The purpose of the rent escrow law is to protect the life, health and safety of tenants and prevent retaliation by landlords; the law may not be used to have a dwelling redecorated, to correct minor code violations or as a means of harassment.
When a landlord delays unreasonably or refuses to repair a condition which threatens the life, health or safety of the tenant, the Rent Escrow law provides several remedies, including the payment of rent into court so that the accumulated funds may be used to pay for repairs.Read the Law: Public Local Laws 9-9
To use the rent escrow process, the dangerous condition must exist on the leased premises or in the common areas and must constitute, or if not promptly corrected will constitute, a fire hazard or a serious threat to the life, health or safety of the tenants (Section 9-9(b)). Examples of such conditions are (Section 9-9(b)):
- Lack of heat, light, electricity, or adequate sewage disposal facilities
- Lack of hot or cold running water (except where tenant pays for water and the lack of water is a result of his failure to pay the water charge)
- Infestation of rodents (except in single-family dwellings)
- Presence of lead paint on interior surfaces, where it would be a violation of the Baltimore City Code and the landlord has notice of the lead painted surfaces
The presence of a dangerous condition may be the basis of an action initiated by tenant for correction of the condition or may be used by tenant as a defense to an action brought by landlord to recover rent or to recover possession of the premises for non-payment of rent (Section 9-9(c)).
Prerequisites to Asserting Rent Escrow
Before bringing a rent escrow action or using the dangerous condition as a defense for nonpayment of rent, the landlord or landlord's agent must also have refused or failed to remedy the condition within a reasonable time after receiving notice of the defective condition in one of the following ways (Section 9-9(d)(1)):
- A letter sent by certified mail return receipt (tenant should keep a copy of the letter and the return receipt);
- A violation or condemnation notice from the Department of Housing and Community Development or other appropriate agency; or
- Actual notice.
A reasonable time to remedy the dangerous condition is left to the discretion of the court but there is a rebuttable presumption that more than 30 days after receiving notice is unreasonable (Section 9-9(d)(1)).
The tenant must pay into the court the amount of rent due under the lease, unless or until that amount is modified by court order (Section 9-9(d)(2)). The tenant must also not have had more than 5 judgments for unpaid rent in the year immediately prior to the initiating the suit or using the dangerous condition as a defense (or not more than 2 judgments if the tenant has lived on the premises 6 months or less) (Section 9-9(d)(3)).
The initial hearing of a rent escrow case must be held within 15 calendar days of notice by the court to the parties, except that the court may order an earlier hearing where tenant alleges emergency conditions, such as lack of heat in winter, lack of adequate sewage facilities, or any other immediate threat to the health or safety of the occupants (Section 9-9(h)).
The court, either on its own motion or on motion of landlord or tenant, may order additional hearings in the case to determine further the rights and obligations of the parties (Section 9-9(i)). Distribution of the escrow money can take place only by order of the court after a hearing where both tenant and landlord were given reasonable notice, or by agreement of both tenant and landlord, or upon certification by a housing inspector that the work required to be done has been satisfactorily completed (Section 9-9(i)).
Whenever a hearing is required in the course of determination of the case, the court must notify all persons required to be notified by certified mail, return receipt requested, stating the date, time, and purpose of the hearing; refusal or unreasonable delay by a party in accepting the notice will not prevent any remedy to which the other party is entitled (Section 9-9(j)).
Defenses for Landlord
The landlord will prevail if he can establish one of the following (Section 9-9(e)):
- He did not receive proper notice;
- The condition complained of by tenant does not exist;
- The condition has been remedied;
- The condition was caused by the tenant, a member of his family, or guest; or
- The tenant has unreasonably refused entry or has unreasonably failed to arrange to be home for entry of landlord or his agent to make repairs.
At the conclusion of the hearing, the court may make any order that the justice of the case requires, including but not limited to one or more of the following (Section 9-9(f)):
- The lease is terminated and the premises surrendered to the landlord;
- All rent money already paid into court shall be released to the tenant or to the landlord;
- The tenant should continue to pay rent into the escrow account until the dangerous condition is remedied;
- The rent is reduced to an amount that fairly represents the condition of the premises (the landlord has the burden of showing why the rent should not be reduced);
- The money accumulated in escrow is released to the tenant, or to the landlord, or to a contractor chosen by the landlord, in order to remedy the condition;
- The matter is referred to a municipal or State agency for investigation and report, and tenant pays into court any rent due during that time;
- The escrow funds are to be used to pay a mortgage on the property to prevent foreclosure; and/or
- The landlord must correct the defective condition.
Where an escrow account is established by the court and the landlord does not make a reasonable effort to remedy the dangerous conditions within 6 months, all money accumulated in the account shall be given to the tenant and the escrow will continue for a new 6-month period with the same conditions as before (Section 9-9(g)).
Protection from Retaliation
Following a determination of the merits of the case, tenant is protected from a rent increase, eviction, or a decrease in services that the landlord is legally required to provide, unless the court finds that the tenant’s complaint or defense was not "in good faith"* or that the landlord has "good cause" to evict the tenant or raise the rent (Section 9-9(k)). For the first 6 months, landlord has the burden of proof to prove the lack of good faith or good cause; after the 6-month period, the burden of proof is on tenant (Section 9-9(k)).
"Good cause" for the landlord to evict tenant or raise the rent requires a finding that (Section 9-9(k)(2)):
- The condition which was the basis of tenant's complaint or defense was caused by an act or omission of tenant or a member of his family or their guest, and was more than ordinary wear and tear;
- The landlord wants in good faith to regain possession of the property so that he himself can immediately live there;
- Landlord has contracted in good faith and in writing to sell the property and the purchaser plans to live there himself immediately;
- Landlord has experienced a substantial increase in taxes or a substantial increase in operating costs unrelated to the condition asserted under this law; or
- Landlord has made a substantial capital improvement to the premises, unrelated to the condition asserted under this law, and the improvement benefits the leased premises.
The protection from an increase in rent, decrease in services, or eviction also applies to a tenant who, in good faith, reports a possible housing code violation to a state or municipal agency, even if the tenant does not intend to use rent escrow procedures; the landlord is restrained from increasing the rent for a maximum of 6 months after determination of the case (Section 9-9(k)(3)). However, this law does not affect the right of a tenant or landlord to terminate or not renew a written lease for one year or longer in accordance with the provisions of the lease except that the terms of the lease may not be used to defeat the intent and the provisions of the law (Section 9-9(k)(3)).
If landlord intends in good faith to raze or board up the premises and intends to obtain a permit to do so, he may give the tenant a 60-day written notice to terminate the tenancy (Section 9-9(l)).
Prohibited Acts and Application of the Law
Any attempt to waive any provision of this law which benefits a tenant or occupant of a dwelling is against public policy and void (Section 9-9(m)).
This law also applies to residential property leased by a municipal or State agency (Section 9-9(n)).