legal service fee clause in lease agreement - Posted by Hal


#1

Posted by Brad Crouch on October 27, 1998 at 19:13:10:

Hi Rob,

You’re right! I have discussed this with Bill, and his opinion seems to be that if you have a contract that is too much “one way”, it can actually hurt you.

“Slanted” towards you (either as buyer or seller, optionor or optionee) is a different story. I think the Bronchick contracts are great. My understanding is that these are the contracts he uses in his practice, every day.

You’re lucky to have a RE lawyer in your family. I’m still trying to find one that I can work with. I wonder how some of the ones I have interviewed, have passed the BAR exam. Guess I’ll try the title companies . . those guys ought to know what they’re doing.

Brad


#2

legal service fee clause in lease agreement - Posted by Hal

Posted by Hal on October 24, 1998 at 11:53:01:

Hi folks,

I’m looking for opinions on whether I should put a clause in my month to month tenant lease agreement that states:

“In any action or legal proceeding to enforce any part of this agreement, the prevailing party shall recover attorneys fees and court costs.”

I’ve read advice both ways on this one. People for it say it scares the tenants into settling out of courts. People against it say in encourages lawsuits, because attorneys know that someone is going to pay them. I’m leaning toward not including it, and treating my tenants well so we never get here.

Any advice? Real world experience?

Thanks.

Hal


#3

Thanks for all the imput! (nt) - Posted by Hal

Posted by Hal on October 27, 1998 at 07:05:48:

nt


#4

Re: legal service fee clause in lease agreement - Posted by Laure

Posted by Laure on October 25, 1998 at 22:11:50:

I have it in all my leases. As a side note… There is a law in my state which limits the amount of late charges I am able to assess the Tenant. However, I charge more than state law permits, I have it in my lease, and the court has UPHELD MY CHARGES !!!


#5

Re: legal service fee clause in lease agreement - Posted by Rick Vesole

Posted by Rick Vesole on October 25, 1998 at 18:02:11:

Check your states laws before putting in a clause regartding payment of attorney fees. In at least one state (and there may well be others) it is illegal to put such a clause in a residential lease, which could result in damages being awarded against the party trying to enforce it.


#6

Re: legal service fee clause in lease agreement - Posted by Brad Crouch

Posted by Brad Crouch on October 24, 1998 at 16:09:21:

Hal,

In Bill Bronchick’s lease agreement, there is a clause that begins with: “LEGAL ACTION: Tenant agrees, without protest, to reimburse landlord for all actual and reasonable expenses by way of tenants violation of any term or provision of this lease . . .”

I would take that to include “reasonable” legal costs involved in dealing with a tenants violation of a lease (or rental) agreement.

By saying “the prevailing party” will pay legal costs, I think you might be shooting yourself in the foot. What happens if you should loose?

Bronchicks verbage doesn’t rely on your winning, to collect the costs. It just indicates they owe the costs . . . regardless of who wins.

I think this kind of clause is present in most “modern day” agreements, and should scare nobody. If it does, it may indicate they were a lousy risk anyway. Better to find out now, than later when you have money at stake.

I’m not a lawyer, this is just my opinion.

Brad


#7

CYA - Posted by Mr Donald (NORVA)

Posted by Mr Donald (NORVA) on October 24, 1998 at 14:18:07:

My advice for you is always: CYA! Especially when dealing with tenants. Put that clause to make sure your tenants know exactly what their responsibilities are in case of default and any ensuing legal battle.

Will they think twice? Probably not, especially if they’re a professional deadbeat. But it certainly can hurt if its thrown in as part of your standard “boilerplate” language in your lease.


