Relating to Real Estate

The Court of Appeals held in Lockett v. Blue Ocean Bristol, LLC, 446 Md. 397 (2016), that under a residential lease, the term “rent” as used in the Real Property Article of the Maryland Code (“RP”) only includes the basic payments under the lease. Therefore, a landlord could not exercise certain rights against a tenant who was in default with respect to other fees and charges under the lease.

Felicia Lockett was a tenant in an apartment building in Baltimore City and was active in the tenants association. This caused a difficult relationship to develop with the owner of the property, Blue Ocean Bristol, LLC, which elected not to renew Lockett’s lease when it expired. When Lockett did not leave, Blue Ocean brought an action to dispossess her as a holdover.

Under Maryland law, a landlord may not retaliate against a tenant for certain activities, including activities with a tenants association. But the law only protects such tenants who are “current on the rent.” SeeRP §8-208.1. Lockett was current with her payments of basic rent, but she was either in default or in a dispute with the landlord in connection with utility payments and other amounts that were deemed to be “rent” under the terms of her lease.

The Circuit Court for Baltimore City held that Blue Ocean had retaliated against Lockett for an impermissible purpose and found that Lockett was current in her basic rent at the time of her termination. The circuit court said that it would not find that Lockett was current on her rent when the distinct court action for holdover was filed. The circuit court awarded treble damages of the monthly rent under the anti-retaliation statute ($837 per month x 3 months = $2,511 total damages awarded), but it refused to award legal fees.

The Court of Appeals accepted Lockett’s petition for certiorari. The Court of Appeals noted that prior Maryland cases had held that whether a fee or charge was to be considered as rent depended on the intentions of the parties as determined from a reading of the lease. However, these cases involved commercial leases, and the Court of Appeals stated that there is a different rule for residential leases.

In a residential lease, the applicable statute, RP §8.208.1, controls. Although the statute does not define the meaning of the term “rent,” the Court of Appeals considered how the term “rent” was used throughout the Real Property Article. Probably more importantly, the Court of Appeals considered the anti-retaliation statute to be remedial in nature, and therefore the Court interpreted the law broadly to give broad effect to it. Thus, the Court held that utility charges and other charges and fees owed by Lockett under the lease were not relevant in the consideration of whether she was “current on the rent” under RP §8.208.1.

On the issue of attorneys’ fees, the Court of Appeals noted that the circuit court has discretion as to whether to award them in connection with a retaliatory action. But under Maryland Rule 2-703(g), the circuit court must state a reason for its grant or denial of attorneys’ fees. Because the circuit court did not provide Lockett’s counsel the opportunity to present evidence about her claim for attorneys’ fees, the Court of Appeals remanded the case for consideration of this issue.

PRACTICE NOTE: The holding in Lockett v. Blue Ocean Bristol, LLC is limited to residential leases. Landlords of non-residential leases in Maryland should continue to provide that all sums payable under their leases – not just payments of basic rent – are deemed to be rent under the lease. If the lease form so provides and a non-residential tenant does not make timely payments of all of the fees and charges due under the lease, the landlord will be able to exercise its remedies provided for under Maryland law and under the lease.

For questions, please contact Ed Levin (410) 576-1900.