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Landlord-tenant fiduciary relationship.

San Diego, CA |

Can a residential landlord-tenant relationship give rise to a fiduciary relationship in certain cases? For example, a tenant provides a landlord with a relatively large amount of rent credit, say 6 months worth of rent to be credited back at a fixed $650 per month in a month-to-month agreement until fully credited. In such a case the landlord has full control of the tenant’s prepaid expenses and it would appear that a relationship of trust is established and the landlord is a fiduciary. If the landlord then commits some sort of fraud or deceit, claiming that the amount is other than that prepaid by the tenant, or tries to raise the rent in order to sap the tenant’s prepaid credit, in theory, apart from any claim for breach of contract, could the tenant use the benefit-of-the-bargain rule instead of the out-of-pocket rule for damages?

In response to the 2 first answers below, see also the article at titled "Fraudulent Common Area Overcharges in Commercial Leases" which mentions that some states including Arizona and Colorado do find a limited fiduciary relationship with regard to certain accounting rights, and closely tied to the implied covenant of good faith and fair dealing, an application which has been rejected in California [McClain v. Octagon Plaza, LLC, 71 Cal. Rptr. 3d 885, 897 - Cal: Court of Appeals, 2nd Appellate Dist., 4th].

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Attorney answers 2


i do not think a standard landlord-tenant relationship gives rise to a fiduciary relationship. contact a local lawyer about your problem.


No, the relationship is still contractual in nature. It does not rise to the level of a fiduciary duty.

In order to sue for breach of fiduciary duty, a plaintiff must first allege the existence of a fiduciary relationship. "It is not always a simple matter to determine whether a fiduciary relationship exists. [Keenan v. D.H. Blair & Co. (S.D.N.Y.1993) 838 F.Supp. 82, 89 ([t]he precise contours of a fiduciary relationship are incapable of expression); Franklin Supply Co. v. Tolman (9th Cir.1972) 454 F.2d 1059, 1065 ([a] 'fiduciary relation' is an elusive status ...)." Fleet Nat. Bank v. H & D Entertainment, Inc. (D.Mass.,1996) 926 F.Supp. 226, 242 -243 (discussing whether and when fiduciary relationship arises in accountant-client context) (certain quotations omitted).]

For example, the relationship between an accountant providing independent audit services and its client does not give rise to a fiduciary obligation. [Franklin Supply, supra, at 1065; Mishkin v. Peat, Marwick, Mitchell & Co. (S.D.N.Y. 1990) 744 F.Supp. 531, 552.] However, a fiduciary relationship may exist where the accountant performs more than merely basic accounting functions. [See, e.g., Myers v. Finkle (4th Cir.1991) 950 F.2d 165, 168 (where accountant gave investment advice, a fiduciary relationship was created with respect to all services rendered by that accountant); Allard v. Smith et al. (Bankr. E.D.Mich.1986) 56 B.R. 936 (where performing audits, the court found that accountant's client reposited "faith, confidence, trust and reliance ... upon the judgment and advice" of the accountant such that a fiduciary relationship arose). ]

The California Court of Appeal case of Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 633 cites examples of circumstances under which the courts have not found fiduciary relationship and notes that "California courts have rejected attempts to extend fiduciary obligations to relationships where the imposition of such an affirmative duty is unwarranted".

The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.