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October 21, 2004
Welcome To My World
The Recap
Back in August a debate was raging regarding laws that force landlords to provide today's basic necessities such as heating and hot water. Alex Tabarrok started the fury when he posted:
...I ask my students who is made better off and who is made worse off by a legal doctrine that says tenants must have hot water? Invariably, the students answer that the doctrine makes tenants better off and landlords worse off. But is this so? Think about it and then read the extension for more.
If tenants benefit from a law that says apartments must have hot water then surely a law that says tenants must have hot water and a dishwasher benefits them even more, right? What about a law that says tenants must have hot water, a dishwasher and cable tv? By now the students have cottoned on to the idea that the rent will increase. Once you realize that the law causes the rent to increase it's no longer obvious if tenants benefit or if landlords are harmed.
Not surprisingly Matt Yglesias & Co. blew a fuse. Who on earth could be against a law requiring hot water? Well... libertarians of course. Tabarrok fought back as did some of his colleagues. Brad DeLong (with the help Atrios) chimed in pointing out that that there are benefits to the laws. Landlords have a degree of monopoly power and it also makes the process of looking for an apartment more convenient for tenants:
When I go and look for an apartment, I don't have to spend the time to determine whether every apartment I visit has a working toilet, has hot water, has a working and safe electrical and heating system, and a whole set of charateristics which are roughly what we consider to be the basic necessities for modern life.
Don Boudreaux then entered the fray and pulled out the trump card in my opinion. He brought up the fact that DeLong had not mention a key premise of contract law. He wrote:
Contract law is beautiful in its subtlety. This law typically examines questions from the point of view of the “reasonable person” – that is, when a contract dispute finds its way into court, the law asks about the question before it: “what would the reasonable person have expected (or said, or done) in the circumstances at issue?” In modern America, the reasonable person reasonably expects that the rental unit has running water 24/7, that the ceiling doesn't leak, and that other basic features of the apartment are in order.
Why Do I Care?
Why did I take such an interest in a debate that seems so detached from reality? Well it just so happened that I had returned from my honeymoon with my wife in mid-August to find that, in fact, we ourselves had no hot water.
The landlady had forgotten to pay the electric bill for the room in the complex where the water heater is located. Sadly, this was not a rare occurrence. Multiple times she has also forgotten to pay the water bill that has left us without any water at all for a day or two.
So why do we put up with this? Well, we live about a half block from Mission Bay, in a good size one bedroom apartment that is well below the market price. Putting up with a flaky landlord is the price we pay. Ironically, while the debate over hot water was going on over the internet, the price I was paying was a few days of freezing cold showers.
I hadn't thought much about the discussion above until yesterday when I walked home to this:
It hadn't rained in San Diego in the last half year believe it or not. Sunday night that all changed and through Monday we had a pretty good rainfall. Monday night we noticed that a wet spot was slowly forming on the ceiling of our living room. I called my landlady at her house (no pick-up) and cell phone (left a message). Tuesday I get home to see that there is water dripping from the light fixture in the kitchen and in the hallway. I call again, leave a message on the cell phone and there is no pick-up at her house. I get on the roof and use a broom to clear off some of the huge puddles of water that had formed above our apartment. Yesterday morning it looks clear but during the day it begins to rain again. Getting back from work I open front door to see the nice little surprise above. A half-hour later I finally get a hold of the landlady and she and a few roofers were there within a few hours fixing the problem. They are hopefully finishing up today and this evening we'll be back to normal.
While I'm sure there are various laws on the books she is violating I know that these conditions are not what a "reasonable person" would expect in an apartment. As Don Boudreaux writes above: "In modern America, the reasonable person reasonably expects that the rental unit has running water 24/7, that the ceiling doesn't leak, and that other basic features of the apartment are in order." Yep, I'm pretty sure this would cover us if we had to go to court. To me this is a much clearer standard than endless regulations on the books.
I also know that we're at our apartment by choice, and believe me we are pretty close to choosing to move. But the one thing that holds us back is the fact that a better apartment means a higher price. There is a two bedroom directly next door for rent that is approximately the same square footage as our place. When I called to inquire about it I found out the price is almost double what we pay.
I guess the debate over hot water isn't as detached from reality as one may think.
Posted by Peter Mork at October 21, 2004 11:55 AM
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