As tenant lawyers, we are always on the lookout for dangerous lease clauses. Renters should know what they are getting into before they sign.
Common dangerous lease clauses
- Landlords will often hide that a unit does not have rent control. Even in jurisdictions with rent control, like San Francisco, Oakland, Richmond, San Jose, and Berkeley, not all units are covered by rent control. When a unit is not rent controlled, a landlord can raise the rent to whatever the landlord wants after the expiration of a fixed-term lease. If your unit does not have rent control, be sure to ask for options to extend at a set rent. In general, single-family homes and condominiums do not have rent control, and units in newer buildings do not have rent control.
- Attorney-fee provisions in leases are good for tenants. Not so long ago, all leases had attorney-fee provisions, which allowed a prevailing party in any dispute arising out of the lease to recover fees. Landlords have been secretly removing these clauses. Fee provisions are important for tenants, especially when landlords illegally try to evict or fail to repair. For example, a tenant with no heat, sewage overflows, and rats has a lot more leverage against a landlord when there is attorney-fee provision in a lease. It gives the tenant access to an attorney and the courts to force the landlord to repair. One-way fee provisions in favor of the landlord are fine for tenants. Under California Civil Code section 1717 [1], a one-way fee provision in a lease automatically converts to a two-way fee provision in favor of a tenant.
- Tenants should watch out for exorbitant late fees and bounced-check fees. A fair late fee is $25, and the tenants should ask for a grace period. Late fees above a nominal amount are illegal under California law.
- Tenants should look out for clauses that require rent to be paid by wire or direct deposit. Banks charge wire fees. California law requires landlords to accept rent by personal check unless payment becomes an issue.
- Non-refundable holding deposits are illegal. In California, there is no such thing as a nonrefundable holding deposit. If a landlord asks for a fee to hold a unit, this is illegal, especially if the landlord states that it is nonrefundable.
- Excessive security deposits are illegal. In California, under California Civil Code section 1950.5 [2], landlords cannot hold a deposit of more than two months’ rent for an unfurnished unit and three months’ rent for a furnished unit.
- Tenants can be held responsible in leases for maintaining common areas. Watch for lease clauses that require tenants to maintain portions of the property, such as the yard. Most repair responsibilities cannot be passed on to tenants, but some repair duties, like yard maintenance, can be passed on. With that said, tenants cannot waive their rights to a habitable premises in a California residential lease. So, a landlord will always be held responsible for repairing major habitability issues, such as no heat, gas and electrical issues, plumbing problems, broken doors and windows, and ineffective weatherproofing.
- Early lease termination fees are illegal in California. Lease clauses that force a tenant to pay a set amount for breaking a lease early are illegal in California. Civil Code section 1951.2 caps what a landlord can recover when a tenant breaks a lease. A landlord can only recover the actual damages suffered because of the lease termination. In fact, a landlord has an obligation to mitigate damages, to re-rent the unit as soon as possible at the same rent. In a tight rental market, where the landlord can re-let the unit right away, the landlord does not have significant damages because of a breach of lease.
- Arbitration clauses and jury waivers are illegal in residential leases in California. Tenants cannot waive their rights to bring claims in court in a residential lease. Lease provisions that force tenants to arbitrate are illegal. So too are lease provisions that purport to prospectively waive a tenant’s right to bring personal injury or property damage claims. Mediation provisions are legal. Often leases will tie the right to recover attorney fees in litigation to a pre-litigation mediation mandate. These provisions can actually be beneficial to tenants. Binding arbitration provisions, on the other hand, strip tenants of all rights to seek redress in court and are therefore illegal as a matter of law.
- Lease provisions expanding the landlord’s rights to enter a unit are illegal. Civil Code section 1954 [3] provides a list of the only reasons that a landlord may enter a unit. Any waiver of that code section in a lease is illegal under California law. Lawful reasons to enter include showing the unit to prospective tenants and purchasers, making agreed upon or necessary repairs, and entering for emergency.
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