You decide to rent your condo in Sacramento. You think you found the perfect tenant. However, after three months, your tenant stops sending you the rent. They are in breach of the lease. What do you do?
This unfortunate scenario occurs quite often and is one of the risks associated with renting property as a landlord. What do you do when your tenant violates the express terms of the lease? If the tenant fails to pay you the rent, you are looking not only at a loss of income, but the additional expense of taking legal action.
Your decision of whether to sue your tenant to recover the lost rent (or the cost of repair if the tenant damaged your rental property) may depend on whether you can recover costs and attorney’s fees. So, you are probably asking, “What is the applicable law for recovery of attorney’s fees in California?”
Here is the answer: in California, each party is responsible for their own attorney’s fees, generally. However, there is an important exception to this general rule – when the lease agreement contains an attorney’s fee clause. If the lease provides that the prevailing party to a legal action has the right to recover attorney’s fees and costs, that provision is usually enforceable.
Add the Attorney’s Fee Clause to Your Lease Agreements
It is better to be safe than sorry. If you want to recover attorney’s fees from a defaulting tenant, you need an attorney’s fee clause expressly stated in the lease. If you currently have a lease with a tenant that lacks such a clause, you will likely be left to bear the cost of paying a lawyer out of your own pocket.
Keep in mind, California Civil Code §1717(a) makes attorney fee provisions reciprocal. This means that both parties (you and the tenant) will have the right to pursue recovery of attorney’s fees and costs if the lease contains an attorney’s fee clause, even if the lease only references an award of attorney’s fees to the landlord.
How Do I Recover Those Costs?
This is an important question to consider. Even if you have an attorney’s fee clause and prevail in court against a tenant, it does not mean the tenant will quickly whip out a checkbook and pay for your attorney’s fees. In fact, many tenants are “judgment proof,” meaning they lack sufficient assets to make a judgment against them desirable. You have to consider the collectability of a judgment to determine whether the pursuit of fees and costs is desirable.
Some landlords go so far as to include an “attorney fee cap” in their lease agreement to shield themselves from a large adverse judgment by a tenant’s attorney. Whether an attorney’s fees cap makes sense in your lease depends on a variety of facts including the type of litigation you are involved in, the likely amount of attorney’s fees awarded, and the financial health of both you and the tenant(s).
Contact an Experienced Sacramento Real Estate Lawyer Today
As you can see, litigation surrounding landlords and tenants can become quite complex and requires proper legal guidance. Kristina Reed is here to help. She is an experienced Sacramento real estate litigator and advisor. She can assist with drafting a lease agreement and with litigating any disputes that may arise with your tenant. Contact her office today to discuss your legal needs.