Landlord Under Fire for Tough Lease

take-aimTenants in Iowa City, Iowa have been handed two major victories in a battle with their landlord over language in a lease agreement.

In the first decision, handed down two weeks ago, two tenants were awarded $200 for bad faith, and an additional $2,000 for  illegal terms in the lease. While the landlord was not ordered to pay attorneys fees, she was ordered to pay $180 in costs.

The case arose after the landlord failed to return the tenants’ full security deposit.

The landlord did return about $350 of the $850 being held, and the tenants cashed the check. A dispute arose over whether that warranted a dismissal of the lawsuit under the theory of accord and satisfaction.

In cases where there is a dispute over the amount of money owed, a court can find that cashing a check for a lesser amount waives the right to ask for more. With little explanation, the court here decided that the tenant did not understand the implications of cashing the check, so there was no accord.

Another significant issue in that case was a charge against the deposit for $150. The landlord designated the charge as a fee for the tenant leaving a window open. The lease provided, and law supported, the landlord charging for additional utility costs if a window is left open while a unit is being heated. However, the landlord did not show any proof that the utility costs spiked due to the open window, and was found liable for wrongful withholding of the deposit.

The same landlord is facing another tenant lawsuit over the lease, and this week the Court of Appeals of Iowa sided with tenants by overturning a lower court’s partial ruling in favor of the landlord, and certifying the case as a class action. That  ruling allows attorneys to encourage other tenants to join in the suit.

The main issue in this second lawsuit is whether a landlord should be accountable to tenants for providing a lease with illegal provisions, whether or not those provisions were enforced. Key provisions under scrutiny include:

Security deposit deductions for cleaning, regardless of the condition of the property;

An indemnity provision in favor of the landlord for any losses a tenant sustains for “theft, fire, rain, wind and otherwise”;

Provisions requiring tenants to bear the cost of maintenance items both inside and outside the property; and,

Forcing tenants to pay for common area damage caused by unknown vandals.

After the appellate court decision, the lawsuit will go back to the trial court to determine whether the tenants are entitled to damages. Specifically, the court must decide whether the landlord “willfully and knowingly” included illegal provisions in the lease.

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