RENT ESCROW

(Baltimore County Code, Title 18 - Housing, Sections 18-36 and 18-37)

Where there are certain serious defects in a dwelling and the landlord has failed to correct them within a reasonable time, this law permits the tenant to pay the rent into court so that funds may accumulate and be used to pay for needed repairs.  The tenant may use this procedure affirmatively by bringing suit, or he may use it defensively after withholding rent from the landlord and being sued for non-payment.  Following is a summary: 

The defects covered by this law are those which "constitute or if not promptly corrected will constitute a fire hazard or serious threat to the life, health, or safety of the occupants", including: 

·         The 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).

·          lack of heat, light, electricity, or adequate sewage disposal facilities.

·         an infestation of rodents (except in one-family dwellings).

·          the presence of lead paint on interior surfaces, provided the landlord has notice of the painted surfaces and provided such condition violates state or county laws or regulations.  

Any of the conditions listed above may be used by tenant as a defense to an action of distress for rent or an action brought by landlord to recover rent or possession of the premises for non-payment of rent; or tenant on his own initiative may file a declaration in the District Court, claiming the presence of any of the above conditions and asking relief.

Tenant's assertion, whether it is the basis of an action brought by tenant or is the defense to an action brought by landlord, is dependent upon the following: 

·         Before the beginning of the action, the landlord or his agent was notified of the defective condition in writing by certified mail, or by receipt of a violation notice from a state or county agency.

·         Landlord has refused or failed to remedy the condition within a reasonable time.  What is a reasonable time is left to the discretion of  the court, but a delay beyond 30 days after landlord received the notice is presumed to be beyond a reasonable time.  That presumption may be rebutted.

·         Tenant pays into court the amount of rent due under the lease, until that amount is modified by court order.

·         Tenant has not had more than 3 judgments for rent due and unpaid entered against him during the 12 months preceding the beginning of the legal action.  If tenant has lived on the premises for 6 months or less and has received 2 or more judgments for rent due and unpaid, tenant is not entitled to the protection of this rent escrow law. 

The landlord will prevail if he can prove one of the following: 

·         The condition complained of does not exist.

·          the condition has been remedied.

·         the condition was caused by tenant or member of his family, or by his or their invitees, assignees or guests.

·         tenant has unreasonably refused entry, or has unreasonably failed to make arrangements for entry by landlord or his agent to make repairs 

At the conclusion of the hearing, the court shall make findings of fact and may make any order that the justice of the case requires.  Such an order may include one or more of the following: 

·         termination of the lease or surrender of the premises to landlord.

·         ordering all the rent money paid into the escrow account to be released to the landlord or to the tenant in accordance as below.

·         ordering the tenant to continue to pay the rent into the escrow account until the defective condition is remedied.

·         ordering that the rent, whether paid into escrow or paid to landlord, be reduced by the court to an amount that fairly compensates for the existence of the complained-of condition. 

In all cases where the court decides that the tenant is entitled to relief under this Rent Escrow law, there is a burden upon landlord to show cause why the rent should not be reduced.

 

·         ordering a portion of the money accumulated in escrow to be released to the tenant (where the landlord has refused to make repairs within a reasonable time), or to the landlord, or to a contractor chosen by the landlord, in order to make repairs.  In any case, the court must make an order to ensure that the money is used to make the repairs.

·         refer the matter to a county or state agency for investigation and report, and delay final decision until the report is received.  During that time tenant will pay into court any rent  due.

·         order the escrow funds to be used to pay a mortgage on the property to prevent foreclosure.

Whenever an escrow account is established by the court and the condition is not fully remedied within 6 months and the landlord has not made a reasonable effort to remedy the condition, the court may order all money accumulated in the account to be paid to the tenant.  The escrow will then continue, beginning a new 6-month period with the same conditions as before.

The initial hearing must be held within 15 calendar days after notice of the hearing is mailed (see 9. below), except that the court may order an earlier hearing where emergency conditions are alleged, such as failure of heat in winter, lack of adequate sewage facilities, or any other condition which constitutes an immediate threat to the life, health or safety of the inhabitants of the premises. 

The court, on its own motion or on motion of either party, may hold additional hearings to determine the rights and obligations of the parties.  Distribution of escrow money can take place only by order of the court after a hearing where both parties were given reasonable notice, or upon motion of both parties, or upon certification by an appropriate agency that the work required to be done has been satisfactorily completed.

Whenever a hearing is required in the course of determination of the case, the court shall notify by certified mail (return receipt) all persons required to be notified, stating the date, time, and purpose of the hearing.  Refusal or unreasonable delay by a party in accepting the notice will not delay or prevent any remedy to which the other party is entitled. 

For 6 months following conclusion of the case, the tenant is protected from eviction, rent increase, or a decrease in any service which the landlord is required by law to provide - unless the court finds that the tenant did not make his declaration or defense "in good faith", or that the rent has been increased or tenant evicted "for good cause."  During that first 6 month period, the landlord will have the burden of proving his own "good cause" or tenant's lack of "good faith".   

Thereafter, the burden is on the tenant to prove his own good faith or the landlord's lack of good cause. 

"Good cause" for the landlord to evict or raise the rent must include one of the following: 

·         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 invitees or assignees, beyond ordinary wear and tear.

·         The landlord wants in good faith to regain possession of the property so that he himself may live there immediately upon termination of tenant's lease.

·         The landlord has contracted in good faith and in writing to sell the property, and the purchaser plans to live there immediately upon termination of tenant's lease.

·         The landlord seeks to raise the rent because he has experienced a substantial increase in taxes or in maintenance or operating costs unrelated to any condition asserted under this law.

·         Landlord has completed a substantial capital improvement of the premises which benefits the premises and is not related to any condition asserted under this law.

The protection of 10. above also applies to a tenant who in good faith reports a potential code violation to a state or county agency except that after the initial 6 month period, the landlord may increase the tenants rent.   Furthermore, this portion of the law shall not affect tenant's or landlord's right to terminate or not renew a written lease for one year or longer in accordance with the provisions of the lease; but the terms of the lease may not be used to defeat the intent and provisions of this law. 

If a landlord intends in good faith to raze or board up the premises and intends to obtain a permit to do so, he may gain possession after giving tenant 60 days' notice. 

Any provision of a lease or other agreement purporting to waive any provision of this law benefitting a tenant, resident, or occupant of a dwelling, is against public policy and void. 

This law applies also to residential property leased by a state or county agency. 

There is a rebuttable presumption that the following conditions, as long as they do not present a serious and substantial threat to the life, health, and safety of the occupants, are not covered by this law and thus cannot be the basis of a successful claim or defense by tenant: 

·         lack of decorative amenities, such as fresh paint, rugs, carpets or paneling, or other defect which merely reduces the aesthetic value of the premises.

·         small cracks in the walls, floors, or ceilings.

·         lack of linoleum or tile on the floors, provided the floors are otherwise safe and structurally sound.

·         lack of air-conditioning. 

Concerning defects in utilities, this rent escrow law applies only to those utilities which the tenant was entitled to receive when the lease began, or which he actually received before he or the landlord instituted court action.

Click here to see what Maryland says about public local law on this issue  

Legally Reviewed - BNI. Last Update - 03/06/08 (PLL/M.A.J.)