Monday, March 14, 2011

I Didn’t Notice You There

In re Soon Kwon, 2011 VT 26 (mem.)

There is one rule for landlords in Vermont at the end of a lease.  If you are going to withhold the security deposit, get into the property, catalog the damages, and send notice to the tenant within 14 days.  If the property is in Burlington, make sure the notice goes to all the tenants’ forwarding addresses via certified mail.

Landlord in the present case learned this lesson the hard way.  In June 2006, Landlord rented an apartment to six college students who provided a security deposit of $2970.  In 2007, the parties renewed, and apparently, Landlord sent a letter notifying Tenants that he intended to deduct a certain amount from the security deposit for damages to the apartment.  In 2008, the college students moved out, and Landlord wrote that out of the remaining security deposit, only $852.11 was left, and he was applying it to damages.  Landlord sent the 2008 letters to the various Tenants’ emergency contact addresses, but he only sent one of them by certified mail. 

Tenants appealed to the Burlington Housing Board of Review to challenge this action.  The Board found that Landlord had not sent the notice to the proper addresses (Tenants’ last known addresses) and had not sent it certified mail as Burlington requires.  Therefore, the notice was ineffective, and he owed Tenants a full refund of their security deposit. 

Landlord appealed to the Superior Court.  On appeal, Landlord apparently expected to start from scratch and to present evidence from the beginning.  To his chagrin, the Superior Court treated the appeal as one from an agency, which meant that the record made by the Board became the record at the trial court level.  Landlord was not allowed to introduce new evidence, but could only make arguments based on what he had presented to the Board.  Furthermore, the trial court applied a deferential standard of review to the Board’s decision, putting the burden on Landlord to show why the Board was wrong.  On appeal, the SCOV affirms these decisions by the trial court.

From here Landlord’s case goes even further downhill.  State law requires landlords to send notice that of their intent to withhold from a security deposit to the tenant’s last known address by either mail or hand delivery.  Burlington has modified this requirement to require tenants to furnish a forwarding address in writing and for landlords to send notice via certified mail to these addresses or to the property itself if no forwarding address is given. 

The Board found that the Tenants gave Landlord copies of their forwarding addresses, and that Landlord failed to send notice to these addresses and had failed to use certified mail.  Both the trial court and the SCOV uphold this finding as supported by the record. 

Reaching deep, Landlord argues that his non-compliance doesn’t matter because Tenants had actual and undisputed notice of his withholding.  The SCOV does not buy it.  Actual notice does not trump the specific method required by the statute and ordinance.  While the SCOV acknowledges the principle that actual notice eliminates formal notice procedures in some situations, the statute here does not admit to such nuance.  This is a consumer protection statute, which means that landlords have a high and formal duty of compliance.  The policy reasons for this are based on the fact that landlords are in the business of renting; they hold more power over tenants in this situation; they are more likely than tenants to know the law. Thus landlords carry elevated obligations.  Because of this, the SCOV will not allow Landlord to slip the reigns and offer an alternative notice in lieu of his duty. 

Landlord’s next argument concerns the 2007 letter that he sent deducting the bulk of the security deposit to cover first year damages.  SCOV makes quick work of this by noting that the letter was substantively deficient in that it failed to include notice of Tenants’ appeal rights.  Therefore, it was D.O.A. 

Finally, Landlord argues that the Board’s decision was improper because it was made by only one member.  SCOV notes that this is acceptable under the Board’s rules.  Please pay the cashier at the exit.

It is unclear whether Landlord was represented by counsel in this case or was a Pro-ser, but one is left with the distinct question of why he would pursue two levels of appeals to hold onto less than $3000.  Parties often pursue cases for the larger issues involved, but this case is a pretty run of the mill notice and standard-of-review appeal.  The questions raised do not appear to be challenging ambiguous law, and the SCOV’s decision is straightforward.  One answer is that this might be one of those cases that only appear clear in retrospect (there are plenty of those).

If nothing else, the present case re-affirms the generous tenant rights provisions within Vermont’s Residential Rental Act, which are often the bane and source of woe for property owners throughout the state.  We should also keep in mind here that neither the Board, nor the trial court, nor the SCOV ever reached the question of damages.  For all anyone beyond the parties knows, the damages could have been extensive.  In such case, Landlord must foot the bill because of procedure.  Of course the opposite could be true too.  The good news is that Landlord will (hopefully) know better next time. 


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