This opinion, which deals with eviction of a residential tenant after a foreclosure sale, is of interest to municipalities that may take property by tax deed on which a tenant is living.
In this case, the tenant lived in an apartment that was part of a resort property. She was a tenant at will for five years without a lease. The property went into foreclosure and was sold to a new owner. However, the tenant was not informed of this fact and continued to pay rent to the former owner for eight months. At that point, the new owner sent an agent with a deputy sheriff and a town police officer and forcibly evicted her in one day.
The tenant sued the new owner for violations of RSA Chapter 540-A. This statute prohibits landlords from taking certain actions against tenants. In particular, she alleged that the new owner had violated RSA 540-A:2 (no landlord shall willfully violate a tenant’s right to quiet enjoyment of his tenancy or attempt to circumvent lawful procedures for eviction pursuant to RSA Chapter 540) and RSA 540:3, II (no landlord shall willfully seize, hold or otherwise deny a tenant access to and possession of the leased premises, other than through proper judicial process). In addition, the tenant asked for damages under RSA 540-A:4, IX(a), which subjects a landlord to an order to pay actual damages, costs and attorney’s fees to a tenant for a violation.
Most of the opinion focuses on whether a landlord-tenant relationship ever existed between the tenant and the new owner. If there were no such relationship, then the tenant could not recover damages under RSA 540-A. The law requires that both landlord and tenant show mutual consent to establish a landlord-tenant relationship. In this case, the Court found that, because the new owner had taken no action to collect rent or otherwise establish a landlord-tenant relationship, there was no mutual consent. The fact that the new owner waited eight months to evict the tenant did not change this. As a result, no landlord-tenant relationship had ever arisen, and the tenant was not able to recover damages for the forcible eviction under RSA 540-A.
However, municipalities should take note of what the Court did next. The new owner argued that because it was not the tenant’s “landlord” within the meaning of RSA Chapter 540-A, it was entitled to use self-help to evict her. The Court disagreed. Relying on a prior opinion in Greelish v. Wood, 154 N.H. 521 (2006), the court held that the tenant was a “residential tenant” in a full apartment. Under the terms of another statute, RSA Chapter 540, a residential tenant is entitled to the full eviction process, including an eviction notice and an opportunity for a hearing in court. The purchaser at a foreclosure sale is not entitled to use self-help to evict a residential tenant, whether or not a landlord-tenant relationship has arisen. Both parties had agreed at oral argument that the tenant could have sued the new owner under a common-law theory of trespass or a similar claim, even without the protections of RSA Chapter 540-A, but she didn’t include that claim in her original suit. In an interesting move, the Court remanded the case back to the trial court so the tenant could seek permission to amend her original suit to include that claim. This means the new owner may still face liability for violating the statutory eviction process.
Municipalities should bear this case in mind when they take an occupied residential property by tax deed. The transaction, from the point of view of the tenant, is similar to a foreclosure sale: property changes ownership and the tenant has no control over it. Under the holding of this case, a municipality should not use self-help to remove occupants from a residential property, whether or not the municipality tries to collect rent or otherwise establish a landlord-tenant relationship with the occupants. Any eviction should follow all of the requirements in RSA Chapter 540.