All About Legal Fees in Evictions
Understanding Legal Fees in Evictions will typically include court costs, attorney fees and non-legal fees incurred while pursuing an eviction. "Court costs" include almost every foreseeably legal fee incurred, such as the cost of services, judicial supplemental, posting the summons, translating the summons and even delivering by certified mail . "Attorney fees" are our regular hourly rates expended while working on your eviction, which typically involves evaluating the case, conferring with our client, documenting your pay history records, preparing and filing the court complaint, attending the hearing, preparing and filing the motion for default or judgment for money damages, preparing and filing a motion to sue a resident’s guarantor, preparing and filing a motion for writ of possession, coordinating with the sheriff’s office and locksmith to evict the resident and returning control of your rental unit and possessions to you, and attorney travel to and from the court and police. Finally, "non-legal fees" include the utility management fees from your utility company, court collection fees, filing, serving and posting fees additional that we mention above, and any other 3rd party fees related to your eviction.
Landlord Pays Legal Fees in an Eviction
Landlords, like tenants, often seek to recover their legal fees in the event that they are successful in an eviction proceeding. Whether or not a landlord will be entitled to its fees will depend on the lease and/or other circumstances of the case at hand. Landlords should keep in mind that the obligations of a tenant to pay the landlord’s legal costs may not be mandatory and may not always be available in an action related to rent arrears.
Subject to what is said below about the authority of the provincial Residential Tenancies Act, it is common for a lease agreement to incorporate a clause entitling a party to recover its legal fees from the other party in the event of an enforcement proceeding such as an eviction proceeding. The leading case on this issue is Knight v. Empire Life Insurance Co., 1980 CarswellOnt 154 (C.A.), where the Court of Appeal for Ontario refused to award the landlord its legal fees because the lease did not specifically provide for the recovery of such fees. If a lease contains a clause entitling one or both parties to recover its legal fees, and only one party brought an action, this would appear to entitle the party who isn’t bringing the action to its reasonable actual costs of defending itself (given that the subject award could not have succeeded without the successful defence). However, the wording of any cost recovery provision and the situation at hand must be carefully assessed by legal counsel to determine if the above position applies.
There are three jurisdictional statutes that affect the Court’s ability to award costs against individuals or corporations under certain circumstances. They are: the Administrative Tribunals Accountability Act, S.C. 2004, c. 20; the Statutory Instruments Act, RSC 1970 5th Supplement, c. 9; and the Immigration and Refugee Protection Act, RSC 2001, c.27 (collectively the "Cost Prohibition Acts"). All of these Cost Prohibition Acts contain broadly worded provisions that exclude the authority of the courts to award costs against an individual or corporation when the proceeding at issue was brought under the applicable statute. The qualified prohibition on costs means that it is not always possible to get costs of a proceeding from the individuals or corporations who brought the proceeding. These provisions are important to the award of costs in lawsuits under the applicable statutes, but do not extend to actions under the Small Claims Court Act. Accordingly, if a tenant brings an action in the Small Claims Court, the landlord may be able to get its costs even if it is not specifically authorizing by virtue of a cost-provision in its lease.
Regardless of whether a lease provides for costs and/or there are other circumstances entitling the landlord to costs of enforcing a lease term, landlords need to be cognizant that any costs the landlord may be entitled to recover may be limited by the tariff under the Courts of Justice Act, RSO 1990, c. C.43 ("CJA"). Once again, in a proceeding at the Small Claims Court, a landlord may be able to recover more extensive costs than it would have had a tenant brought the action under its residential lease because costs are not capped in the Small Claims Court in the same way as in the superior courts or in the Ontario Court. However, if costs are being sought in the Small Claims Court, the landlord cannot recover more than the upper simple scale as set out in the CJA.
Tenant Pays Attorney Fees in an Eviction
In the cases where an action for possession is commenced by a landlord against a tenant (or former tenant), the tenant will not be liable for the legal fees and disbursements of the landlord. While it may be statutorily permissible for a landlord to charge a tenant for such fees and disbursements, the landlord has the burden of establishing its entitlement to recover those fees through the pleading of such fees in the landlord’s Claim under Rule 9.03 of the Small Claims Rules.
A landlord can generally recover its legal fees from a tenant (or former tenant) where those fees are expressly authorized by the lease agreement. However, the landlord can only recover the legal fees that it incurs by nature of commencing an action or proceeding in which it was successful. Easy Leases include a clause requiring a tenant to pay the landlord’s legal fees incurred in "enforcing" the terms of any Lease, meaning that the legal fees related to the commencement of an action or proceeding in relation to the tenant’s non-payment of rent.
