California's pro-tenant rental laws risk harming tenants by worsening the housing crisis
Marc Hoag via Midjourney
This is educational material and does not constitute legal advice nor is any attorney/client relationship created with this article, hence you should contact and engage an attorney if you have any legal questions.
As we settle into 2024 and prepare for all the new pro-tenant rental laws coming online, it’s important to pause and consider potential unintended consequences of our robustly pro-tenant environment. Having long since eclipsed their role as mere tenant protection, California’s rental laws are now decidedly anti-landlord; ironically, to tenants’ detriment.
California’s well-intentioned pro-tenant laws were not drafted with the intent to provide loopholes for exploitative behavior by tenants. Our laws contemplated, and were intended to protect, otherwise decent tenants who did not possess some ulterior motive to cheat and defraud innocent, non-professional “small landlords,” e.g., a family that rents out one or two rental properties.
Unfortunately, this is precisely the scenario we have today: Though they certainly make up the minority, it is the bad acting tenants whom these laws inadvertently empower, rather than merely protecting decent tenants (and indeed, decent landlords who have seen a significant erosion in their rights generally, despite being burdened with the greatest responsibility). Scam artists can have their cake and eat it too: no matter their egregious wrongdoing, it is all but impossible to evict them if they have the determination and financial resolve to remain.
There is a peculiar imbalance in the scales of justice at the moment which must be corrected to reapportion even a fraction of the benefit of doubt now afforded to bad acting tenants to otherwise decent landlords who are wronged at the hands of such tenants.
To provide an example of the egregiously flawed reasoning of today’s laws, consider the flawed logic regarding the award of attorneys’ fees in an unlawful detainer (eviction) action for nonpayment of rent.
First, let’s discuss the one scenario that results in the correct and logical outcome just to set a frame of reference: If a tenant is deemed to have justifiably withheld rent from a landlord (for example, due to breaches of the implied warranty of habitability), then the tenant should absolutely be recognized as the prevailing party and thus awarded attorneys’ fees and costs; this is correct.
Conversely however, if the Court determines there were no breaches of the implied warranty of habitability and thus orders the tenant to pay back the withheld rent, either in whole or in part — this is the essence of the unlawful detainer action — then the tenant’s compliance with this order should be irrelevant to determining which is the prevailing party. Inexplicably however, in this scenario, it is the tenant who is declared the “prevailing party” despite being reprimanded to return the back rent.
An unlawful detainer action is fundamentally aimed at addressing a breach, and not actually removing a tenant; eviction of the tenant is the remedy for failing to cure the breach. So determining the “prevailing party” in such an action based on possession rather than which party benefits from the cured breach misses the point of an unlawful detainer entirely.
Therefore, in cases where the tenant is ordered to cure a breach — such as by paying back withheld rent — the focus should not be on who ultimately retains or regains possession of the property. Instead, the landlord, by virtue of seeking to rectify the breach, ought to be regarded as the prevailing party, reflecting the true purpose of both applicable statute (especially Cal. Civ. Pro. §1717(b)(1)) and the purpose of the unlawful detainer action itself.
Tying a tenant's compliance with a Court order in an unlawful detainer action to whether they achieve “prevailing party” status contradicts public policy. It creates a paradoxical and untenable situation where a tenant can be at fault for improperly withholding rent yet still be declared the prevailing party simply by virtue of complying with a court order to pay back the improperly withheld rent. Such mutually exclusive outcomes are not only incompatible but also unjust to the landlord who, in essence, has otherwise practically prevailed by achieving the action’s primary goal — addressing the breach and recovering the improperly withheld back rent — yet nonetheless fails to be declared the “prevailing party” and thus cannot collect attorneys’ fees.
Not only does this result undermine the equitable balance intended by unlawful detainer proceedings in the first instance, but it will continue to discourage innocent property owners from renting out their homes in the first place due to the extraordinary risks imposed on landlords, and thus further exacerbate California’s desperate housing shortage. So rather than helping the very tenants our laws were enacted to protect, they will further harm those tenants by both reducing the supply of rental housing and increasing rental prices generally as more and more landlords remove their properties from California’s rental market.