Update for today's pro-tenant courts suggested (if you don't live on the left or right coast this probably won't apply to you)

Take out the "prevailing party collects legal fees from non-prevailing party."

it's best to put in "each party is responsible for their legal fees."

Thoughts?

I asked my attorney about adding collection fees, but he says the judges won't do it since you can collect on your own for no fee; therefore, it's not fair to penalize the tenant for a cost that may not actually occur.

So the way I work around that is the Early Termination Fee is due if I have to evict, because the tenant's actions caused the lease to have to be terminated early. This is how it is written up in our lease. My ETF either gets added to the judgment, or even if the judge won't add it for some reason, I simply apply all of the deposit toward it, leaving nothing to apply to the money judgment. So now I can collect the full $ judgment, and most often that includes the ETF.

YMMV.

It all depends on if you expect to win or lose. If you expect to win then you want the clause, because you will not get legal fees of you don't have it. If there is possibility of your losing, then you will wish that you didn't have the clause because you will have to pay YOUR legal fees plus the other side's fees.

If you have a problem with tenants who don't really have a case but will get a lawyer and sue anyway (e.g., legal aid) it may be useful to put into your clause to LIMIT attorney fees to the prevailing party, say to $500. The object would be to discourage an attorney from taking the case, because he won't be awarded enough money to make it worth his while to get involved.

Keep in mind that problem tenants often are also not going to be those from whom you can collect back rent or attorney fees.

Also judge will often reduce attorney fees to be awarded to landlord so really there is not much incentive to have any attorney fees in your agreement unless you include limit such as $500 as Moshe mentioned above.

Of course this is all from my perspective in California which might not be the case in some other places.

Why concede you will be the loser? If you have the right lease and did what your state mandates you will not lose. I don't get that thinking. Our collection court is not the same mickey mouse court for evictions. The judges here know which end is up.

Sid first statement and first error "you asked your attorney".

First off-- you will have to spend just as much time as any company would to try and collect. So that's the first mistake by the judge/your atty. Does your attorney think your time is free?

Second I explained in detail in a previous post on how to collect properly. So simple steps and minimal cost. #1 get a business license to operate out of your home with a new company name DBA XYZ collection company. Open a PO box using company name. Next open checking and savings account and get a credit card in the company name to pay for anything you incur.

Now when you make your claim for collection fees you have the XYZ company in the by line @ 30% collect fee.

myob,

You listed all your steps to open you own collection agency, but you did not mention that your judgement will be in the name of the landlord, not the collection agency. You will need to assign the debt over to the collection agency.

I never expect to lose, but I have used a clause “each party bears his own attorneys’ fees” for many years.

1. Some hungry attorney who listens to a disgruntled tenant’s lies during the intake interview also expects to win. If he sees that the prevailing party will be awarded attorneys’ fees, he sees stars and dollar signs. If he sees a clause “each party will bear his own fees”, then he worries a lot more about whether he can collect his fees from the deadbeat tenant/client.

2. If I prevail and if I am awarded attorneys’ fees against the tenant, will I ever see even a penny? I really don’t think so. So what is (in reality) the upside of an awrd of attorneys’ fees to me? Bragging rights? Whereas if fees are awarded against me, they will have to be paid; I am not judgment-proof.

3. MYOB, even if a tenant is collectible at the inception of the lease, if the tenant and I are involved in litigation, things have changed, and I will count of the tenant still being collectible.

A little known fact. When you have your collection people go to court to collect YOU have to go. WHY becase most collection company's don't have attorneys on retainer. The owner has to go not your collection company. As far as GETTING you judgment collection is a line item on the paper for you.

When questioned: your honor the collection company I use charges 30% on top of the debt. Which is what your XYZ charges-- REMEMBER.

WL first you have to put collectable types in your property. Doesn't own RE? It's not just RE. It's anything with a title. Its a job they want that requires the employees to get bonded. I am by no means saying we collect from everyone. I will say they know we are on their shirt tails and at every purchase there will be questions and in some cases denials. Some time-- sometimes they will have to pay up and it would bother me if for example they had the funds to pay me and just walked.

Mike NV I get that-- crap goes down hill fast. I want my claim and I will renew it every year I can.

WL let me say out front. I love LL's who know what there doing BEFORE THEY NEED TO. The what if's are covered.

Honestly you are expected to know what the in's and out's are don't you agree. Yes each state is different-- heck each county tries to be.

Keep in mind if you do everything per your law code YOU will prevail. I know many say well it's lower court and anything can happen. That is so.

A general rule of law is that a benefit conferred by the lease without consideration to only one [arty must be extended to benefit both parties.

So, in CA al least, absent any agreement to pay legal fees, neither party are entitled to fees. And, If there is agreement favoring only one party, the judge can (and will) apply that privilege to both parties. I expect that its true elsewhere, also.