Wrongful Evictions Can Cost Landlords Dearly
December 20, 2016
Property owners who rent or lease their spaces must be on guard against tenants who do not pay rent or damage the premises. Sometimes it is necessary for them to evict the tenants. However, they must follow proper procedures and have good reason to take such drastic action. Wrongful evictions can cost landlords dearly.
A Louisiana property owner leased two parts of a building to a single tenant. The tenant planned to open a sports bar in one unit and a reception hall in the other. Nine months into the two-year lease, the landlord changed the locks to the units. While he did not follow the legal procedure for eviction, he claimed that he was told the tenant was abandoning the premises. State law permitted him to evict a tenant who moved out.
The tenant claimed that she had not moved out and that the landlord took possession of her furnishings when he changed the locks. A court believed her version of events and awarded her $175,722.99 plus legal interest. On appeal, the judgment was reduced to $117,542.09.
A California man accepted a new job in New York City on short notice and had to quickly find an apartment. A real estate broker located an apartment for him, and he signed a 37-day lease, paid the advance rent and a security deposit. A few weeks into the lease, the real estate broker (acting on the landlords' behalf) offered him a four-week extension, which he accepted.
A few days later, the landlords reneged on the extension and threatened to allow a new tenant to move in even if he was still living there. The tenant protested, and a week later he came home to find his belongings gone and his landlords changing the locks. They had not followed legal requirements for eviction, and they refused to return either his belongings or his security deposit.
The tenant sued. A trial court awarded him $53,534.98 for damages, attorneys' fees and costs. On appeal, he received additional attorneys' fees of $32,870.55 and triple his original damages of $6,700.
A standard commercial general liability insurance policy provides personal and advertising injury liability coverage. Among other things, this covers the policyholder's liability for "wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor." However, it does not cover liability when the insured person knowingly violates another person's rights or commits a criminal act. It is possible that this insurance would have covered some or all of the amounts these two landlords were ordered to pay.
The landlords in these cases may have believed that they were acting in the right. Regardless, the courts saw things differently and ordered them to pay their former tenants large amounts. All landlords should carry liability insurance that covers personal and advertising injuries. An uninsured wrongful eviction can leave a landlord in a deep financial hole.