A recent court decision has placed property owners on notice that, at least in the eyes of the law, the adage “no harm—no foul” does not always apply. The facts of the case were not in dispute. The property owner had a lease provision which required a tenant to pay the costs associated with the service of a notice to quit. It was undisputed that the landlord did not enforce this provision as it was a clear violation of Massachusetts General Laws c.186 §15B(1)(c) which prohibits a landlord from imposing any penalty on a tenant unless their rent is more than thirty (30) days in arrears. The Massachusetts Attorney General’s office, however, brought an action against the landlord claiming that the mere insertion of this provision, regardless of its enforcement, was an unfair and deceptive trade practice in violation of the consumer protection act.
To most observers, this action by the Commonwealth appeared to be the act of an overzealous prosecutor attempting to make a political point against the “big bad landlord”. At least it was considered that there were no damages and therefore the landlord’s agreement to remove the provision from future leases would be enough. Think again. The Court not only found that the insertion of this provision was a violation of law, but also held that the fact that the clause was not enforced had no bearing on the ultimate decision. The Court held that, since the provision was illegal and therefore a violation of the consumer protection act, the mere insertion of the clause was actionable. The Court therefore entered an Order prohibiting the landlord from using this provision in their leases. However, the Court also went on to award the Commonwealth monetary amounts including its attorney’s fees and costs, all of which were quite substantial.
The lesson which can be learned from this case is that every landlord needs to have their legal documents reviewed on a continual basis to insure that the provisions are both enforceable and legal. The fact that a clause may not be enforced does not constitute a defense to a potential claim. Every management organization should have their documents reviewed at least every five (5) years. Such a “check-up” not only insures that the provisions are legal and proper, but can also insure that changes in the law are reflected in your documents.
Jeffrey C. Turk is a partner in the law firm of Turk & Quijano, LLP and focuses his practice on the representation of residential and commercial landlords and property management organizations.