● Is "Unreasonable" Rent a Breach of Tenancy?
● Is There a Duty to Ask Reasonable Rents? Who Decides? The Jury?
● The Elements of the Case for "Intentional Interference with Property Rights"
● Avoiding "Intentional Interference with Property Rights" Claims
● Positive Resident Relations
SAN DIEGO. In Aranda, et al. v. Terrace View Partners, L.P. An El Cajon jury awarded just 10 spaces (the first of several groups from Terrace View MHP to go trial) $58,389,000 in damages against Park owners. This is the first phase of 49 homes that are part of the lawsuit. The case is now on appeal.
The theory of liability is novel and horrifying. In the Aranda case, rents are alleged to be so high as to be "unreasonable" and "unconscionable." The suit alleges "Intentional Interference with Property Rights" and "breach of the implied covenant of good faith and fair dealing."
Comment: It is one thing to say that lease charges were miscalculated or that overcharges occurred. But to claim that tenancy was breached because rent was simply, inter alia, "unreasonable," has never before been sustained as an actionable legal challenge. The ramifications for all landlords loom large.
■ IS THERE A DUTY TO ASK REASONABLE RENTS? WHO DECIDES WHAT IS REASONABLE? THE JURY?
The tenant lawsuit alleges that the rents in Terrace View were so high that no "reasonable" man would pay them. This means that the rents were "unconscionable." On the other hand, there is no room for general or implied duties which are also expressly described or articulated in a rental agreement. The express terms displace a claim of implied duties.
Thus, a rent formula which specifies how, when and how much rent adjustments are calculated are explicitly-described rights and duties. If there is an articulated methodology for a rent adjustment, whether or not the rent adjustment is reasonable is displaced by the mutual assent to the specific formula. In such a case, like all long-term leases, the rent formula is not just implied, it is spelled out. The parties agreed the method for rent adjustments was reasonable in light of all the rights, entitlements and protections. The park is owner is indeed required to follow that formula. So, we will see if the Court of appeal agrees or whether it jumps in and re-writes the contract.