Knight v. Hallsthammar
623 P.2d 268, 29 Cal. 3d 46 (1981)
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Rule of Law:
A residential tenant does not impliedly waive the landlord's breach of the implied warranty of habitability by continuing to live in the premises despite knowledge of defects. A tenant may raise this breach as a defense in an unlawful detainer action without first giving the landlord a reasonable time to repair the defects, even if the defects existed under a prior owner.
Facts:
- Tenants, including Clara Breit, were renting apartments in a 30-unit building that had numerous defects, including wall cracks, peeling paint, water leaks, and pests.
- The tenants had complained about these conditions to the previous owner, Norman Baker, and the resident manager, but only some repairs were made.
- On May 18, 1977, James E. Knight and other plaintiffs purchased the building.
- On May 19, 1977, the new owners' management company notified tenants of a substantial rent increase.
- On May 26, 1977, Clara Breit, representing the tenants' association, sent a letter to the management company stating that tenants would withhold rent due to the building's disrepair and the rent increase.
- The new owners did not respond to the letter and allegedly indicated that repairs would not be made to occupied units until they became vacant.
- The new owners hired a pest control company and made some minor improvements to common areas.
- The tenants withheld rent as stated in their letter.
Procedural Posture:
- Plaintiffs (landlords) served defendants (tenants) with three-day notices to pay the increased rent or vacate the premises.
- Plaintiffs filed consolidated unlawful detainer actions against the tenants in the trial court.
- The case was tried before a jury, where tenants asserted the breach of the implied warranty of habitability as a defense.
- The jury returned verdicts in favor of the plaintiffs against four tenants, including the appellants.
- The defendant tenants appealed from the judgment of the trial court to the Supreme Court of California.
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Issue:
Does a residential tenant impliedly waive a landlord's breach of the implied warranty of habitability by continuing to occupy the premises with knowledge of its defects or by failing to give the landlord a reasonable time to repair them before withholding rent in an unlawful detainer action?
Opinions:
Majority - Bird, C. J.
No. A tenant does not waive the implied warranty of habitability by remaining in a defective dwelling, nor must a landlord be given a reasonable time to repair before the breach can be used as a defense. Public policy, the inequality of bargaining power in the housing market, and the impracticability of tenant inspections prevent the waiver of the warranty simply by a tenant's continued occupancy with knowledge of defects. The duty to pay rent is mutually dependent on the landlord's duty to maintain habitable premises; therefore, a breach exists the moment the premises become uninhabitable, not after a 'reasonable time to repair' has passed. This defense is also valid against a subsequent purchaser of the property, as the new owner assumes the duty to maintain the premises, and the change in ownership is an event outside the tenant's control.
Dissenting - Clark, J.
Yes. A tenant who is aware of an apartment's defects at the time of rental and knows the landlord has not agreed to repair them implicitly waives the warranty as to those defects by agreeing to a commensurate rent. It is inequitable to allow a tenant to enter a lease at a lower rent due to known defects and then withhold that rent later. Furthermore, sound commercial rules and principles of equity require that a tenant provide notice and allow the landlord a reasonable opportunity to repair the defect before asserting a breach of warranty as a defense. The trial court's instructions reflecting these principles were correct, and the judgment should be affirmed.
Analysis:
This case significantly strengthens the implied warranty of habitability defense established in Green v. Superior Court. It removes two major potential hurdles for tenants: the landlord's argument that the tenant 'assumed the risk' by moving in with knowledge of defects, and the requirement to wait for a 'reasonable time' before exercising their right to withhold rent. The decision solidifies the warranty as a non-waivable, fundamental aspect of residential leases, focusing on the actual condition of the premises rather than the landlord's fault or knowledge. This holding increases the leverage of tenants in substandard housing and places a clear, immediate duty on new landlords who purchase properties in a state of disrepair.
