There is another law in California that seems to allow landlords to make mandatory arbitration when tenants sign the lease. Section 1942.1 of the Civil Code provides that landlords and tenants can agree in writing to an arbitration procedure for breach of habitability. The Court of Appeal in the case discussed above considered the conflict between the two statutes, but reached no conclusion. The prudent tenant should be careful and seek the assistance of a lawyer before declaring herself ready to sign her right to a jury. Arbitration can be very costly and the arbitrator`s decision can only be challenged in court for extremely limited procedural reasons. In Jaramillo v. JH Real Estate Partners, Inc., the Court of Appeal considered DesBGB 1953. Another California law, Civil Code Section 1942.1, appears to allow landlords to require tenants to make mandatory arbitration when tenants sign the lease. The Act provides that landlords and tenants can accept arbitration in writing when there are issues of deviability violations.
The University of Dorf has attempted to enforce the arbitration provisions of the continuation of care contracts. On June 1, 2020, the California Court of Appeal for the Second Appellate District ruled in favour of the applicants. On September 16, 2020, the California Supreme Court dismissed the defendant`s request for review and upheld the Court of Appeal`s decision. Arbitration can be very expensive. The cost of arbitration is often shared between the landlord and the tenant. The owner is usually in a better position to pay the arbitrator`s time, pay witnesses for their time, and pay to do research on the case. Instead, you may be reluctant to take action against the owner, because you can`t afford the cost. Given these characteristics of arbitration, parties to a lease agreement, particularly a commercial lease, should ensure that these clauses can be useful. On the one hand, a tenancy dispute could concern a highly technical legal issue of contractual interpretation of rents. In these cases, a judge may be preferable to an arbitrator, subject to the constraints of the precedent and the possibility of an appeal review. On the other hand, a rental right dispute may include substantive or market considerations such as valuations, valuations or modes of use. In these cases, someone who knows real estate in general, or even a specific market or use, can be very useful.
In general, when making leases, you think carefully about what arbitration can offer and the challenges for the use of arbitration. Then take the time to establish a compromise clause that uses arbitration for litigation only if it makes sense for these particular types of litigation. This clause seems to be fair to the Jaramillos, but it was not. Your lawyer argued that the clause was buried in the lease. Your lawyer noted that an arbitrator with the American Arbitrators Association could cost $2,000 to $3,000 a day, which is prohibitive for many tenants. I myself have seen that the referee`s fees are as high as $1000 an hour. That`s the kind of fee the Jaramillos should have paid to fight their housing violations. California law appears to prohibit leases from imposing an outright conciliation of disputes. However, there is a conflict between two laws that the courts have not yet resolved. The Court of Appeal also found that the arbitration agreements in the leases were null and void because the lease arbitration agreements were contrary to state policy.
In particular, Section 1953, Subsection (4), provides that any lease provision by which a tenant agrees to amend or waive his “procedural rights in litigation in an action relating to his rights and obligations as a tenant” is non-applicable and contrary to public policy.