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Alabama Landlord/Tenant Law Proposed Amendment Neglects Individual Investors

Posted by 15789465 on

Alabama State House Representative Wren (75th District, Montgomery and Elmore Counties) has introduced an amendment to the Alabama Residential Landlord Tenant Act.  Under current law, a residential lease cannot contain a clause making the tenant liable for legal fees in the event of a dispute or a lawsuit.  If there is a lawsuit, the judge can award legal fees in some situations, it's just illegal for the lease to say that. The reasoning behind this was that, previously, some unethical landlords used such a clause to browbeat tenants into giving up valuable rights whenever there was a dispute between a landlord and a tenant. The landlord would say, "Let's just go to court on this issue. You'll have to pay MY legal fees and YOUR legal fees if you want a judge to decide our dispute."  Most consumers would just give up. Now, Representative Wren wants to change the law to add the following paragraph:

(c) A rental agreement may include a provision in which the tenant agrees to pay the landlord's reasonable attorney's fees when the landlord prevails in an action against the tenant and is a corporation or other entity required under Alabama state law to be represented by an attorney in a legal proceeding. "

You'll notice a couple of questions raised by this:
  1. Is it only corporation landlords (and similar entities) who are allowed to have the clause in their lease, or does it mean anyone can have the clause, but only corporate landlords can collect?
  2. If only corporate landlords can have the clause, what happens when this clause is in a lease and the corporate landlord sells the property to an individual landlord?  Is the lease clause now illegal and the individual landlord liable for statutory penalties for having an illegal clause?
  3. If the clause is in a lease for a corporate landlord, and then an individual investor buys the property, does the existence of the clause mean the individual landlord can't collect any legal fees at all, even if the court wanted to award them?
  4. Does this strip away the current right of an individual landlord to collect legal fees when granted by a court?
  5. Why does it make any difference about corporate landlords vs. individual landlords?
I'll contact Representative Wren's office, and see if I can find out the answers to some of these questions.

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15 comments

  • Thanks for letting me know about this – keep me posted!

    I’m fairly certain that the reason it was drafted so as to just allow attorneys’ fees for corporate entities required by statute to have attorneys is BECAUSE of the statute requiring them to have attorneys. Individual landlords always have the option of being pro se. However, just because individual landlords have that option does not mean that they should be limited in their ability to be represented, or treated differently should they elect to have their case handled by an attorney.

    Sarah Taggart on
  • I sent an email to Representative Wren’s office asking for a clarification regarding his thoughts. The problem with drafting something “plain and simple” is that it is always “plain and simple” from the writer’s point of view. But, because the writer has certain background experiences and ways of thinking about things, it just never occurs to them that their language might be interpreted in a different way by clever lawyers. I’ll always remember an IQ test I took in grammar school. Some of the questions were analogies. You know, “Hair is to Head as Toes are to (1)Foot (2) House (3) Steak.” I got one of the questions wrong because it order to answer it correctly, you had to know that newly mown grass had a smell. I didn’t know that. We lived in US Army apartments my whole life. We didn’t have grass, we had dirt and gravel, even in the play areas. So, answering the question correctly was not possible, because it was outside my experiences. I think this happens a lot of times to lawmakers who pass laws they think are going to fix problems.

    deniselevans on
  • Denise,

    Thank you for this information. I agree with the first comment here and with the direction you’re going. All landlords, especially an individual (such as myself) who has less room for absorbing expenses, should be able to be reimbursed.

    mary robin jurkiewicz on
  • Many investors think they cannot afford the legal fees involved in simple evictions, routine “default judgment” quiet title actions and collection actions, etc. Others think that bankruptcy options are more flexible if they hold title in their own names rather than a single-asset or even multi-asset entity. Many investors grew out of a single family home, or inherited one, and converted it to rental property. The single ownership state of affairs just continued, without thinking about it. Others started out with an individual ownership plan from ignorance, and have been told that a later transfer to a corporation or LLC is a taxable event that will result in income taxes due on phantom income. I’m not saying whether any of these is true or not, I’m just repeating what many people believe. Perhaps you could write a short article addressing these concerns. If you post it on your website, or your blog, I will provide a link to it from my blog.

    deniselevans on
  • I really don’t have an issue with the proposed wording given that it appears to apply to LLCs as well. With that being said, the real question is why some individuals don’t keep or move these properties under an LLC from a liability standpoint.

    Justin South on

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