Don't assume landlord's insurance covers all damage

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Mar. 22, 2012

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Some landlord-tenant disputes arise when one side claims that the other isn't abiding by the lease terms, or is implementing them in a way that is contrary to the spirit of the lease. For example, a landlord might claim that a tenant is failing to take reasonable care of the property, in violation of the lease clause that requires such care, and terminate accordingly. The tenant contests the ensuing eviction lawsuit, and one side wins. In this situation, your lease's cap on the loser's liability might hold up, as long as there's no state law or policy that would lead a judge to strike it down.

But suppose the lawsuit is over the tenant's use of a rent-withholding remedy, which was followed by the landlord's decision to take away the tenant's parking privileges. The tenant, claiming unlawful retaliation, sues and wins. Will the cap be applied? That depends on whether the anti-retaliation statute itself requires the loser to pay the winner's costs. When retaliation is involved, many statutes include this type of provision.

For example, California law specifies, "In any action brought for damages for retaliatory eviction, the court shall award reasonable attorney's fees to the prevailing party if either party requests attorney's fees upon the initiation of the action." (Cal. Civil Code § 1942.5(g).)

The statute in Illinois does not provide for these fees (765 Il. Comp. Stat. § 720/1), but Texas law does (Tx. Prop. Code Ann. § 92.333).

So, if your state's anti-retaliation statute requires the loser to pay reasonable fees, but the loser's attorney fees exceed $1,500, will a court uphold the lease's attempt to vary the statutory rule? It depends. Sometimes, courts allow landlords and tenants to vary the rules, but often they don't.

For example, courts won't uphold a lease clause that relieves a landlord of the duty to maintain fit housing.

Lawsuits that arise independently of the lease

Now, suppose you're dealing with a legal spat that does not have its origin in the lease, such as a discrimination lawsuit. It's doubtful that a hearing officer or a judge would apply a lease clause that attempted to limit the liability of the losing party. Often, the antidiscrimination statute itself specifies that the loser will pay.

And from a practical point of view, such a limitation would limit the number of cases brought to challenge illegal landlord acts, which is not what state legislators want.

Here's the problem: Imagine a winning tenant whose attorney has billed for many thousands of dollars, as is common. If the losing landlord is responsible for only $1,500, the balance will have to come from the winning tenant. If the award to the tenant in the lawsuit is modest, the lawyer could end up with most of it. Knowing that this may be how things turn out, tenants may be discouraged from bringing such suits, which is not what legislators intended when they wrote laws proscribing discrimination.

For this reason, a court might refuse to apply a lease clause that limits the loser's liability for the winner's fees.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.

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