Procedures and Examples of Valid Reasons for Opening an Escrow Account
(1) The courts are very particular regarding the reasons for resorting to escrow, as a remedy in settling disputes between landlords and tenants. The following are only examples of these valid reasons and are not limited to:
Structural defects in the unit or building that pose certain threats to the health and safety of the tenant. The court further requires that the renter’s notice should be in writing and via certified mail. In addition, the local government authority must have been notified and that a local government unit will acknowledge the existence of the threat to safety by serving a notice of violation to the landlord.
- The defects in the unit are serious enough to render the unit as uninhabitable for human use.
- Issues such as lack of heat, electricity and water are recognized only if said utilities were not cut-off due to the renter’s inability or negligence to pay for their corresponding usages.
- There is lack of sewage disposal facilities to provide proper sanitation.
- The presence of fire hazards for which the local fire department has been notified, who will in turn confirm the existence of threat by serving the landlord a notice of violation.
- Failure to reduce lead paint hazards which should likewise be confirmed by the local housing authority through a violation notice served to the landlord.
(2) If the property rented is managed by property administrators or managers, they shall be construed as the landlord’s legal extensions and notices and proofs that these had been sent to and received by them will suffice.
(3) Upon court hearing to open an escrow account, the renter will be asked to bring all the previous receipts as proof of the renter’s diligence in paying his monthly rent obligations.
(4) If the court finds that the renter’s reasons are not included among those prescribed by law or are not serious enough to pose threat to health and safety, the court will allow the landlord to serve the renter a notice of eviction. This is one of the reasons why checking out the state laws is a must.
(5) However, the landlord still has to go through proper court procedures to evict the tenant by showing proof that the notice of eviction was served accordingly, i.e. reasonable time, return of deposit and the like.
(6) If the tenant wins and the landlord is directed by the court to comply with the necessary repairs, the rent payment withheld will be deposited to a court-appointed trustee to provide the escrow service until such time that the repairs have been completed.