Summary of Knight v. Hallsthammaar, S. Ct. CA 
Relevant Facts: Pl/LL became owners of 30 unit apartment bldg and hired Western Investment Properties (pl2)to manage the property. WIP sent letters to the tenants indicating a raise in the rent. A week later the Tenant’s Assc. sent a letter to WIP indicating rent would be withheld as a result the disrepair of the building and the proposed increase. Pl did not respond. Two weeks later the tenants were served with 3 day pay or quit notices. Only a portion of the reported problems had been addressed by Pls. A health inspector made several notices of violations and they were abated by the fall. None would have rendered the residences uninhabitable he stated, although only a few had been inspected. The county definition is lack of water, extensive sewage leakage, or unsound structural conditions.
Legal Issue(s): 1) Whether a residential tenant may be held to have impliedly waived a landlord’s breach of implied warranty of habitability by continuing to live in the premises, with knowledge of the defects; or 2) by failing to allow a landlord a reasonable time to repair before withholding rent?
Court’s Holding: A tenant may not have impliedly waived and the breach does not depend on the tenant’s knowledge of the conditions, nor whether the LL had reasonable time to repair.
Procedure: Jury trial was unable to reach a verdict for 3 tenants, but returned a verdict against 4 others. Df’s appeal on failure to allow their instructions. Judgment reversed.
Law or Rule(s): A LL impliedly “covenants that premises he leases for living quarters will be maintained in a habitable state for the duration of the lease."
Court Rationale: The fact that a tenant was or was not aware of specific defects is not determinative of the duty of a LL to maintain the premises which are habitable. A tenant’s lack of knowledge of defects is not a prerequisite to the LL’s breach of the warranty. Any agreement by a lessee waiving or modifying his right to receive habitable premises shall be void. A LL’s breach of the implied warranty of habitability exists whether or not he has had reasonable time to repair. The LL had notice of alleged uninhabitable conditions, not caused by the tenants themselves, and failure to repair is not dependant upon knowledge of the conditions by the tenant. Whether the premises are in fact habitable is the issue, and a LL is not exempt from breaching Implied WH when a tenant continues to live therein.
Plaintiff’s Argument: The tenants voluntarily entered into leases, paid the agreed rent, and continued to live in the premises aware of the physical defects, without complaint. All complaints for physical defects were minor and/or repaired.
Defendant’s Argument: The jury should have been instructed on the standards of habitability as determined by the law. A valid defense to an unlawful detainer action is a breach of an implied warranty of habitability.
DISSENT: New owners retained the 30 yr mgr. The letters provided alternative phone numbers in case of emergency, only one tenant called. Only when the proposed increase in rent entered did the complaints arise, despite the presence of an Assc. In a free market community, the parties have a right to K that the court cannot regulate. Prior to entering the lease the tenants had opportunity to inspect the premises. They accepted the premises as they were until the increase in rent was announced. All the repairs complained of were minor and most were repaired by the new management. The health inspector found 7 violations, they were fixed.
Green held (implied warranty may be waived in appropriate situations): 1) There is no tenant expectation that the premises will be fit for habitation when the tenant is aware of defective physical conditions; 2) Circumstances involving the fitness or merchantability of goods may negate or exclude the implied warranty; 3) the LL is entitled to the fair rental value of the defective premises and unless paid may reacquire possession.
The implied covenant should not permit inequitable conduct. When a tenant, aware that the premises are not habitable, continues to pay the agreed rent without complaint, he reflects that he did not contemplate repairs by the LL.