Free Tenant Legal Aid - How is it affecting your business?

As some of may know, tenants in Los Angeles County are often represented by organizations that specialize in defending tenants in unlawful detainer actions. Their tactics are becoming uniform and the implementation of these tactics can impose a large financial burden on landlords, especially mom and pop owners who have invested their savings in a duplex or small multi-family unit.

The defense tactics consist of demanding a jury trial and propounding discovery. In the central downtown trial court of Los Angeles it is not unusual to have from 5 – 10 cases per day set for a jury trial.

Of course there are insufficient courtrooms ready to try these cases so many are dragged out for weeks or a month before a courtroom can be found. Result, the tenant can get many more weeks living rent free. Tenant wins – landlord loses.

As to the discovery, the legal fees to respond to discovery may range from $400 - $1000. Landlord loses more.

As to the jury trial, the preparation of the documents and jury instructions needed for a jury trial may range from $500 to $1500 depending on the type of case. Landlord loses. The attorney’s fees for a jury trial may range from $3000 to $6000 depending on the case and the number of trial hours. Thousands of dollars in attorney’s fees can be rung up just waiting in court.

The theory of the defense is rudimentary: it is “if you want to save yourself hours of sitting around the courthouse in a jury trial and want to be guaranteed of a ridding yourself of this tenant your options are; waive all rent due, give the tenant from 60 to 90 days to vacate, and seal the court file (just so the tenant can do this to his or her next landlord); pay the tenant to move out, give plenty of time to move, and seal the court file, or; take your chances with a jury and the financial obligation and the risk of losing. Warning: If your rental agreements do not cap the legal fees and you lose you could be facing a $10,000 bill for the defense attorney and costs of defense.

As a result, even if the landlord wins, the landlord loses. The tenants have nothing to lose because in most instance the tenant does not pay the attorney because there are a number of the “defense” firms that are paid by grant money, and the tenants almost always get fee waivers for both the filing fee and the jury fees.

For those management companies taking over a portfolio of foreclosed upon properties, it is a good bet that when you first go to the property the tenant does not say, “Nice to meet you,” the tenant says, “Talk to my attorney.”

My question is, therefore: What course of action can we take, whether legal or political, or just institutional, to counter this abuse of our industry, our clients, and the court system? There is no question that everyone deserves a fair trial and fair hearing and to avail themselves of our court system but what I have just described is, in my opinion, not an example of the purpose of our system. It is an example of “We’ve got an offer you can’t refuse.” Well, you can but one way or the other it is going to be costly.

Some property management firms do not use the legal system; unless it is a last resort. I saw a lease once that specified that they utilize binding arbitration as a means to save court costs and legal fees. The specific clause used required the signature of all parties that indicated that all parties understood that in the event that there was a disagreement between the parties; the results of the arbitration were legal and binding on all parties involved. I do not recall if the clause indicated that any of the parties were entitled to an appeal, and at who's expense.