Opinion ID: 1182285
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Heading: The transformation of the landlord-tenant relationship and developments in analogous areas of law compel the recognition of a common law implied warranty of habitability in residential leases in California.

Text: (2) At common law, the real estate lease developed in the field of real property law, not contract law. Under property law concepts, a lease was considered a conveyance or sale of the premises for a term of years, subject to the ancient doctrine of caveat emptor. Thus, under traditional common law rules, the landlord owed no duty to place leased premises in a habitable condition and no obligation to repair the premises. (3 Holdsworth, A History of English Law (5th ed. 1966) pp. 122-123; see, e.g., Brewster v. DeFremery (1867) 33 Cal. 341, 345-346.) These original common law precepts perhaps suited the agrarianism of the early Middle Ages which was their matrix; at such time, the primary value of a lease lay in the land itself and whatever simple living structures may have been included in the leasehold were of secondary importance and were readily repairable by the typical jack-of-all-trades lessee farmer. Furthermore, because the law of property crystallized before the development of mutually dependent covenants in contract law, a lessee's covenant to pay rent was considered at common law as independent of the lessor's covenants. Thus even when a lessor expressly covenanted to make repairs, the lessor's breach did not justify the lessee's withholding of the rent. (See 6 Williston, Contracts (3d ed. 1962) § 890, pp. 580-589; Arnold v. Krigbaum (1915) 169 Cal. 143, 145 [146 P. 423].) In recent years, however, a growing number of courts have begun to re-examine these settled common law rules in light of contemporary conditions, and, after thorough analysis, all of these courts have discarded the traditional doctrine as incompatible with contemporary social conditions and modern legal values. This emerging line of decisions, along with a veritable flood of academic commentaries, [7] demonstrates the obsolescence of the traditional common law rule absolving a landlord of any duty to maintain leased premises in a habitable condition during the term of the lease. The recent decisions recognize initially that the geographic and economic conditions that characterized the agrarian lessor-lessee transaction have been entirely transformed in the modern urban landlord-tenant relationship. We have suggested that in the Middle Ages, and, indeed, until the urbanization of the industrial revolution, the land itself was by far the most important element of a lease transaction; this predominance explained the law's treatment of such leases as conveyances of interests in land. In today's urban residential leases, however, land as such plays no comparable role. The typical city dweller, who frequently leases an apartment several stories above the actual plot of land on which an apartment building rests, cannot realistically be viewed as acquiring an interest in land; rather, he has contracted for a place to live. As the Court of Appeal for the District of Columbia observed in Javins v. First National Realty Corporation (1970) 428 F.2d 1071, 1074 [138 App.D.C. 369]: When American city dwellers, both rich and poor, seek `shelter' today, they seek a well known package of goods and services  a package which includes not merely walls and ceilings, but also adequate heat, light and ventilation, serviceable plumbing facilities, secure windows and doors, proper sanitation, and proper maintenance. (Fn. omitted.) In the past, California courts have increasingly recognized the largely contractual nature of contemporary lease agreements and have frequently analyzed such leases' terms pursuant to contractual principles. (See, e.g., Medico-Dental etc. Co. v. Horton & Converse (1942) 21 Cal.2d 411, 418-419 [132 P.2d 457]; Groh v. Kover's Bull Pen, Inc. (1963) 221 Cal. App.2d 611 [34 Cal. Rptr. 637]. See generally Note, The California Lease-Contract or Conveyance? (1952) 4 Stan.L.Rev. 244.) Similarly, leading legal scholars in the field have long stressed the propriety of a more contractually oriented analysis of lease agreements. (1 American Law of Property (Casner ed. 1952) § 3.11, pp. 202-205; 2 Powell, Real Property (rev. ed. 1967) ¶ 221 [1], p. 179; 6 Williston, Contracts (3d ed. 1962) § 890A, pp. 592-613.) Our holding in this case reflects our belief that the application of contract principles, including the mutual dependency of covenants, is particularly appropriate in dealing with residential leases of urban dwelling units. Modern urbanization has not only undermined the validity of utilizing general property concepts in analyzing landlord-tenant relations, but it has also significantly altered the factual setting directly relevant to the more specific duty of maintaining leased premises. As noted above, at the inception of the common law rule, any structure on the leased premises was likely to be of the most simple nature, easily inspected by the lessee to determine if it fit his needs, and easily repairable by the typically versatile tenant farmer. Contemporary urban housing and the contemporary urban tenant stand in marked contrast to