Ineffective or slow maintenance is cause for opening a rent escrow case. There is a legal way to establish rent escrow. It can be created by the tenant, or ordered by the judge. Tenants do not have the right to voluntarily withhold rent until repairs are made, this is not the legal way to establish rent escrow. Rent escrow is a procedure that involves paying rent to the court until repairs are made. Once created, the county/city inspectors will inspect the property, then testify in court as to their findings.
Rent escrow is intended to reveal deferred maintenance that could threaten the life, health and safety of the tenant. Defective or insufficient heat, plumbing issues, lack of hot water, defective electrical, structural issues such as a leaking roof, defective stairs, and rodent and vermin infestation in multi-family dwellings. Rent escrow is not intended to address cosmetic concerns, such as fresh paint, or worn carpeting, or small cracks in the walls or ceilings. However, in our experience, cosmetic repairs is open to interpretation and may be added by an inspector on their list of required repairs. As an example, Baltimore City law allows rent escrow to be used to cover items not essential to health and safety for items promised in a lease or an incentive to rent.
The tenant must notify the landlord of the needed repair by certified mail, or a written notice from a housing inspector. The landlord is given reasonable time to make the repair, usually anything beyond 30 days is considered unreasonable.
If the repair isn’t made the tenant may file for a rent escrow hearing to establish a rent escrow case. The landlord receives notice to appear in court for the hearing, and the judge will determine whether a case will be opened. If it is, any future rent payments will go to the court. There will be an inspection ordered. Usually a list of repairs will be generated. The landlord must comply with those repairs. A re-inspection is then done, then a follow-up hearing for all parties to agree. The judge then orders the release of the rent escrow. in some cases, the judge will order part or all of the escrow back to the tenant if they had to endure any hardship during this process.
Alternatively, the tenant might withhold rent, wait for the landlord to take them to Rent Court, and make their case to the judge. At that point, the tenant may request rent escrow. The judge may or may not grant the escrow, and the tenant is at risk to pay late charges and court costs. Some judges may not allow Rent Escrow to be used as a defense in Rent Court.
To create rent escrow, the tenant must document their case with the following:
The tenant must also have the full rent to pay to the court. If the judge grants Rent Escrow, the judge may order the landlord to:
If the tenant desires, the judge may also terminate the lease and end the tenancy.
The landlord and the tenant have an agreement: the landlord provides housing free of life, health and safety hazards; and the tenant agrees to pay rent on time and not cause damage to the property. The tenant may make their request of repairs with the landlord, or may file a complaint with the housing inspector.
If a tenant requests legitimate and needed repairs, it’s the landlords responsibility to properly make those repairs. If not, the tenant has legal recourse that can be time consuming and expensive for a landlord if entered into the judicial process. The first hearing determines if it rent escrow will be granted. The landlord must provide proof showing a standard of care to argue against rent escrow. If not, rent escrow will be granted.