Tenants: Beware and Negotiate

In a matter of first impression before the Texas Supreme Court, the Court ruled that a Residential Lease provision that obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault” was not void and unenforceable.

The background facts:  A young lady, Carmen White, got her first apartment and signed a standard Texas Apartment Association (“TAA”) lease.  Her parents gave her a washer and dryer set as a gift.  While using the dryer, it caught fire and burned her apartment and others nearby.  The damages to the apartment complex exceeded $83,000.00.  The source of the ignition was unknown and no fault was placed on White or the Landlord.  The landlord’s insurance company paid the claim, subrogated, and demanded reimbursement from Ms. White.  When she refused to pay the insurance company brought suit against her. 

The Procedural facts:  The case was tried to a jury.  After trial, the jury answered “no” to a question asking if White’s negligence proximately caused the fire.  However, the jury answered “yes” to the question whether White breached the lease agreement by failing to pay the casualty loss.  The jury awarded the landlord $93,498.00 in damages.  White moved for judgment not withstanding the verdict which was granted and the trial court rendered a take-nothing judgment.  The Court of Appeals affirmed the trial court ruling holding that that the Reimbursement Provision was void as against public policy.  The Appeals Court found a fatal conflict between the Reimbursement Provision’s broad language and Chapter 92 of the Texas Property Code restricting a Landlord’s ability to contractually allocate repair responsibilities.

The Supreme Court ruling:  The Supreme Court was to determine, as a matter of first impression, whether public policy embodied in the Texas Property Code precludes enforcement of a residential lease provision imposing liability on a tenant for property losses resulting from “any other cause not due to the landlord’s negligence or fault”.  In so holding the Supreme Court (in a 5-4 decision) repeatedly stated the well known legal axiom that “Parties in Texas may contract as they wish, so long as the agreement does not violate the law or offend public policy, recognizing the the Legislature has limited the freedom of a landlord and tenant to contractually allocate responsibility for repairs materially affecting health and safety.  Interestingly in footnote 4, the court acknowledged that above the signature block, the lease prominently states that the lease can be modified by agreement of the parties, but neither party requested modifications to the Reimbursement Provision. 

The Lease contained a reimbursement provision standard in the TAA lease which obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault”.

As we all know it is almost impossible to get a Landlord to revise any provision in a standard form lease, but if you are to avoid the tragedy that happened to Ms. White, you must negotiate a modification of the Lease.

Be aware that the TAA Lease is a legal document and forms a binding contract.  You should consult an attorney for help revising the Lease. 

We would first add a sentence to Section 10, Special Provisions.  We would write in the blanks a sentence to limit my liability.  For instance, “Notwithstanding anything to the contrary, Tenant shall never be responsible for repair, or liable for damages to Landlord’s property, including other units in the complex, unless such damage is proximately caused by the negligence of Tenant, Tenant’s guests, or invitees.”

Secondly, we would strike out certain language contained in Section 12. We would strike out “or any other cause not due to our negligence or fault”, at the end of the first sentence of Section 12.

We firmly believe that no residential Tenant should be held responsible to repair other units damaged or for property losses “resulting from any other cause not due to the landlord’s negligence or fault.”  Do not let this happen to you.

Six Approaches to Effective Negotiation

1. Understand your Opponent’s Position

a. Crawl into the shoes of the other guy. When you understand your opponent, you have a        better chance of reaching a successful conclusion. That means paying attention to how they    view the issues.

2. Build Trust through Personal Relationships

a. Through mutual trust, you are able to achieve things that benefit both sides. When there      is trust, you can talk about their assumptions, strategies, and even fears.

3. Build Confidence

a. Confidence building keeps the parties talking. The best way to think about a big                      negotiation is in a series of small negotiations. Start with an issue that could be resolved          quickly, reasonably and amicably.

b. The longer you can keep the sides talking with one another – instead of delivering                  sermons to one another – the better the chances that a middle ground can be reached.

c. Once the two sides are able to take small steps in unison, you can move to larger and            more complicated issues.

4. Compromise

a. Negotiation is by definition the art of compromise. But no compromise should be taken        to the extreme of sacrificing core principles. Know what you are willing to give up before the    negotiations start, and by abiding by Approach #1, you should have a pretty good idea what    the opponent can live without.

b. President Reagan once said; “I’d rather get 80% of what I want that to go over the cliff          with my flag waiving”.

5. Timing

a. Recognize when to press a point and when to withdraw. Like a good poker player, you          have to know when to hold them and know when to fold them.

b. On the other hand, bad timing can undermine successful negotiation.

6. Maintain a deep Appreciation of and Respect for Politics

a. The difference between success and failure is often measured by the ability to understand    how political constraints shape the outcome of any negotiation. Understand the external          influences the opponent may have.

b. Appreciate what objectives, arguments, and trade-offs are important to your opponents.

c. A public official must have the power to make the decision. That power largely derives          from public support or support of a board of directors.

d. A public official who loses public or board confidence also loses power. Understand that      the opposing negotiator may have to save face to get the deal done. Understand what is            necessary for the official to save face.

How one considers these six approaches will change from situation to situation. An approach to timing that proved effective in one negotiation might not work in another. Always remain flexible.

There are three maxims that remain absolute. Ignoring one of these maxims can seriously jeopardize a successful negotiation.

Maxim 1: Never lie.
Maxim 2: Nothing should be deemed agreed to until everything is agreed to.
Maxim 3: Keep a written record of all discussions.