#8

Re: legal service fee clause in lease agreement - Posted by PBoone

Posted by PBoone on October 24, 1998 at 12:44:47:

Hal,
In our state (oregon) the statement about attorneys fees is not necessary because it is in the statutes. Check your state statutes to see if the clause has already been taken care of for you.
In every document we have signed it is there
pat


#9

Re: legal service fee clause in lease agreement - Posted by Philly Dave

Posted by Philly Dave on October 26, 1998 at 08:21:40:

Hello, Brad:

Just a thought regarding your interpretation of that clause. I don’t believe the tenant would be liable for the landlord’s attorney’s fees or costs if the tenant wins in court because, pesumably, the court would have found no violation by the tenant. No violation, no liability for payment of the landlord’s attorney’s fees and costs.

As to Hal’s original clause, there is also the question of what constitutes “prevailing” in court. If more than one issue is argued, and the court decides in favor of landlord on one issue and tenant on the other, who has prevailed? This isn’t just a rhetorical question; this kind of court decision is fairly common.

In any event, I beleive a landlord is wise to include language that requires the tenant to pay his/her attorney’s fees and other costs if the landlord should win in court. I see no need to mention the landlord’s liability for such fees and costs if the tenant should win. Let the tenant ask to insert it into the lease if he so chooses; why offer it?

There … I’m 2 cents poorer.


#10

Re: legal service fee clause in lease agreement - Posted by Brad Crouch

Posted by Brad Crouch on October 27, 1998 at 03:56:28:

Philly Dave,

You make some good points, but I think everybody knows better than to attempt an eviction on questionable grounds (like a belligerant personality or unreasonable attitude - for that, you simply hire someone to break his legs). You would have the documentation and proof that the rental agreement really was violated before you actually went in front of a judge.

I have been to small claims court several times and was always amazed at the lack of preperation by the parties. Hard to win a case like that.

Your point about “prevailing” brings up an interesting point. I previously posted “part” of Bronchick’s clause. I don’t want him mad with me for “publishing” the clauses in his contracts, but I can say that the paragraph goes on to include court costs, attorney fees and all collection costs. But it does not make any “conditions” as to whether or not the court finds anybody “guilty” or not. Simply that the tenant is responsible for the costs of going to court (as well as the costs of the notices to pay or quit). This clause might be enough by itself to keep the tenant out of court. Probably the term “prevailing”, ought not be used in a rental or lease agreement, in this context.

I think you are also right about not offering a liability clause that would be detrimental to you (the landlord). I might go a step further, and not include it even if they asked. You can always say that there are 4 other couples who are willing to sign the agreement “as is”, and that they have only a few minutes to make their decision.

As a landlord (which I hasten to admit that I’m not), I think I would reject any tenant who did not have a “submissive” personality. I realize that you might not be able to always tell, but by rejecting the ones who obviously did not have this type of personality, I think I would be ahead some.

Again, I’m not a lawyer . . . so this is just what’s rolling around in my head.

Brad


#11

Re: legal service fee clause in lease agreement - Posted by Rob FL

Posted by Rob FL on October 26, 1998 at 20:13:55:

Some courts will consider a clause like that “unconscionable”. Meaning that you took advantage of someone who did not understand what they were signing. If a judge thinks that the agreement is heavily slanted in the landlord’s favor, he could consider this “unconscionable”. In this case, the judge can throw away the whole agreement and use state law instead, which generally favors the tenant.


#12

Re: legal service fee clause in lease agreement - Posted by Brad Crouch

Posted by Brad Crouch on October 27, 1998 at 04:00:48:

Rob,

Maybe it was a mistake, but I only quoted “part” of Bronchick’s clause. There is more that clearly describes the costs involved. I don’t see how anybody could read the whole thing and then say they didn’t understand it.

See my post to Philly Dave above.

Brad


#13

Re: legal service fee clause in lease agreement - Posted by Rob FL

Posted by Rob FL on October 27, 1998 at 06:18:37:

I am sure Bill B. gives correct advice so I won’t question it. I believe the “unconscionable” stuff comes in when you say “landlord has all these rights 1,2,3,4,5,etc. and in the same situation tenant has no rights” My father is a RE lawyer, so I always have him go over my docs. and a few times he has told me to change things because of this “unconscionable” stuff.