67 The Alabama Lawyer 422 (2006). The New Uniform Residential Landlord Tenant Act : Balancing the Scales of Justice in the Landlord-Tenant Relationship.

• Author: BY JEFFREY C. SMITH

The Alabama Lawyer

2006.

67 The Alabama Lawyer 422 (2006).

The New Uniform Residential Landlord Tenant Act : Balancing the Scales of Justice in the Landlord-Tenant Relationship

The New Uniform Residential Landlord and Tenant Act:Balancing the Scales of Justice in the Landlord-Tenant RelationshipBY JEFFREY C. SMITH On April 6, 2006, Governor Riley signed into law Alabama's version of the Uniform Residential Landlord and Tenant Act(fn1) ("Act"). As a result, the legal relationship between residential tenants and landlords was dramatically changed. Prior to the adoption of the Act, the relationship between a residential tenant and a landlord was governed by principles of common law and somewhat antiquated views of the contractual relationship between the parties. This left the residential tenant with little or no bargaining power with regard to the terms and conditions of the lease. This new legislation represents an attempt to balance the bargaining power between the parties and impose affirmative duties upon the landlord that did not arise in common law. The result of the Act's passage is a dramatic shift in the law governing residential leases.

For example, the landlord now has an affirmative duty to maintain the premises in a habitable condition.(fn2) Under the common law the landlord had no such duty.(fn3) Prior to the Act, the amount of security deposit required by landlords and the ability of the landlord to keep the deposit for unspecified "damages" to the property caused by the tenant was unregulated. Now the amount of security required, and the terms of its repayment to the tenant, are clearly delineated in the statute.(fn4) In virtually all existing residential leases, the tenant must pay the landlord's costs of enforcing the lease agreement and collecting past due rents. Under the new law, the landlord is no longer automatically entitled to recover the cost of collection and attorney's fees in the event of a default by the tenant.(fn5) In fact, the mere presence of such a clause in the lease is a violation of the Act which will give rise to statutory penalties against the landlord who knowingly uses such language in a rental agreement.(fn6) Also, the landlord's lien on the personal property of the tenant is abolished by the Act.(fn7) These are just a few of the dramatic changes which you and your residential landlord clients and tenants need to be aware.

The history of the Act is quite interesting. The move toward a uniform Act among the states originally arose during the civil rights movement of the late '60s and early '70s.(fn8) During this period it was estimated that the concentration of poor urban populations gave rise to a disproportionate number of "non-whites" living in substandard housing.(fn9) The original uniform committee proposed a model for the current Act in 1973. Id. Given that the history of the Act finds its origins in the era of the civil rights movement, it is not surprising that many of the Act's provisions are aimed at shifting the balance of power away from the landlord and in favor of the tenant. When the original model of the Act was adopted by the uniform committee, tenants were widely abused by landlords who took advantage of their economic power at the expense of their tenant's rights. These landlords made no warranties and assumed no duties to repair or maintain the premises during the tenancy. This left the tenant in a "take it or leave it" negotiating position.(fn10) Further compounding the economic disparities between the landlord and the tenant was an antiquated common law system which provided that the doctrine of caveat emptor applied to the rental of residential property. The following statement from the Uniform Committee Report in 1973 summarizes the purpose of the Act well:

Some extremely inequitable situations have resulted from the lease being used as an adhesion contract by the landlord offering the burdensome lease agreement to the tenant on a "take it or leave it" basis. The Commissioners have attempted to remedy this particular aspect of imbalance in the relative bargaining powers of landlord and tenant ....(fn11)

In Alabama, the common law principals of caveat emptor also applied to the rental of residential property; thus, the landlord had no duty to repair or maintain the premises, absent an agreement between the parties.(fn12) Consequently, most standard leases provided that the tenant would be responsible for repairs and maintenance of the property. The landlord would simply disclaim his or her responsibility for repairing or maintaining the premises, leaving the tenant very few rights under the lease other than the obligation to pay rent. The new Act changes the relationship between the parties in numerous ways.

I will attempt to simplify the various provisions of the Act and their implications below:

Which properties are covered by the Act?

Section 35-9A-102(c) provides that the chapter shall apply only to the residential landlord and tenant relationship.(fn13) However, certain dwelling units are not covered by the Act, including:

Institutional residences for medical geriatrics, educational, counseling, religious, or other services.(fn14)

Properties under a contract for sale.(fn15)

Property occupied by fraternal or social organizations.(fn16)

Transient occupancies such as hotels and motels.(fn17)

Occupancy by residential managers of rental property.(fn18)

Agricultural leases.(fn 19)

Occupancy by the seller of residential property for no longer than 36 months after the sale.(fn20)

How does the Act dictate the terms of the rental agreement itself?

The general provisions of the Act provide that the rental agreement comes with an implied obligation of good faith on the part of both parties.(fn21)

The Act also provides that the mere presence of certain terms in the lease itself is unconscionable and unenforceable.22 For example, the court may find as a matter of law that a rental agreement or any provision thereof that was unconscionable when made is unenforceable.(fn23) The court can also enforce the remainder of the agreement without the unconscionable provision, and limit the application of any unconscionable provision to avoid an unconscionable result .(fn24) Likewise, when a settlement is reached in which a party waives or agrees to forego a claim of right under the Act or under an unconscionable agreement, the court may refuse to enforce the settlement between the parties, or enforce all but the unconscionable provisions of the settlement agreement.(fn25)

Several items that are now specified by the terms of the Act itself

The Act provides that a landlord and tenant may include any provisions in a rental agreement that are not prohibited by the Act.(fn26)

In the absence of an agreement, the tenant is required to pay the fair rental value for the use and occupancy of the premises.(fn27) Further, rent is payable without demand or notice and, unless otherwise agreed, is payable at the premises itself at the beginning of the term of the lease.(fn28)

Unless specified in the rental agreement, a residential tenancy shall be construed to be week-to-week in the case of a tenant who pays weekly rent, and in all other cases month-to-month.(fn29)

There is no requirement that the lease be signed or delivered by the landlord or the tenant.(fn30) Acceptance of rent without reservation by the landlord gives a rental agreement the same effect as if it had actually been signed and delivered by the landlord.(fn31)

Likewise, if the tenant fails to sign and deliver the written rental agreement to the landlord, acceptance of possession and payment of rent without reservation gives the rental agreement the same effect as if it had been fully executed by the tenant.(fn32)

If the written agreement of the parties provides for a lease term longer than one year, but is not properly executed by the parties, the Act provides that the rental agreement shall only be effective without execution for one year.(fn33)

What provisions in a rental agreement are prohibited by the new Act?

First, the Act prohibits the rental agreement from waiving...