this agrarian model. First, the increasing complexity of modern apartment buildings not only renders them much more difficult and expensive to repair than the living quarters of earlier days, but also makes adequate inspection of the premises by a prospective tenant a virtual impossibility; complex heating, electrical and plumbing systems are hidden from view, and the landlord, who has had experience with the building, is certainly in a much better position to discover and to cure dilapidations in the premises. Moreover, in a multiple-unit dwelling repair will frequently require access to equipment and areas solely in the control of the landlord. Second, unlike the multi-skilled lessee of old, today's city dweller generally has a single, specialized skill unrelated to maintenance work. Furthermore, whereas an agrarian lessee frequently remained on a single plot of land for his entire life, today's urban tenant is more mobile than ever; a tenant's limited tenure in a specific apartment will frequently not justify efforts at extensive repairs. Finally, the expense of needed repairs will often be outside the reach of many tenants for [l]ow and middle income tenants, even if they were interested in making repairs, would be unable to obtain any financing for major repairs since they have no long-term interest in the property. ( Javins v. First National Realty Corporation (1970) 428 F.2d 1071, 1078-1079 [138 App.D.C. 369].) In addition to these significant changes, urbanization and population growth have wrought an enormous transformation in the contemporary housing market, creating a scarcity of adequate low cost housing in virtually every urban setting. [8] This current state of the housing market is by no means unrelated to the common law duty to maintain habitable premises. For one thing, the severe shortage of low and moderate cost housing has left tenants with little bargaining power through which they might gain express warranties of habitability from landlords, and thus the mechanism of the free market no longer serves as a viable means for fairly allocating the duty to repair leased premises between landlord and tenant. [9] For another, the scarcity of adequate housing has limited further the adequacy of the tenant's right to inspect the premises; even when defects are apparent the low income tenant frequently has no realistic alternative but to accept such housing with the expectation that the landlord will make the necessary repairs. Finally, the shortage of available low cost housing has rendered inadequate the few remedies that common law courts previously have developed to ameliorate the harsh consequences of the traditional no duty to repair rule. [10] These enormous factual changes in the landlord-tenant filed have been paralleled by equally dramatic changes in the prevailing legal doctrines governing commercial transactions. Whereas the traditional common law no duty to maintain or repair rule was steeped in the caveat emptor ethic of an earlier commercial era (see, e.g., Nelson v. Meyers (1928) 94 Cal. App. 66, 75-76 [270 P. 719]), modern legal decisions have recognized that the consumer in an industrial society should be entitled to rely on the skill of the supplier to assure that goods and services are of adequate quality. In seeking to protect the reasonable expectations of consumers, judicial decisions, discarding the caveat emptor approach, have for some time implied a warranty of fitness and merchantability in the case of the sale of goods. (See Klein v. Duchess Sandwich Co., Ltd. (1939) 14 Cal.2d 272, 276-283 [93 P.2d 799]; Escola v. Coca Cola Bottling Co. (1944) 24 Cal.2d 453, 461-468 [150 P.2d 436] (Traynor, J., concurring.) Peterson v. Lamb Rubber Co. (1960) 54 Cal.2d 339, 341-348 [5 Cal. Rptr. 863, 353 P.2d 575]. See generally Jaeger, Warranties of Merchantability and Fitness for Use (1962) 16 Rutgers L.Rev. 493.) In recent years, moreover, California courts have increasingly recognized the applicability of this implied warranty theory to real estate transactions; prior cases have found a warranty of fitness implied by law with respect to the construction of new housing units. (See Aced v. Hobbs-Sesack Plumbing Co. (1961) 55 Cal.2d 573, 582-583 [12 Cal. Rptr. 257, 360 P.2d 897]; cf. Kriegler v. Eichler Homes, Inc. (1969) 269 Cal. App.2d 224, 227-229 [74 Cal. Rptr. 749]; Avner v. Longridge Estates (1969) 272 Cal. App.2d 607, 609-615 [77 Cal. Rptr. 633].) [11] In most significant respects, the modern urban tenant is in the same position as any other normal consumer of goods. (See Note, The Tenant as Consumer (1971) 3 U.C. Davis L.Rev. 59.) Through a residential lease, a tenant seeks to purchase housing from his landlord for a specified period of time. The landlord sells housing, enjoying a much greater opportunity, incentive and capacity than a tenant to inspect and maintain the condition of his apartment building. A tenant may reasonably expect that the product he is purchasing is fit for the purpose for which it is obtained, that is, a living unit. Moreover, since a lease contract specifies a designated period of time during which the tenant has a right to inhabit the premises, the tenant may legitimately expect that the premises will be fit for such habitation for the duration of the term of the lease. It is just such reasonable expectations of consumers which the modern implied warranty decisions endow with formal, legal protection. (Cf. Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 269-271 [54 Cal. Rptr. 104, 419 P.2d 168]. See generally Leff, Contract as a Thing (1970) 19 Am. U.L. Rev. 131.) Finally, an additional legal development casts significant light upon the continued vitality of the traditional common law rule. The past half century has brought the widespread enactment of comprehensive housing codes throughout the nation; in California, the Department of Housing and Community Development has established detailed, statewide housing regulations (see Health & Saf. Code, § 17921; Cal. Admin. Code, tit. 25, §§ 1000-1090), and the Legislature has expressly authorized local entities to impose even more stringent regulations. (See Health & Saf. Code, § 17951.) These comprehensive housing codes affirm that, under contemporary conditions, public policy compels landlords to bear the primary responsibility for maintaining safe, clean and habitable housing in our state. As the Supreme Court of Wisconsin declared with respect to that state's housing code: [T]he legislature has made a policy judgment  that it is socially (and politically) desirable to impose these duties on a property owner  which has rendered the old common law rule obsolete. To follow the old rule of no implied warranty of habitability in leases would, in our opinion, be inconsistent with the current legislative policy concerning housing standards. ( Pines v. Perssion (1961) 14 Wis.2d 590, 596 [111 N.W.2d 409, 412-413]; see Buckner v. Azulai (1967) 251 Cal. App.2d Supp. 1013, 1015 [59 Cal. Rptr. 806, 27 A.L.R.3d 920].) Unquestionably these numerous factual and legal developments have completely eroded the foundations of the traditional common law rule. As noted earlier, the highest courts of seven of our sister states and the Circuit Court of Appeals for the District of Columbia have discarded the traditional common law doctrine and have explicitly recognized an implied warranty of habitability in residential leases. The Supreme Court of Wisconsin was the first to adopt this approach in 1961, and since 1969 the Supreme Courts of Hawaii, New Jersey, New Hampshire, Illinois, Iowa, and Massachusetts and the Circuit Court of Appeals for the District of Columbia have followed this lead. [12] The Court of Appeal decision in Hinson v. Delis (1972) 26 Cal. App.3d 62 [102 Cal. Rptr. 661], was decided in the wake of this rapidly burgeoning, uniform trend of out-of-state decisions. [13] In Hinson, after a landlord had refused to repair a number of defects that had developed in the tenant's apartment  including a rotting bathroom floor, a defective toilet and an improperly fitting, drafty front door  the tenant withheld over two months rent, $200, and requested an inspection of the premises by a local housing inspector. The inspection confirmed the existence of a number of substantial housing code violations, and when the landlord received an official letter from the inspector he finally made the needed repairs. The landlord then demanded that the tenant pay the $200 that had been withheld, but, although the tenant ultimately agreed to resume paying her full rent as of the date of the completion of repairs, she continued to insist that she did not owe the full rent for the period when the premises had been in an unfit condition. The tenant filed a declaratory judgment action seeking a declaration that her obligation to pay full rent was dependent upon the landlord's compliance with his duty to substantially obey the housing codes and make the premises habitable, and also seeking to enjoin the landlord from evicting her during the pendency of the action. The landlord agreed not to evict the plaintiff during the court proceedings, but the trial court concluded that although the landlord had violated several housing code regulations, the plaintiff had no legal or equitable right to unilaterally withhold rent. Accordingly, the trial court entered a declaratory judgment that the tenant owed the landlord the full back rent. The Court of Appeal, however, relying heavily on the line of out-of-state decisions cited above, reversed the trial court's judgment and held that a warranty of habitability was implied by law in the tenant's lease, and that a landlord's breach of such warranty could justify a tenant's refusal to pay the full amount of the rent. The Hinson court emphasized, however, that the tenant is not absolved from all liability for rent, but remains liable for the reasonable rental value of the premises, as determined by the trial court, for such time as the premises were in violation of the housing codes. (26 Cal. App.3d at p. 70.) The court therefore remanded the case to the trial court to determine to what extent, if any, the landlord's alleged breach of an implied warranty of habitability excused the tenant's rental obligation. For the reasons discussed at length above, we believe that the traditional common law rule has outlived its usefulness; we agree with the Hinson court's determination that modern conditions compel the recognition of a common law implied warranty of habitability in residential leases.