Many tenants, upon finding a new
rental residence, conduct a cursory review of the lease agreement and sign the agreement without really knowing what they have committed
themselves to. Having been a corporate
business executive equipped with an MBA, I negotiated large-scale contracts
with clients and vendors and understand that contract language is key to
defining the parameters of a relationship.
A good tenant’s attorney is, among
other things, a good contract attorney for at the heart of the landlord-tenant
relationship is the lease agreement. If
you find yourself in a dispute with your landlord, first look to the lease
agreement and always keep a copy of the agreement in your paper files and/or stored
in the “cloud.” If you are served with
an eviction proceeding, your lease agreement will be attached to the complaint
as an Exhibit for review by the judge and jury.
I will be covering a series of
blog articles about lease clauses in typical leases used in the Bay area. As part of my legal services, I offer lease
review before a tenant enters into a
contractual agreement with a landlord and have been successful negotiating
lease provisions with landlord and property management companies. Tenants must take a proactive stance to entering into lease agreement since unexpected circumstances such as job loss or a roommate who stops paying her share of the rent can escalate
into an eviction proceeding.
ATTORNEYS’ FEES CLAUSE
If you find yourself faced with a
lawsuit brought by your landlord against you, check your lease agreement to see
if there is an attorneys’ fees clause. Tenants usually lack the financial resources to pay an attorney to
represent them, but if there is an attorneys’ fees clause in your lease there may be incentive for an attorney to take
your case.
Below is an example of a lease clause from an actual lease agreement used by a large East Bay
property owner:
“ATTORNEYS’ FEES: If any legal
action or proceeding (including mediation and arbitration) is brought and
arising out of the terms of this Agreement, EXCEPT any unlawful detainer,
breach of contract, property damage or related action brought by Owner/Agent,
each side will be responsible for their own attorney’s fees and other costs of
mediation, arbitration and/or litigation. The attorney’s fees, court fees and
any other costs related to any unlawful detainer, breach of contract, property
damage or related action brought by Owner/Agent shall be paid by Resident.”
In the example above, you may believe that you will have to pay the landlord’s attorneys’ fees in addition to your
own in an eviction proceeding and this is what you are supposed
to think. However, under Cal. Civ. Code
section 1717(a), attorneys’ fees are reciprocal. That is, attorneys’ fees will be awarded to
the prevailing party. The statute reads:
“In any action on a contract, where
the contract specifically provides that attorney's fees and costs, which are
incurred to enforce that contract, shall be awarded either to one of the
parties or to the prevailing party, then the party who is determined to be the
party prevailing on the contract, whether he or she is the party specified in
the contract or not, shall be entitled to reasonable attorney's fees in
addition to other costs…”
Generally, to prevail, a tenant must win at trial. However, most cases settle before trial and, in a settlement, and the case is dismissed. Generally, then, there is no prevailing party. When there is a settlement, the tenant attorney can attempt to negotiate a payment of her fees during settlement negotiations. Most cases settle before trial, including eviction proceedings.
While the lease clause described above can
be overturned by California law, many leases include a attorneys’ fees
clause like the one detailed below:
“ATTORNEYS’ FEES:
In any legal action or proceeding brought by either party to enforce the terms
of this Agreement or relating to the Premises, whether based in contract or
tort, the prevailing party shall be entitled to reasonable attorneys’ fees, costs
and expenses in connection with this action.”
A newer trend adds a cap to
attorneys’ fees and includes a revision to the clause above as
follows:
“ATTORNEYS’ FEES:
In any legal action or proceeding brought by either party to enforce the terms
of this Agreement or relating to the Premises, whether based in contract or
tort, the prevailing party shall be entitled to reasonable attorneys’ fees (not to exceed $1,000), costs and
expenses in connection with this action.”
In general, the courts will uphold
the cap. What is a reasonable attorneys' fee is then determined by the court.
On the flip side, some landlord
leases include the following clause:
“ATTORNEYS’ FEES:
If any legal action or proceeding is brought by either party to enforce any
part of this Agreement, each party shall be responsible for their own
attorneys’ fees, court costs, and costs incurred.”
This lease clause reflects the
American Rule in which each party to a lawsuit pays his or her
own attorneys’ fees. Depending
upon the basis of the lawsuit and the tenant’s affirmative defenses to the
complaint, other California statutes or federal law may pay for the tenant’s
attorneys’ fees. For example, if the tenant claims that the landlord’s eviction was retaliatory, Cal. Civ. Code section 1942.5 awards attorneys’ fees to the prevailing party.
Finally, some landlords exclude an
attorneys’ fees clause from the lease altogether believing that the vigor of
the tenant’s defense lawyer will be significantly diminished. Tenant's are usually limited in what they can pay an attorney. Conversely, an attorney is more likely to recover fees from a property owner.
If you are about to
enter into a new lease agreement, check the lease for an attorneys’ fees
clause. And, if you are already locked
into a lease agreement, check your lease for an attorneys’ fees provision. This provision may be central to your legal defense
should you find yourself on the short-end of an eviction
proceeding.
Landlord-tenant cases are
usually highly charged; it's frightening to lose one's home. With escalating
rents in the Bay area, more tenants are finding a Notice to Terminate Tenancy
in their mail or posted on their door.
Finding affordable replacement housing is difficult, time-consuming, and
may require much more time than the Landlord is willing to provide the tenant
(usually 30 to 60 days.) You need all available ammunition to wage your defense should you exceed the notice
period and are served with an eviction proceeding.
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