A significant legal concern in 2008 is the continued proliferation of unfair business practice and class action lawsuits brought against residential and commercial landlords. Law firms representing tenants have targeted residential landlords and property managers for alleged unfair or unlawful business practice claims.
California law allows an individual attorney representing only one tenant, to file suit on behalf of a class of tenants who have also been subject to the alleged unfair or unlawful practice. Even if the practice in question has a nominal effect on any individual tenant's finances, the cases can be lucrative for plaintiffs' attorneys who may be awarded attorneys fees to be paid by the defendants they sue.
Insurance may not cover the claim because it is a restitution case, not a damage claim. In other words, the claim is that the landlord or property manager should never have received the payment in the first place, and, according to the language of the statute, they must "disgorge their ill-gotten gain".
The statute of limitations for an unfair business practice is generally four years. This means that if lawsuit was filed for alleged illegal late charges, the property owner or manager may be ordered to return every late fee collected from every tenant for the last four years.
What are some of the current and recent subjects of class action lawsuits? The most recent concern RUBS, which stands for ratio utility billing systems. This is where residents are billed for water and sewer charges without sub-meters measuring the exact amount of water being used. There is nothing in the law that specifically prohibits RUBS, but plaintiff attorneys have found it ripe for claims, either as a concept itself, or failure to properly disclose the fact that utilities are being billed in this manner, or how it is being calculated.
Late fees, credit reporting, collection practices, application fees, Proposition 65, security deposit accounting, ADA and fair housing violations have all been the subject of class action lawsuits. In addition, application fees and unlawful detainer searches in the tenant screening process have recently been the subject of these suits.
Many of these suits are initiated because the landlord is using out-dated leases, either because they recently took over management of a property who did not have valid leases, or used an out-of-date form. Conducting an annual review of your lease or at least using a current industry standard form is the best way to ensure that your lease language is current with California and Federal law.
