EASTERLY, Associate Judge.
The issue presented in this case is whether a trial court may grant a landlord (or his agent) judgment of possession and an award of back rent based on a rent increase which the tenant has objected to and refused to pay. A landlord of a non-rent-controlled property, who is unconstrained by lease terms, may certainly seek to rent his property for any amount he thinks the market will bear; and if the tenant in occupancy refuses to pay the rent a landlord wishes to charge, the landlord may direct the tenant to vacate the apartment so the landlord may rent to someone else. But, as this court's precedent makes clear, a landlord may not unilaterally raise the rent over a tenant's objection and then obtain a back rent award for the amount the tenant has refused to pay. Because Cathie Gill, Inc., improperly received such an award, we now reverse and remand for proceedings consistent with this opinion.
The tenants in this case, Charles Mines and his wife, initially rented the property in question, an apartment, in June 2011. They signed a one-year lease setting their rent at $3,000/month. Shortly before the lease expired in 2012, the two owners of the apartment ("the landlords") asked the tenants to sign a new one-year lease with a 3% rent increase. The tenants ultimately declined to sign a new lease but remained in the apartment; it was their understanding that their expired lease terms remained in effect. As to the landlord's understanding of the situation the record is silent, but there is no indication in the record that the landlords objected or asked the tenants to leave. Instead, this arrangement continued, apparently without incident, for seven months. Then, at the end of 2012, Cathie Gill, a management company hired by the landlords, contacted the tenants. Cathie Gill informed the tenants that, going forward, it would collect the rent on the landlords' behalf, and it gave the tenants notice of a 6% rent increase ($3,180), effective February 1, 2013. The tenants again declined to pay an increase in rent and continued to pay $3,000/month, apparently still to the landlord.
At trial, Mr. Mines proceeded pro se; Cathie Gill was represented by counsel. The proceedings were informal and took the form of a conversation between the court, counsel for Cathie Gill, and Mr. Mines. Neither party disputed the history of their relationship detailed above. Mr. Mines argued that he and his wife had never agreed to pay more for their apartment and thus they were only obligated to pay the landlords the $3,000/month as negotiated in the (expired) June 2011 lease.
The trial court ruled for Cathie Gill, explaining to Mr. Mines that once the lease expired, the landlords, with reasonable notice, were free to raise the rent in any amount they chose (since the apartment was not rent-controlled) and that Mr. Mines and his wife, if they remained in the apartment, were obligated to pay that amount. The trial court accordingly awarded $1,586 in back rent, late fees, and court costs to Cathie Gill.
We review de novo the following question of law: whether, based on the facts undisputed by the parties, the tenants had an obligation to pay the demanded rent increase.
We begin our analysis by clarifying what, if any, agreement the landlords and the tenants had vis-a-vis the payment of rent at the time that Cathie Gill, as an agent for the landlord, sought to increase the tenants' rent in February 2013. Mr. Mines argued at trial, as he does on appeal, not only that he and his wife did not agree to pay a 6% rent increase, but also that the June 2011 lease, in particular paragraph 24 (addressing termination/holdovers), was still operative in February 2013, and froze their rent to the amount bargained for in the lease. But the lease was only for one year, and it had expired by the time Cathie Gill sought to raise the rent.
This does not mean, however, that the landlords and the tenants had no legally recognized agreement with respect to the tenants' continued occupancy of the apartment. At the end of a contractual lease term, if a new lease is not signed but the tenant remains, a landlord has two choices: the landlord may refuse to allow the tenant to remain in the property
The question is what happened to this holdover agreement when, seven months into the holdover tenancy, Cathie Gill notified the tenants that, in a month's time, the rent would increase by 6%. Cathie Gill took the position at trial that, the tenants' objection to the rent increase notwithstanding, the fact that the tenants had remained in the apartment meant that they were obligated to pay the increased rental amount. Put another way, Cathie Gill argued that the terms of the holdover tenancy were unilaterally altered by the landlords and that the tenants were bound by this change. This is not the law.
"[A] unilateral statement of rent does not per se create a contract."
It was undisputed at trial that the tenants in this case refused to pay the rent increase. Mr. Mines explained that he had not agreed to a 3% increase requested at the end of his lease term and he had not agreed to the 6% rent increase announced seven months into his holdover tenancy. And indeed Cathie Gill acknowledged that Mr. Mines had objected by letter to the 6% rent increase and had continued to pay $3,000 in rent until Cathie Gill filed suit. Under the circumstances, Cathie Gill could not obtain a judgment for possession or for back rent based on a rent increase it knew the tenants had refused to pay.
The only remaining question, then, is whether Cathie Gill, as the landlords' agent, was entitled to damages based on fair use and occupancy value.
For the reasons set forth above, we vacate the award of $1,586 in back rent, late fees, and court costs to Cathie Gill and remand the case to the trial court for further proceedings consistent with this opinion.
So ordered.
This court in Groner was swift to note that our holding did not "mean that appellant could occupy [the contested property] free of charge." 235 A.2d at 325. Rather, the court explained he was "liable for the reasonable value of the use and occupation of the space." Id.; see Sanchez, 623 A.2d at 1182 n.5 (explaining that the "measure of damages for the unlawful detention of leased premises" generally turns on the fair and reasonable rental value, but also may include consequential damages).