North Carolina landlord-tenant law may seem daunting at first, but the attorneys of Jordan Price are prepared to assist our clients in navigating all kinds of tricky landlord-tenant situations. I would like to discuss certain aspects of a case in which the failure of the tenant to take timely action with respect to a dangerous defect in a leased property resulted in devastating consequences for the tenant. In the interest of transparency, I will disclose that I served as co-counsel for the landlord for a period of time prior to my arrival at Jordan Price.
In 2005, the tenants in this matter entered into a lease with the landlord, who was also the property owner, for a residential property located in North Carolina (hereinafter referred to as the “Property”). The landlord was very familiar with the tenants over several years of acquaintance and actually employed one of the tenants for a period of time.
The tenants were long-term occupants of the Property, and maintained contact and communications with the landlord, who was also living locally. The landlord and the tenants would see one another about town occasionally, and the landlord would ask about the tenants, their family, and about the condition of the Property. The tenants would typically respond by saying that everything was fine and that they were not experiencing any problems. Although the landlord did not conduct regular inspections of the Property, he had been inside the Property since commencement of the lease and observed that the interior of the home was kept in relatively good condition. The landlord also observed that the Property’s exterior was well-maintained.
In 2018, one of the tenants alleged that he entered the bathroom of residence, turned on a light, and that a significant explosion occurred. The tenant was seriously injured as a result of a natural gas explosion at the residence and hospitalized for an extended period of time.
As the proverbial dust settled from the explosion, its cause was ascertained relatively quickly. Unbeknownst to the landlord, and during the tenants’ long-term occupancy of the property, a significant hole developed in the bathroom floor, beneath which existed a crawl space in which the home’s furnace was located. The injured tenant’s expert witness suggested that water had been leaking from the bathroom above and onto the furnace pipe for approximately seven years, thereby causing severe corrosion to the pipe carrying natural gas, thereby resulting in a gas leak.
The evidentiary record showed that the injured tenant generally was aware of the hole in the bathroom floor, as well as the fact that water was leaking through the hole. The record did not contain substantive support for the notion that the tenant made any effort to repair the hole himself or inform the landlord of the hole’s existence so that it could be repaired.
It would be natural to ask how the tenants could have failed to discover such a significant gas leak as the one that caused the explosion at the Property, as natural gas has a very distinctive odor, and the injured tenant’s lack of curiosity regarding the origin of the gas scent and their lack of diligence in addressing the issue were notable. The evidentiary record demonstrated that that the injured tenant was aware of a distinctive natural gas smell emanating from the Property. Although the injured tenant testified that he understood gas leaks to be dangerous, he took little action to investigate the source of the natural gas scent.
As time passed, the odor of natural gas emanating from the Property became so strong that the neighbors began to notice the smell of natural gas emanating from the property. The injured tenant testified that he was informed multiple times by a neighbor that she had smelled gas emanating from the Property, and that the same neighbor informed the injured tenant that she had called the gas company to report the smell of natural gas.
The injured tenant was informed by the local fire department that they had visited the Property due to having received multiple reports of the smell of gas in his neighborhood. Furthermore, the injured tenant personally observed representatives from the local fire department and gas company as they walked in the streets of his neighborhood with devices designed to detect natural gas leaks. He noted that they all convened at the Property after conducting their investigation.
Nevertheless, the tenants made no attempt to notify the landlord regarding any issues related to the natural gas system or the smell of natural gas emanating from the Property. Despite their being in contact with one another, and the landlord living locally, the tenants never mentioned any concerns to the landlord related to natural gas or the scent of natural gas. Furthermore, the landlord was never notified by representatives of the gas company or the local fire department of their visits to the Property in response to the reports of the smell of natural gas in the area. In short, the landlord did not have any notice whatsoever of the aforementioned gas issues.
Based upon the aforementioned lack of notice to the landlord, the trial court granted the landlord’s motion for summary judgment upon all of the injured tenant’s claims. The tenant timely appealed to the North Carolina Court of Appeals. In Terry v. Pub. Serv. Co. of N.C., Inc., 287 N.C. App. 362, 883 S.E.2d 196 (2022), the Court of Appeals issued a majority opinion that reversed the trial court’s grant of summary judgment in favor of landlord. Pursuant to N.C. Gen. Stat. § 7A-30(2), the landlord appealed to the North Carolina Supreme Court. In a landmark majority decision, the Supreme Court affirmed the trial court and reversed the Court of Appeals in Terry v. Pub. Serv. Co. of N.C., Inc., 385 N.C. 797, 898 S.E.2d 648 (2024).
