When Can a Tenant Withhold Rent?

When rental conditions become unsafe or uninhabitable, tenants may feel they have no choice but to take drastic measures. Rent withholding is one method tenants may consider if their property becomes uninhabitable due to serious safety or health concerns.  While this can be an effective way to prompt repairs, it must be done carefully to avoid eviction or legal disputes. Knowing the steps and legal considerations involved in rent withholding is key to ensuring you stay protected throughout the process.

Real estate law is a broad area of law. It is important to hire a lawyer who has experience with rent withholding issues to get accurate legal advice. Marc Lieberman, a real estate attorney at Kutak Rock in Scottsdale, Arizona, stresses the importance of speaking to the right lawyer when dealing with real estate matters. “You can really get yourself in trouble just because you think you’re a real estate law lawyer, but that doesn’t mean that you actually know everything about real estate laws. Just to be practical.”

What Is Rent Withholding?

Withholding rent is a legal strategy that tenants can use when dealing with specific renting situations. It may be available when the landlord fails or refuses to keep the rental property in a habitable condition. To use rent withholding as a strategy, tenants will make partial payments or withhold the full payment to the landlord until the significant issues with the property are addressed. Once the property is safe and habitable again, the tenant must make the outstanding rental payments.

The implied warranty of habitability is the legal doctrine that most states have in place to protect tenants. It defines what conditions landlords must keep their rental properties in to ensure safety and habitability for their tenants.

Tenants who do not want to withhold rent have other legal options. One option is to ask the landlord for rent abatement. The tenant would ask the landlord to reduce or suspend the rent due for as long as the property remains uninhabitable. Another option is for the tenant to make the necessary repairs, paying for the repairs themselves. Then, they deduct the cost of the repairs from the rent.

Legal Reasons To Withhold Rent

A tenant cannot withhold rent simply because they want to or are unhappy. Each state has laws that outline the reasons that can trigger the tenant withholding rent. The most common is the implied warranty of habitability. This legal doctrine covers severe defects or issues with the property that could create an unsafe living situation for the tenant.

Examples of extreme safety or habitability issues include non-working hot water, electricity, or lack of running water. A health hazard could be anything from lead paint to a pest infestation. Other reasons for withholding rent could include state law and building code violations.

The Process for Legally Withholding Rent

If a tenant wants to withhold rent, the first step is to speak with a real estate attorney who focuses their practice on landlord and tenant law. The attorney will provide legal advice on landlord-tenant laws and tenant rights.

Part of this consultation is to review the rental agreement. It will outline any procedures or responsibilities that the tenant must adhere to. That way, they do not violate the lease in an attempt to hold the landlord accountable. Once the tenant has a plan in place, the next step is to document the unsafe conditions thoroughly. The more documentation, the stronger an argument the tenant has for the landlord ignoring unsafe conditions. Take pictures and videos, keep a calendar of related activities, and inspection reports.

Send the landlord written notice of the habitability issues. By sending the notices via certified mail, the tenant can have a record of the delivered notices. Another option is to send the notice via email with a read receipt. However, check with a lawyer about what the law states. There can be statutes that outline how and when the tenant must send notice.  There may also be timelines for specific repair needs. If not, the tenant needs to give the landlord a reasonable amount of time.

If the landlord ignores the repair requests, the tenant can open an escrow account. Instead of paying the entire monthly rental payment to the landlord, the tenant can place a portion or all of the rent payment into the escrow account. At the same time, the tenant can file a complaint with the appropriate housing authority.

Once the landlord notices that the tenant isn’t making their monthly rental payments, they may take their own legal action. The tenant should be prepared for this and begin preparing for the eventual eviction notice.

Putting Withheld Rent in Escrow

When a tenant withholds rent payments, they need to set that money aside in a separate account. The money needs to be available for when the landlord makes the necessary repairs. Once the property is habitable, the tenant will need to make the back owed rental payments. Putting the withheld rent money into an escrow account will ensure the money is readily available. An escrow account is a type of bank account that is managed by an independent and neutral third party.

In addition, withholding rent can lead the landlord to attempt eviction proceedings. The landlord will claim the tenant violated the lease by not paying the agreed-upon monthly rent. Putting the withheld rent into an escrow account is a counterargument for the tenant. The tenant can demonstrate good faith by showing the money in an escrow account, ready to be paid when the issues of habitability are resolved.

A tenant can open an escrow account with a separate bank account, escrow service, or legal professional. Keep records of the amounts deposited, which should match the amount of rent owed. Once the issues are resolved, the tenant should promptly notify the escrow holder to release the funds to the landlord. If the issues are not resolved, the tenant should speak with a lawyer about their further legal options and how to move forward with the funds held in the escrow account.

As an experienced real estate attorney, Lieberman explains what he would look for when hiring an attorney in the practice area. “If it were me, I would only hire a board-certified real estate specialist and someone who actually has experience with the type of matter that you’ve handled. For example, many board-certified real estate specialists in Arizona only handle transactional matters. You wouldn’t want to hire them to handle litigation matters and vice versa.”

Potential Risks and Consequences of Withholding Rent

When a tenant decides to withhold rent, they take on various legal risks. To mitigate these risks, a tenant should speak with a landlord/tenant lawyer about how best to proceed. That way, the tenant learns the law and reduces the risk of unknowingly violating it. A tenant should also document everything. The more the tenant communicates with the landlord and documents their actions, the more the tenant can show they acted in good faith.

The most significant risk of withholding rent is the landlord pursuing an eviction. Instead of making the necessary repairs, the landlord may file for an eviction with the clerk of court for nonpayment of rent. This could lead to additional attorney’s fees and court costs as the tenant must defend their actions. In some situations, the landlord may take additional action to retaliate against the tenant. They could attempt to increase the rent, refuse to renew the lease, or neglect additional repair and maintenance needs. The landlord may decide to delay repairs, as withholding rent pushes them to deprioritize the habitability problem.

If the landlord is successful in their eviction proceeding for unpaid rent, the tenant will have a negative mark on their rental history and credit report. This can have lasting negative impacts on the tenant, making it harder for the tenant to secure future housing.

Find Experienced Legal Help

Withholding rent can be an effective strategy for tenants facing uninhabitable living conditions, but it requires careful attention to legal details. Understanding the specific grounds for rent withholding, such as severe health and safety violations, and following the proper legal steps is crucial to avoiding potential eviction or other legal consequences. Proper documentation and communication with the landlord are essential to building a strong case.

Since rent withholding laws vary by jurisdiction, consulting with an attorney is the best way to ensure you’re protecting your legal rights and complying with local regulations before taking action.

Visit the Super Lawyers directory to begin your search for an experienced real estate attorney who handles landlord-tenant law cases.