Legal Hotline September 2014 – Edition 2
CATEGORY: Landlord/Tenant Issues
TITLE: Landlord Not Entitled To Damages If A Replacement Tenant Is Found Immediately
FACTS:
The tenant informed the property manager that he felt unsafe at the property. He also provided a copy of a police report evidencing a recent car break-in. Shortly thereafter, the tenant vacated the premises. At the time, rent was paid for the remainder of the month, and the property was left in good condition with no damage. The landlord was able to place a new tenant at the beginning of the next rental period.
ISSUE:
Is the landlord entitled to keep the tenant’s security deposit?
ANSWER: No
DISCUSSION:
Although the tenant may have been concerned with the safety of the neighborhood, the facts as described dictate that the tenant likely breached the lease and is responsible for the remaining lease term, including monthly rent payments. The tenant’s obligation, however, is contingent upon the landlord’s duty to mitigate damages. In this case, the landlord was able to re-let the premises without any lapse in time between rental periods. If the new rental rate equals or exceeds the prior rental amount paid by the former tenant, then the landlord has no recoverable damages and withholding the tenant’s security deposit would constitute a violation of A.R.S. § 33-1321(D) and entitle the tenant to maintain an action for treble damages under the statute. For these reasons, the security deposit should be returned to the former tenant.
CATEGORY: Agency
TITLE: Broker’s Duty Does Not Include Assisting In A Title Dispute Years After Close Of Escrow.
FACTS:
The brokerage represented the buyer of a property in 1996. As part of that transaction, the buyer obtained title insurance and the title company disclosed to the buyer that there was an easement for access to the property. Recently, however, the buyer was informed that the easement is allegedly invalid. The buyer and a neighboring property owner are litigating the dispute. The buyer has also sent several demand letters to the brokerage, in which the buyer claims that the brokerage has an ongoing obligation to assist her in resolving the dispute and potentially participating in the resolution.
ISSUE:
Does the brokerage owe a duty to the buyer 18 years after the close of escrow to help resolve the dispute?
ANSWER: No
DISCUSSION:
Because the transaction closed approximately 18 years ago, no common law or statutory duties are owed by the brokerage to the buyer. It is generally recognized that, absent an agreement to the contrary, the fiduciary duties owed by a brokerage to its client end at the close of escrow. See Coldwell Banker Commercial Group, Inc. v. Camelback Office Park, 156 Ariz. 226, 231, 751 P.2d 542, 547 (1988) (recognizing that once an agreement between principal and agent is terminated or completed, “the fiduciary relationship is ended and the broker ‘is free to act for himself or the opposing party as long as he does not hinder, delay or interfere’ with a transaction which the agreement was intended to bring into being.”). Moreover, assisting in or negotiating a legal dispute is beyond the scope of services which a licensee can legally provide. Accordingly, at this point, the brokerage does not owe any ongoing duties to the buyer and the brokerage has no legal duty or obligation to assist the buyer in her current dispute with the neighboring property owner.