Landlord Liability is Limited under the Statutory Warranty of Habitability and Consumer Protection Act

In Terry v. O’Brien, 2015 VT 132 (October 23, 2015), the Vermont Supreme Court vacated a judgment against a landlord for deceptive practices under the Consumer Protection Act and breach of the statutory warranty of habitability.

Issue: The landlords appealed a jury verdict against him for breach of the statutory warranty of habitability and deceptive practices under the Consumer Protection Act, and an award of attorneys’ fees. There were several habitability and code issues, including an issue in the attic’s electrical wiring caused a fire in the building, when tenants overloaded an electrical outlet with space heaters.

Holding: The Court reviewed prior case law and statutory amendments regarding the common law and statutory warranties of habitability, focusing on latent defects, as well as landlord knowledge and notice requirements. The Court vacated the warranty of habitability verdict against the landlord, holding that the tenant’s claim for breach of the statutory warranty of habitability failed as a matter of law because there was no evidence that the landlords had actual notice of a habitability defect that led to the fire. It also reversed the trial court’s ruling to reduce the landlords’ unpaid rent claim since it was based on this vacated verdict. It reversed and remanded the tenants’ Consumer Protection Act claim, because the jury instruction was overbroad. The instruction did not include any requirement that the landlord knew or should have known of the defect that they failed to disclose and that led to the fire. It also did not include a requirement that the alleged deceptive act be material, in that objectively it would have affected the tenants’ decision to rent the property. In light of these decisions, it vacated the award of attorney’s fees to the tenant as the prevailing party. It also upheld the denial of the landlord’s attorney’s fees.