Most residential lease agreements contain attorney fee provisions. They generally state that if the landlord and tenant go to court, the loser must pay the winner’s attorney fees. Landlords are familiar with this common provision, and often find it useful in pressuring non-paying tenants to vacate prior to an eviction trial.
However, the practical realities of the situation suggest that this provision may be more costly than it’s worth to most landlords.
Landlords win the overwhelming majority of unlawful detainer trials–including attorney fee awards–but very few of them actually collect the money that’s owed. The reasons are simple: most evictions result from a tenant’s failure to pay rent (suggesting a lack of means); tenants typically don’t own any property of their own; the landlord often does not know the tenant’s new address for service of collection proceedings; evicted tenants are usually poor at following rules by definition; and the award is usually too small to concern the landlord. So, these attorney fee awards look good on paper, but are rarely collected.
But, what happens when the tenant wins? Prevailing tenants are entitled to attorney fees under these provisions, even if the lease says it only applies to the landlord. None of the reasons why prevailing landlords rarely collect their judgments apply to prevailing tenants. And, most importantly, these awards can be very, very costly.
A cottage industry of tenant-based attorneys routinely seeks out cases where the landlord has either violated some obscure legal requirement, or has filed a defective unlawful detainer lawsuit. They will then drag the case out as long as possible, attempt to prevail at trial, and then request exorbitant legal fees. This can potentially cost the landlord five figures or more. Not too long ago I observed an attorney fee motion hearing here in San Diego where the tenant’s attorney requested a $50,000 fee award. Ouch.
It is therefore recommended that landlords modify these provisions in new leases to cap the attorney fee awards at a reasonable figure. This will allow landlords to offer tenants a carrot to avoid an unlawful detainer judgment while minimizing their risk of receiving the stick.