Lease Audit Information
TOPIC OF THE WEEK:
Does a "fiduciary
responsibility" exist in the Landlord/Tenant relationship?
At least two courts have said "Yes".
"Fiduciary Relationship" is
defined in the Merriam-Webster's Dictionary of Law as:
a relationship in which
one party places special trust, confidence, and reliance in
and is influenced by another who has a fiduciary duty to act
for the benefit of the party.
"Fiduciary Duty" is defined as:
the legal duty of a fiduciary to act in the best interests
of the beneficiary.
If Landlords have a fiduciary
duty to act in the best interests of their tenants, then
clearly they cannot use their position to take advantage of
occupancy cost reimbursement provisions in order to profit
at the expense of their tenants. If a Landlord bills more
than it actually pays or incurs for an expense or service,
without the authorization or expressed consent of the
tenant, then it is taking advantage of this relationship.
P.V. Properties v. Rock
"Aa suit in equity for
an accounting may be maintained when the remedies at law are
inadequate." P.V. Properties v. Rock Creek, 549 A.2d
403, 409 (Md. Ct. Spec. App. 1988) (citing Nagel v. Todd,
45 A.2d 326 (Md. 1946)). Remedies at law are inadequate and
an accounting is due where one party has exclusive control
over financial records showing how much is owed to another.
P.V. Properties, 549 A.2d at 409; see Gianokas v.
Magiros, 208 A.2d 718 (Md. 1965).
In P.V. Properties, the
court held the landlord and tenant were in a fiduciary
relationship because the landlord exclusively maintained
documentation showing expenses for property maintenance,
compelling the tenant to rely on the good faith of the
landlord in assessing the charges tenant owed.
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