How CA residential leasing law hurts poor people

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The courts have screwed up unlawful detainer (eviction) in California and it’s hurting poor people.

Here is the current situation with leasing in CA:

  • Courts won’t enforce a lease provision through which tenant waives jury trial (see this article for the background); and
  • Courts won’t enforce arbitration provisions in residential leases (see here) (arbitration is effectively private court system that allows for faster resolution of civil disputes than is possible in court)

 

Bottom line: There is no way for a landlord to prevent a tenant under eviction from getting a jury trial if the tenant wants one.

Why should landlords care? Because if you have a tenant who doesn’t pay rent and you go for an eviction, you will find yourself negotiating a settlement, because that’s almost always going to be cheaper/faster than going through with a jury trial.

OK, but why should non-landlords care? Shouldn’t society be happy that tenants can get in front of a jury, and therefore have a lot of leverage in eviction cases?

No. And here’s why: Making it difficult to remove bad tenants means that landlords are/should be much pickier about letting in any tenant who might conceivably turn out to be bad. In practice, that means that landlords should avoid tenants who have have been evicted before, have bad credit, lack references, and / or can’t pay large security deposits.

Which tenants fit that description? Poor people.¬†California’s well-intentioned courts have made renting apartments to poor people into a terrible business. You can’t make enough money charging affordable rents to make up for the losses that are the inevitable result of a few bad tenants failing to pay rent, then opting for jury trials in the event you go to court, and forcing you into expensive settlements.

Can you imagine a better way of doing things? I can:

  • Make arbitration clauses mandatory in residential leases
  • Collect a small fee from every landlord every year to pay the arbitration costs (so that individual tenants don’t have to pay for half the cost, as is customary in arbitration)
  • Give arbitrators the ability to order lock-outs, the way that courts can

Under my proposed system, it would be much easier to get a bad tenant out, making it much less risky to let a potentially bad tenant in. And, ultimately, that’s better for society: We should want a system where a poor person who can afford to make a reasonable security deposit and the first month’s rent can get a decent apartment, even if he’s had some problems in the past. We should want a system that makes it easier to give people second chances.

[Note: I am not a lawyer and this is not legal advice. That said, I spend do unfortunately spend a lot of time in eviction court.]

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