More re: Pending Legislation to Change Attorneys Fees/Residential Leases in Alabama

After corresponding with Representative Greg Wren, and speaking to the Alabama Association of Realtors, and to landlord attorney Sarah Taggart, I now have more insights into legislation sponsored by Representative Wren.

As discussed in an earlier post, Representative Wren has proposed an amendment to the Alabama Residential Landlord Tenant Act (ARLTA). He would like to allow legal fees clauses in residential leases if the landlord is a corporation or other entity required by law to have an attorney when appearing in court.  Individuals MAY represent themselves in court, or MAY hire an attorney.  Except for small claims court, corporations and LLCs MUST hire an attorney for any court action.

My question was, “Why do you want to let corporations have a legal fees clause in their leases, but not individuals?”  I think the answer is: “It was not intentional, just an accidental drafting mistake.”

My next question was, “Why do we even need such an amendment, because ARLTA lets the court impose legal fees against a tenant. You just can’t have that clause in your lease, but the court can do it anyway.”  Thanks to insights from Sarah Taggart, the answer is:

A court can award legal fees if it finds that the tenant’s behavior was “willful.”  Different judges have different personal definitions of willful. Some say that if you don’t pay your rent because you don’t have the money, and you don’t vacate the premises upon demand because you can’t afford to move someplace else, then your actions are not willful. Other judges say that if you refuse to vacate after not paying your rent and after the landlord demands that you leave, then the tenant’s actions are willful and forced the landlord to hire an attorney for an eviction.

If a lease could say that the tenant is responsible for legal fees if it defaults, then individual judges can’t impose their own personal opinions on the subject.  Tenants will know that if they default, and don’t vacate, and the landlord must hire an attorney, then the tenant WILL be responsible for the legal fees.

I think this is a good reason for changing the law. I would just like it to apply to individual and corporate landlords, but only if they actually hire an attorney.

BUT, I do not want to return to the “bad old days” when some landlords had very harsh legal fees clauses in their leases. Often, such clauses allowed the landlord to charge legal fees every time they asked their lawyer a question about anything to do with the tenant. This is how those conversations used to go:

Tenant:  “I paid my rent on time last month but you charged a late fee. It’s not my fault your secretary closed the office early and I had to slide the check under the door and it wasn’t posted to my account until Monday.  Please reverse the late fee.”

Landlord:  “I’m not sure about the law on that subject.  I’ll check with my attorney. He charges $350 an hour and usually takes 1 to 2 hours to answer my questions. The lease makes you responsible for my legal fees. So, I’ll ask my lawyer this question, and might end up reversing the $75 late fee, but it will cost you $700 in legal fees one way or the other.”

Tenant:  “I can’t afford $700 for a lawyer! Just keep my $75 late fee.”

Because late fee clauses were often used as “hammers” for unfairly beating on tenants, something had to be done to change that situation.  It is fair, I think, to make the tenant responsible for legal fees if it is in default and if the landlord files a lawsuit. The requirement that the landlord file a lawsuit before being able to collect legal fees will, I think, avoid many past abuses.

What do you think?