There’s less and less variation in the leases that landlords offer tenants today, new research shows. And many of these leases contain clauses that could increase the risk of renters being displaced amid the pandemic.
Researchers from the University of Pennsylvania and New York University recently released a new study that is one of the first large-scale descriptive analyses examining the language used in residential leases. The study examined roughly 170,000 leases filed in connection with eviction proceedings from 2005 to 2019 in Philadelphia.
Over that span of time, the leases they analyzed became less and less friendly to tenants and more biased in the favor of landlords. Increasingly, the documents featured provisions that the researchers said were not legally enforceable in Pennsylvania.
“Landlords put all kinds of provisions in leases that permit eviction for what we think of as behavioral violations by the tenant, and that gives the landlords lots of power,” said David Hoffman, one of the study’s co-authors and a law professor at the University of Pennsylvania. For instance, many leases featured terms specifying that residents could face eviction if any criminal activity occurred in their homes, even if they were not the perpetrators.
Moreover, Hoffman and his co-author, Anton Strezhnev, a fellow at the New York University Center for Data Science, noted that these terms appeared to be particularly targeted at Black tenants who live in majority-white neighborhoods. As a result, these tenants faced a higher risk of eviction.
Landlords are using shared lease forms
An overarching trend is driving the fast adoption of these leases — and the questionable provisions within them — and it’s not exclusive to the Philadelphia area, the researchers said.
In the past, leases varied extensively based on where a rental was located. Landlords often relied on local landlord associations to provide them with templates of how to draft a rental agreement. Today, thanks in large part to the internet, this variation has dissipated.
“We’re seeing a nationalization of leases,” Hoffman said. “What we think we observe today is small landlords basically go on Google and search ‘residential lease.’”
Through these web searches, landlords are increasingly like to find form leases created by large organizations like the National Apartment Association or leases generated by algorithms, Hoffman added. The National Apartment Association, for instance, offers a service called “Click & Lease,” where landlords can pay a licensing fee to get access to a lease database, among other benefits.
“ ‘The new forms are considerably worse for tenants.’ ”
And because finding a lease online through Google GOOGL, +0.55% has become so easy, many landlords are now drawing up longer, more complex agreements with their tenants, replacing short, informal and even oral agreements.
And over time, the shared forms that landlords now rely on have included more and more of the provisions that Hoffman and Strezhnev described as having a “pro-landlord tilt.”
“The new forms are considerably worse for tenants,” Strezhnev said.
In a response to MarketWatch, John McDermott, general counsel for the National Apartment Association, said that the organization’s “Click & Lease” program “undergoes strict legal review to ensure compliance with Fair Housing laws and adherence to legal and compliance regulations across jurisdictions.”
Certain provisions give landlords an edge amid COVID-related eviction wave
Millions of renters continue to face challenges paying their monthly rent in full as unemployment remains high amid the COVID-19 pandemic. Those renters ostensibly should be protected by the federal eviction moratorium that was first issued by the U.S. Centers for Disease Control and Prevention in September.
The moratorium prohibits eviction on the basis of non-payment of rent. However, landlords have continued to file thousands of eviction proceedings against tenants, and many Americans have been displaced. To some extent, these evictions are a reflection of how local authorities have failed in enforcing the national mandate, by choice or otherwise.
But the evictions may also be a reflection of the loopholes that lease terms can offer. Since the moratorium was first announced, consumer advocates have warned that gaps in the ban could leave some renters unprotected. The moratorium specifies that lessees can still be evicted if they engage in criminal activity on the premises, damage property or violate other contractual obligations.
“It would be super tempting if I was a landlord today to find myself looking for behavioral violations by tenants so that I can evict when I wouldn’t be able to for non-payment of rent,” Hoffman said.
Moreover, he argued that some landlords may be taking advantage of clauses found in many leases today to encourage tenants to vacate their homes even before a legal eviction in pursued.
For instance, it’s increasingly common for leases to include an “as-is” provision, that claims the tenant must accept the property in the condition it’s in at lease signing and that the landlord is not contractually obligated to make it more habitable.
While state and local laws related to rental housing vary, Hoffman said that these provisions are generally unenforceable — but tenants don’t necessarily realize that. Consequently, Hoffman argues that a landlord could use those provisions to encourage tenants to leave.
“Most of the time tenants leave their premises, it’s not because they’ve been evicted through court proceedings, it’s because the landlords have basically found private ways to force them out,” Hoffman said.
“It might be that landlords are convincing tenants that they don’t have the rights that the law actually gives them,” he added. “One thing that might be happening is they’re pointing to their lease provisions and saying you don’t have a right to complain about that.”