Sometimes the Lease Determines Who Pays for Attorney Fees in an Eviction
Most lease agreements contain some form of standard provisions providing for a division of legal fees between the landlord and tenant. It is likely that the majority of landlords in Quebec will follow provisions similar to those provided in the provincial Civil Code (for example, a landlord is generally entitled to recover the legal fees of a tenant who loses in an action where the "object of the litigation" exceeds $5,000), and many commercial leases will have similar provisions. However, as in virtually all contractual situations, the lease agreement may modify the general presumptions of the law. For example, it is not uncommon for a lease agreement to provide that a tenant must reimburse a landlord for all its legal fees "pertaining to a breach of the lease" regardless of whether the amount in dispute is over $5,000.
Such contractual provisions may result in the outcome of a dispute about legal fees being decided on the very basis of how the dispute first arose. For example, if a landlord were to have successfully evicted a tenant for failure to pay rent, but the landlord had to bring two actions as the first had been lost on account of a technicality or had to be withdrawn and amended to correct a defect, then the landlord’s legal fees may be substantially larger than the amounts claimed. In this scenario, the landlord is able to recover a substantial amount of legal fees from the tenant to the extent that the lease agreement provides for the recovery of all legal fees pertaining to a breach of the lease (e.g. failure to pay rent). However, if the landlord loses the eviction to another tenant in the same building who has also stopped paying its rent and the tenant who sued won the eviction, then the outcome of the dispute would be significantly different if the lease agreement did not contain any sort of legal fees provision or if the lease agreement had restricted the landlord’s right to legal fees to those "pertaining to a breach of the lease where the amount in dispute exceeds $5,000". Aside from being irritating to the tenant, the landowner would be unable to swap the roles in the example above and obtain a similarly favourable outcome because the tenant who lost would not have legal fees to claim from the landlord for an eviction which was won. The lesson here is that indeterminate provisions are favorable to the landlord but the tenant will be at a disadvantage if it must suffer the burden of paying more than its proportionate share of the landlord’s legal fees, albeit a benefit that may be outweighed by being ill-behaved tenant, frequently requiring the services of the landlord’s lawyers.
As is often the case, the above discussion is overly simplistic and does not account for the fact that it is not uncommon for the dispute to encompass issues other than what is claimed in the notice to quit (e.g. counterclaim by the tenant or other forms of legal action) and that the tenant could well have a counterclaim or another form of recourse that would be entirely unrelated to the eviction. In such a simplified scenario, the landlord would likely be forced to pay its own legal fees for the eviction. More typically, the matter is complex, with several components that make it less obvious who owes what to whom. When this happens, the parties will be entirely subject to the provisions of the lease agreement and its provisions for the allocation of legal fees.
State Law Impacts Who Pays the Attorney Fees in an Eviction
State laws throughout the United States, while generally providing that one party should not be compelled to pay the legal fees of another party when the action is primarily for the recovery of money damages, have paid limited attention to the subject of legal fees in the context of a summary proceeding. Some cases contain simple rules cobbled together from different sources, and others leave the issue to the discretion of the trial judge. Only a few states appear to provide any guidance as to the underlying philosophy or policy considerations to guide the trial court’s discretion in making such an award.
An early New York case described the state of the law with the statement that: "The general rule is that each party must bear its own counsel fees." In the eviction context, state statutes that distinguish between judicial and non-judicial eviction proceedings have been used for a long time to determine the party responsible for the payment of the landlord’s legal fees, and the legal fees of professional administrators and managers who perform the functions of building managers. A few state laws, including those of Georgia, Missouri, and Washington state that the prevailing party shall recover its reasonable legal fees.
Variations exist in the specific language of the statutes examined. Some state statutes, such as those of Arkansas, refer simply to ‘prevailing parties’ without reference to whether the prevailing party is the plaintiff or the defendant.
Courts in other states have determined that even though states have laws providing for the prevailing party to receive its legal fees , such statutes do not limit the discretion of the court to provide for the awarding of legal fees to the non-prevailing party where special circumstances are cited in making this determination. Thus, New Hampshire rules state that: "Although the general rule is for each party to bear its own costs, the trial court may award attorney’s fees as an exception to this general rule where it finds that the losing party has acted in bad faith, with malice or has a history of frivolous or unjustified litigation."
In contrast, some states set higher burdens upon the party who seeks to have the other side pay the fees, such as in Nebraska, where courts have determined that: "While a contingent fee agreement evidences an understanding which is in accord with public policy, it does not prevent the prevailing party from recovery of her attorneys fees."
