“We had a deal. We shook hands:” When a Tenant’s Acceptance is not Enough?

It’s a common situation. Landlord enters into an agreement on a handshake and a smile with the tenant. No lease, no email chain no signed writings. Perhaps they split up the utilities, perhaps they split the utilities or some other obligation the Landlord is obligated to take on absent a signed writing by the tenant. If the tenant has been willing, and accepts the arrangement, what’s wrong with it?

This can be a stumbling block for landlords. The State Sanitary Code requires that any agreement between a landlord and a tenant related to the utilities, needs to be in writing signed by the tenant or it is void, in addition to other requirements. In a case called Young v. Patukonis, the court ruled that notwithstanding how long a tenant had paid the subject utility, if the arrangement is not reduced to writing, the Landlord has violated the state sanitary code.

In Young, the parties has an oral understanding that the tenant was responsible for the heat and hot water, both of which were separately metered. Court found that while the arrangement was unenforceable, since the tenant received the benefit of the arrangement, entitling the Tenant to only nominal damages, in addition to her attorney’s fees.

When the landlords and tenants come to an agreement over a handshake but fail to reduce it to writing, issues are created that may drive litigation. A properly drafted lease in every case can prevent issues; whenever there is a question or a problem the parties need only look to the four corners of the lease to see what their duties rights and obligations are.

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