Understanding Terry v. Public Service Company of North Carolina: Lessons for Housing Providers and Residents

By: Heather Tabor- North Carolina Licensed Managing Attorney with Brownlee Whitlow & Praet, PLLC

 
        The 2023 North Carolina Supreme Court decision in Terry v. Public Service Company of North Carolina has become a pivotal case in housing provider-resident law. The ruling not only clarifies the obligations of housing providers under the
North Carolina Residential Rental Agreements Act (RRAA) but also underscores the responsibilities of residents in maintaining habitable rental properties. The case serves as a critical reminder of the balance between statutory duties, common-law principles, and shared accountability in rental agreements. In this blog, we will explore the historical significance of the Terry decision, its legal implications, and practical lessons for housing providers.  From the facts of the case to its broader impacts
on housing law, this blog aims to provide housing providers with actionable insights to navigate their legal obligations effectively.

      Terry v. Public Service Company of North Carolina revolves around a tragic gas explosion that caused life-altering
injuries to a resident. In 2005, Mr. Terry entered into a lease for a single-family home in Durham, North Carolina. The
property featured a crawlspace beneath the bathroom where the furnace and water heater were located. Over the years,
a hole developed in the bathroom floor, allowing water to drip onto the furnace piping. This corrosion went unnoticed by
the housing provider for years and unreported by the resident. In early 2017, neighbors and Mr. Terry detected the smell of
natural gas near the home. Despite these warnings, Mr. Terry failed to notify the housing provider of the issue. On April 13, 2017, the situation culminated in a gas explosion after Mr. Terry switched on the bathroom light, which resulted in Mr. Terry suffering severe burns and other injuries.

      Mr. Terry filed suit against the housing provider on four grounds: Common-law negligence; Negligence per se for
violations of housing codes; Breach of the Implied Warranty of Habitability; and Violations of the RRAA. The trial court
granted summary judgment in favor of the housing provider. However, the Court of Appeals reversed, finding enough
evidence to support Mr. Terry’s claims. Ultimately, the North Carolina Supreme Court reinstated the trial court’s ruling, siding with the housing provider and emphasizing the lack of resident notice. Thus, this case became a turning point in interpreting housing provider responsibilities under the RRAA and common law.

      The Supreme Court’s decision in Terry addressed key legal issues, focusing on the extent of housing provider liability
under common law, statutory duties, and housing codes. The Court found that housing providers do not have a common-law obligation to inspect or repair the premises unless they have actual or constructive notice of a defect. Since Mr. Terry failed
to notify the housing provider of the gas smell or water damage, the housing provider had no duty to act.

      The Court ruled that violations of housing codes could not constitute negligence per se without evidence of the
housing provider’s knowledge of the violation. Without notice of the corroded gas line or damaged flooring, the housing provider could not be held liable.

      The RRAA requires housing providers to repair dangerous conditions only after receiving resident notice or acquiring
actual knowledge. The Court emphasized that the statute does not impose a proactive duty to inspect properties regularly. Housing providers are obligated to provide safe and habitable housing but only after being made aware of issues that affect habitability. In this case, the resident’s failure to report defects absolved the housing provider of liability. The decision in Terry highlighted the principle that residents, as occupiers, are in a better position to observe and report property issues. The Court reinforced that housing provider liability under the RRAA and common law hinges on notice or knowledge of a hazard.

      The Terry decision builds on decades of legal developments and may influence future legislative reforms. Historically,
North Carolina housing providers have had no duty to repair under the doctrine of caveat emptor. The RRAA, enacted in 1977, introduced statutory duties for housing providers to maintain habitable premises. The Terry ruling reaffirms that these duties are limited by the need for resident notice. The case underscores that this warranty, while codified in the RRAA, remains contingent on resident notification. It does not impose an automatic duty for housing providers to inspect or repair. The
ruling illustrates the shared nature of housing provider-resident obligations. While housing providers must respond to
reported issues, residents must fulfill their duty to report hazards promptly.

      The Terry case offers valuable lessons for housing providers and residents, emphasizing communication and diligence in managing rental properties:

• • • • Be Proactive: Schedule routine maintenance for critical systems.
      • Respond Promptly: Address resident complaints quickly to mitigate risk.
      • Document Everything: Keep records of repairs, inspections, and resident interactions.
      • Understand Housing Codes: Stay updated on local compliance requirements.
      • Educate Residents: Provide resources on reporting procedures and resident responsibilities.
        
        

      The Terry decision reinforces the principle that safe housing requires shared accountability. Housing providers must
respond to known issues, while residents must report problems promptly. By fostering better communication and adopting proactive practices, both parties can prevent disputes and create safer living environments. As housing laws evolve, this case serves as a blueprint for navigating the complexities of housing provider-resident relationships. Housing providers and residents alike can learn from its lessons to build a more cooperative future in rental housing.

     
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