In addition, in some jurisdictions, courts have stated that exceptions to the general rule against the enforcement of fee-shifting contracts exist when the contract for attorney fees at issue is void because it violates public policy as reflected in a statute aimed generally at the particular problem addressed by the statute. For example, New Jersey has held that: "Where a landlord seeks a fee award pursuant to a provision in a residential lease agreement, it cannot be said to violate public policy (see N.J.S.A. 2A:18-61.2) prohibiting recovery of attorney’s fees because the landlord is seeking to enforce the lease between the parties." Where the lease does not address the issue of legal fees, landlords should look at their state’s law to determine whether it feels that landlords should be entitled to an award of legal fees paid if the action is successful.
Tenants Have Remedies if They Have to Pay Attorney Fees
Tenants typically are not in the financial position to be able to have legal counsel in an eviction. Hiring a lawyer to represent you in a situation that has a high likelihood of ending in an eviction seems like a waste of money to many people. However, if the court proceedings are handled properly, even when the tenant loses, they do not always have the obligation to pay the landlord’s attorney fees. The tenant should seek assistance from legal aid services, the local bar association, or pro bono attorneys to help them with representation.
Some of the pro bono services are those of individuals who are willing to take cases at very low or no costs. A tenant whose circumstances fit the criteria for such services should consider seeking assistance with finding a provider of such services. In addition, there are some government programs that provide legal aid to the poor.
An attorney helps the tenant negotiate with the landlord. Sometimes this prevents the eviction. If the tenant is evicted, the court may find that the tenant only has an obligation to pay the pro rata share of the landlord’s legal fees. Among other circumstances, the court may determine that the landlord is not entitled to an award of their attorney’s fees. If the case is lost, the tenant may be entitled to legal fees under a "prevailing party indemnification" clause in the lease. A tenant should always be aware of such a clause before they contract for such an arrangement.
Landlords Have Options When They Will be Required to Pay Attorney Fees in an Eviction
To help reduce the chance of being ordered to pay another party’s legal fees, a commercial landlord may begin evicting a problem tenant as soon as strong reasons arise for doing so. An eviction that drags on for a long time can raise the amount a landlord is ordered to pay more than if eviction proceedings had been commenced sooner.
Landlords can reduce the risk of having to pay legal costs by adding clauses to leases that require tenants to pay legal fees where proceedings against them are necessary or likely. If a lease requires a tenant to pay costs following an eviction, a judge will take the lease into account, but the judge nevertheless has discretion as to whether to order the tenant to pay, and some judges may feel it is unfair to order a tenant to pay costs even though they have agreed in writing to do so.
When selecting a tenant, landlords have a number of options for reducing the likelihood of the tenant underperforming, and of any subsequent eviction proceeding requiring significant legal fees:
Once litigation has begun, landlords can limit the amount of its legal fees by only incurring those that are necessary. The term ‘necessary’ can mean that it is common practice to incur a particular type of fee, rather than that it is strictly necessary in order to protect a particular interest. An example of a common practice might be locating a certain type of document on an electronic system for ease of access later, as opposed to just looking at the document when necessary (as it is not always necessary to have it immediately to hand).
The meaning of ‘proportionality’ is less well-defined. However, it is generally taken to mean that, for example, it would not be proportionate for a landlord of a modest commercial unit with a low-value tenancy to spend large amounts of money on litigating an eviction process, especially where there are no claims made as well as possession proceedings, and where the tenant is unlikely to have money to repay the landlord.
Conclusion: Paying Attorney Fees in an Eviction
This post addresses the liability for legal fees related to evictions and includes some common scenarios. It also has some guidance on when a landlord may be responsible for a tenant’s legal fees and what that means for landlords and tenants in these situations. Evictions can be complicated by financial responsibility issues that lead to confused landlords and tenants. Hopefully this information can help to shed some light on this area of landlord-tenant law and what may happen if you have to evict or be evicted.
In summary, even if a residential lease contains a provision that shifts the costs of eviction to the tenant, a non-equitable lease provision may not be enforceable in Illinois . The only types of cases where a landlord will be able to collect for the costs of a tenant’s eviction will be in commercial eviction actions and possibly small claims cases for rent based actions. Even then, the amount of fees and costs allowed by a court is unlikely to be enough to cover the actual costs of an eviction. A lease provision allowing for the costs of an eviction by could make it more likely for a landlord to win fees and costs from a tenant (and vice versa), but overall, the money available to collect is unlikely to make evictions financially beneficial for landlords.
