Facts: A tenant rented a residential apartment unit from a landlord. The rental fees were controlled by the Los Angeles Rent Stabilization Ordinance (LARSO), which requires the landlord to serve a tenant a copy of a valid rental unit registration statement before collecting a rental fee. A tenant may withhold rent until they receive a notice, after which they are to pay all accrued rent. The landlord collected rent from the tenant during the tenant’s multiyear occupancy without serving the tenant the required statement.
Claim: The tenant sought a refund of all rental fees paid to the landlord, claiming the landlord was not entitled to collect any rental fees since their failure to serve the mandatory statement during the tenant’s occupancy relieved the tenant of their obligation to pay rent.
Counter claim: The landlord claimed the tenant was not entitled to a refund since the LARSO does not permit a tenant to avoid paying rental fees entirely if the landlord does not serve the statement.
Holding: A California court of appeals held the tenant was not entitled to a refund of the rental fees paid to the landlord since the LARSO does not enforce penalty costs or allow the tenant to forego paying their rental fees entirely if the landlord does not serve the mandatory statement, but permits the tenant to withhold payment until the landlord serves the statement, after which the tenant must pay all accrued rent. [Lyles v. Sangadeo-Patel (April 17, 2014)_CA4th_]
Editor’s note — The tenant’s withholding of rent until service of the notice was the penalty structure put in place to compel landlords to comply with the local ordinance. In this case, the tenant sought a forfeiture of all rent paid over an approximate nine year period, effectively enabling them to live rent-free for the duration of their entire tenancy, plus treble damages. The court observes this outcome would have been patently absurd.