This matter’s factual pattern provided the Supreme Court with an opportunity to delineate the extent of a landlord’s responsibility to make repairs to leased property where they have no notice of an imminently dangerous condition, as well as examine the relationship between common law and the North Carolina Residential Rental Agreements Act.
North Carolina law has long insulated landlords from liability for issues about which they do not have any notice. In fact, under traditional North Carolina common law, landlords have no responsibility to provide any level of habitability in the leased space and have no duty to make repairs. For a tenant to have a claim against a landlord in tort, “[a landlord] must show that there was a dangerous hidden defect on the premises, of which the landlord knew or should have known, and of which the tenant was unaware or could not, through ordinary diligence, discover”. Harrill v. Sinclair Refin. Co., 225 N.C. 421, 425, 35 S.E.2d 240, 242 (1945).
The North Carolina Residential Rental Agreements Act (hereafter referred to as the “RRAA”), codified at N.C. Gen. Stat. §§ 42-38 to 49, modified with the common law in certain respects and essentially codified the implied warranty of habitability. The RRAA established responsibilities to which a landlord must adhere for the safety of their tenant, including a duty to make repairs under certain circumstances where a tenant provides written notice or the landlord acquires actual knowledge of any imminently dangerous condition. The RRAA stated in its relevant part that a landlord shall
(1) Comply with the current applicable building and housing codes, whether enacted before or after October 1, 1977, to the extent required by the operation of such codes; no new requirement is imposed by this subdivision (a)(1) if a structure is exempt from a current building code.
(2) Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition.
(3) Keep all common areas of the premises in safe condition.
(4) Maintain in good and safe working order and promptly repair all electrical, plumbing, sanitary, heating, ventilating, air conditioning, and other facilities and appliances supplied or required to be supplied by the landlord provided that notification of needed repairs is made to the landlord in writing by the tenant, except in emergency situations.
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(8) Within a reasonable period of time based upon the severity of the condition, repair or remedy any imminently dangerous condition on the premises after acquiring actual knowledge or receiving notice of the condition.
N.C. Gen. Stat. §42-42(a). Particularly relevant to the injured tenant’s case is the requirement of § 42-42(a)(8) that omits the written notice requirement and requires that, where an imminently dangerous condition exists, a landlord must repair the leased premises upon obtaining actual knowledge of their necessity of repairs.
In the injured tenant’s case, the Supreme Court affirmed the notion that the RRAA represents a codification of the notice requirement that has been well-established under the common law and that the landlord, having been without any notice or reason to have known of a defect with respect to the Property, could not be held liable in tort for the injuries suffered by the injured tenant that resulted from the explosion. The Supreme Court stated that the tenant, “as the tenant and occupier of the leased property, had long-term prior notice . . . that there was an issue of some sort with the gas line and with the flooring above the furnace.” Terry, 385 N.C. at 806, 898 S.E.2d at 654 (citing DiOrio v. Penny, 331 N.C. 726, 728, 417 S.E.2d 457, 459 (1992). Undergirding the aforementioned notice requirement is the proposition that “a tenant, as an occupier of land, stands in the same position as the landowner with respect to standards of care and duties owed to others. This is because the tenant, as the occupier, is in a much better position to know about the condition of the property.” Id. (citing Robinson v. Thomas, 244 N.C. 732, 737, 94 S.E.2d 911, 915 (1956)).
Addressing the above scenario from the perspective of a landlord, it is important to be aware that your insulation from liability is not limitless. A landlord should take all necessary steps to have the leased premises repaired and restored as soon as possible after a tenant has given written notice of a defect. Furthermore, if a landlord has any knowledge whatsoever of an imminently dangerous condition with leased premises, they should immediately effectuate the repair the dangerous condition in the most thorough manner possible.
Addressing the above scenario from the perspective of a tenant, if you are experiencing any issues with leased property for which you believe that repairs may be needed, you should inform your landlord in writing as soon as possible in order to afford them an opportunity to address the issues. The issue may be one that the landlord is required to address under the law or the applicable lease. If you are facing an imminently dangerous condition with the leased premises, such as gas leak, it is critical that you not delay in informing your landlord and any other relevant authorities so that corrective action may be taken as soon as possible. The aforementioned case demonstrates that a tenant must take certain affirmative precautions in the name of self-preservation, and that a tenant’s failure to take the necessary steps to protect themselves and their loved ones is simply playing with fire.