must comply with the statute (10 days before bringing complaint.

41. Unconscionability DGH, LLC v. Nix, 712 S.E. 2d 335 (N.C. App. 2011).
“Unconscionability is the fourth element that the Plaintiff must prove.”
Lincoln Terrace v. Kelly, 179 N.C. App. 621 (2006).
“That the result of enforcing the eviction is not unconscionable is an element of the claim for eviction.”
Charlotte Housing Authority v. Fleming, 123 N.C. App. 511, 623 (1996).
"A landlord may prevail in evicting a tenant only if the “enforcing forfeiture is not unconscionable.”

42. Prior Breach
A material breach of a contract by one party may excuse the opposing parties obligation to perform. Layman v. C.C.F. of Georgia, Inc., 161 F.Supp.2d 666, 670 (2001).

43. Protected Tenants – 50-B cases
“Protected tenant” – a tenant or household member who is a victim of domestic violence under 50B of the General statutes or sexual assault or stalking under Chapter 14 of the G.S.
Additional Rights –
Early Termination of Rental Agreement
Landlord Unable to Terminate Lease Based on Status as Protected Tenant
Ability to Request Change to Locks

44. AFFIRMATIVE CLAIMS AND COUNTERCLAIMS

45. Breach of Warranty of Habitability
Residential leases include an implied warranty of habitability which creates numerous landlord responsibilities
Responsibilities include:
Duty to Make Repairs
Duty under Express Covenants
Liability for Defects
Remedy: Rent Abatement
Difference between the fair rental value of the property in a warranted condition and the fair rental value of the property in its unwarranted condition. Von Pettis Realty Inc., v. McKoy, 135 N.C. App. 206.

46. Practical Actions to Prove Violation of G.S. 42-42
Advice to Clients:
Take pictures of all defects.
Contact the fire marshal or building inspector for a safety check.
Request Repairs in writing in order to place landlord on notice of defects.
Keep a copy

47. Unfair and Deceptive Trade Practices: N.C.G.S. 75-1.1.
A landlord who leases a home containing defects and subsequent to learning of these defects attempts to collect rent on the home commits an unfair and deceptive trade practice.
Remedy: If unfair and deceptive trade practices are found damages are “trebled automatically” and a party may recover attorneys’ fees upon a showing that the opposing party acted “willfully.”
Pinehurst, Inc. v. O’Leary Bros. Realty, Inc., 79 N.C. App. 51, 63 (1986).

48. Unfair Debt Collection: N.C.G.S. Chapter 75 Article 2
N.C.G.S. Chapter 75 Article 2 articulates actions which a debt collector is prohibited from engaging in.
Sample Actions include:
Threats and coercion
Harrassment
Unreasonable Publication
Deceptive Representation
Unconscionable Means
Charging Excessive Fees

49. Trespass to Real Property
Overview: The disturbance of possession. Every unauthorized entry on land in the peaceable possession of another constitutes a trespass. Matthews v. Forrest, 235 N.C. 281, 283 (1952).
Can be brought by Landlord against Tenant at will
Can be brought by Tenant for LL interference with quiet enjoyment
Remedy:
Compensatory damages for showing of actual damages
Punitive damages for showing of circumstances of aggravation authorizing such damages.
Nominal damages if no actual damage can be shown.

50. Conversion
Overview: An unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another.
Remedy: The measure of damages for conversion is the fair market value of the converted property at the time of the conversion, plus interest. Bartlett Milling Co., L.P. v. Walnut Grove Auction and Realty Co., 192 N.C. App. 74, 81 (2008).

51. SECURITY DEPOSITS Non – Negotiable
NCGS Section
Tenant must provide forwarding address
LL must provide
information about location of Security Deposit
interim accounting within 30 days
60 days for final accounting
LL forfeits security deposit if they violate these rules.

52. PROCEDURAL ISSUES

53. Discovery in Small Claims Court
NOPE

54. Appeals Process: N.C.G.S. 7A-229
A decision may be appealed from small claims court to the district court for a trial de novo. Don Setliff & Associates, Inc. v. Subway Real Estate Corp., 178 N.C. App. 385, 387.

55. Appeal Deadlines- Ten days after the Judgment is entered Rent Bond Fee
Jurisdictional
Rent Bond
Amount of judgment or
Pro rata amount from date of judgment if indigent
Fee
Indegency

56. Writ of Possession Eleventh day after judgment, (if no appeal)
LL must obtain writ from clerk.
Clerk delivers to Sheriff
Sheriff serves it on Tenant
Tenant notified of date of lockout

57. Call if you have questions
Tom Gallagher
Doug Tate