Legislative Briefcase: Early Lease Termination, Lead-Based Paint Disclosures and Plain Language Contracts

EARLY LEASE TERMINATION

Q: I have a lady who has been an excellent tenant for quite some time. She is a senior citizen who recently came to me and showed me a letter indicating she is eligible for subsidized senior citizen rental housing. She told me she intends to terminate our lease in sixty days, even though the lease term does not expire for another ten months. Do I have to let her out of the lease early?

A: Yes, you do. The Michigan State Legislature recently amended the Landlord Tenant Relationship Act, and the amendment addresses this situation. According to the law, a tenant who has occupied a rental unit for more than thirteen months may terminate a lease by a sixty-day written notice to the landlord if the tenant becomes eligible during the lease term to take possession of a subsidized rental unit in senior citizen housing and provides the landlord with written proof of that eligibility.

Q: I have a second tenant who recently suffered a stroke. He is no longer capable of living independently. His nephew came to me, attempting to terminate the lease. Must I accept the early termination for this tenant, too?

A: Yes. That same amendment to the Landlord Tenant Relationship Act also provides that a tenant who has occupied the rental unit for more than thirteen months may terminate the lease by a sixty-day written notice to the landlord, if the tenant becomes incapable during the lease term of living independently. Here, the tenant must present the landlord with certification by a physician in a notarized statement, confirming that the individual is no longer capable of living independently.

LEAD-BASED PAINT DISCLOSURES

Q: I understand there is a new federal law requiring lead-based paint disclosures. Does this law apply to the leasing of apartments as well as the sale of homes?

A: Yes. The new federal law applies to all transactions involving the sale or lease of "target housing". Target housing means any housing constructed prior to 1978, with limited exceptions.

Q: What are some of the main requirements of this new federal law?

A: Sellers and landlords must provide purchasers and tenants with a copy of the EPA pamphlet, Protect Your Family From Lead In Your Home; provide a written disclosure regarding the presence of any known lead-based paint and/or lead-based paint hazards in the home, apartment or common areas; and provide the purchaser or tenant with actual copies of any records or reports regarding lead-based paint in the home, apartment or common areas.

Q: Do I need to modify my lease or have the tenant sign anything confirming that I have complied with this new law?

A: The law requires each purchase agreement and lease to include an attachment to confirm compliance with this new law. The attachment must include a mandatory lead warning statement, to put purchasers and tenants on notice of risks associated with lead-based paint and their rights under this new law; a statement by the seller/landlord disclosing relevant information regarding the presence of known lead-based paint; and a list of any pertinent records or reports. The purchaser/tenant must confirm receipt of this information, and the purchaser (but not tenant) must confirm that he or she received an opportunity to inspect the home for lead paint. Sellers and landlords must retain this information for three years following completion of the sale or commencement of the leasing period.

Q: Does this law apply to real estate agents?

A: Yes. If an agent is involved in a transaction, the agent has an affirmative duty to inform the seller/landlord of their obligations under this new law, and either personally perform those obligations or ensure that the seller/landlord does so. Otherwise, the agent will be subject to the same fines and penalties applicable to the seller/landlord.

Q: What type of penalties are we talking about?

A: Penalties include an enforcement action by the U.S. Department of Housing and Urban Development and/or the U.S. Environmental Protection Agency, including civil monetary penalties up to $10,000.00 per violation. In addition, Congress specifically authorized private causes of action for purchasers and tenants, including liability for triple damages, together with court costs, reasonable attorneys fees and expert witness fees. Purchasers and tenants may also pursue traditional causes of action under state law, such as negligence, breach of contract, misrepresentation and fraud.

PLAIN LANGUAGE CONTRACTS

Q: I recently heard that the Michigan legislature was considering a law requiring all purchase agreements and leases to be written in "plain language," whatever that means. Has this law taken effect?

A: The Michigan Plain Language Act has not yet become law. House Bill No. 4028 proposes requiring all consumer contracts, including real estate purchase agreements and leases, to be written in plain language. The bill defines plain language as a contract written "in a clear and coherent manner" using "words and phrases with common and everyday meanings." The bill also includes an objective test, whereby a computer could perform a numerical analysis considering the total number of sentences, words and syllables, to determine, in the first instance, whether the contract is presumed to be written in plain language. This bill passed the Michigan House of Representatives on February 5, 1998, and is now before the Michigan Senate Committee on Financial Services.

Reprinted with permission from Building Business & Apartment Management (April 1998), publication of the Building Industry Association of Southeastern Michigan.