Prohibited Provisions In Rental Agreements

Current law prohibits a written rental agreement from including:

• An unreasonable liquidated damages clause that assigns a cost to a party stemming from an eviction notice or an eviction action for a violation of the rental agreement; or
• A one-way, fee-shifting clause that awards attorney fees and court costs only to one party. Any fee-shifting clause in a rental agreement must award attorney fees to the prevailing party in a court dispute.

The act amends these prohibitions so that:

• A written rental agreement must not include any clause that assigns a penalty to a party stemming from an eviction notice or an eviction action that results from a violation of the rental agreement; and
• Any fee-shifting clause in a rental agreement must award attorney fees to the prevailing party only following a determination that the party prevailed and the fee is reasonable.

With certain exceptions, the act also prohibits a written rental agreement from including:

• A waiver of the right to a jury trial; the ability to pursue, bring, join, litigate, or support certain class or collective claims or actions; the implied covenant of good faith and fair dealing; or the implied covenant of quiet enjoyment;
• A provision that purports to affix any fee, damages, or penalty for a tenant's failure to provide notice of nonrenewal of a rental agreement prior to the end of the rental agreement;
• A provision that characterizes any amount or fee set forth in the rental agreement, with the sole exception of the set monthly payment for occupancy of the premises, as "rent" for which all remedies to collect rent, including eviction, are available;
• A provision that requires a tenant to pay a fee markup or for a service for which the landlord is billed by a third party; or
• A provision that purports to allow a provider operating under any local, state, or federal voucher or subsidy program to commence or pursue an action for possession based solely on the nonpayment of utilities.

The act specifies that some of the new prohibitions do not apply to a rental agreement concerning the occupancy of a mobile home in a mobile home park or to a duplex or triplex or to an accessory dwelling unit of a residential premises if:

• The owner of the duplex, triplex, or residential premises uses the residential premises or at least one of the units of the duplex or triplex, as applicable, as the owner's primary residence; or
• The owner's primary residence is on the same lot as the duplex, triplex, or residential premises.

APPROVED by Governor June 5, 2023

EFFECTIVE August 7, 2023

NOTE: This act was passed without a safety clause and takes effect 90 days after sine die.
(Note: This summary applies to this bill as enacted.)