Rental Agreements Often Leave Nashville Renters with Few Options

Class action and jury trial waivers in leases create roadblocks for tenants who want to sue their landlords

When Mark Finlay opened his email to sign the lease to his one-bedroom apartment in 2019, a one-page addendum at the end of the agreement read, “Class Action Waiver.” 

The now 30-year-old thought the addendum was “weird,” but it was also the first time he had ever rented from a property management company. So, he thought it was a standard policy. Like all documents requiring his signature, he sent the lease to his mom, a former attorney. She approved it. Then, he sent the signed lease back to EH Property, LLC, which at the time owned Eastside Heights Apartments in East Nashville. 

By doing so, Finlay waived his right to participate in a class action lawsuit against his landlord, EH Property, LLC and its registered agents. He also waived his right to a jury trial and agreed to pay for his landlord’s attorney fees if they prevailed in any lawsuits.

Since the 1980s, there has been an increase in companies requiring consumers to sign forced arbitration clauses, class action waivers and other provisions on forms, including apartment leases, creating a take-it-or-leave-it situation and roadblocks for renters to hold landlords accountable. 

Some class action lawyers say the provisions allow big companies to “contract themselves out of the Seventh Amendment” — the right to a jury trial — while individuals are left with few options to negotiate terms or are unaware of the things they signed in agreements. 

“When it comes down to the lease, if they say take it or leave it, you don’t have much of a choice,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “I mean you could look around and see how many landlords don’t have class action waivers or forced arbitration clauses or other terms that no normal human being is possibly going to understand.” 

He added: “The courts and state legislatures over the years have permitted them to get away with it.” 

Waiving right to class action lawsuit

Brandon Watters, of Antioch, rented an apartment managed by Lincoln Property Company and another apartment managed by UDR, Inc. 

Following an investigation by nonprofit investigative outlet ProPublica into RealPage Inc. — a technology company whose algorithm sets rent prices for property management companies throughout the country — he filed a class action lawsuit on behalf of residents who rented from companies in Greater Nashville that use RealPage’s software.

He alleges that RealPage and its clients, who manage the majority of rental units in desirable neighborhoods in Nashville, overcharged tenants’ rent, which caused them harm due to the limited availability of rental units in the metropolitan area. His lawsuit and more than 20 others are consolidated in Middle Tennessee. The company asked the chief U.S. district judge to enforce class action waivers in lawsuits brought by Watters and other plaintiffs.  

“Enforcing the class action waivers based on these plaintiffs’ leases is not so clear-cut,” Judge Waverly Crenshaw Jr. wrote in a memorandum, adding that some leases contain ambiguity.

One of the challenges of enforcing the waivers is that the language is often obscure, according to class action lawyers. 

“It’s not clear who’s covered by this. It’s not clear which wrongdoers get with a free pass because of this — and on that basis, courts have found them to be unenforceable in some cases,” said Mark Chalos, managing partner of Lieff Cabraser, which represents plaintiffs in class action lawsuits.

The National Apartment Association, a landlord industry group with 96,000 members, launched a class action waiver addenda in its standard lease form in 2018. (A sample version can be found here.)  Some of the biggest property management companies  — such as Greystar, BH Management Services, UDR, MAA and Lincoln Property Company — use the association’s  “Click & Lease” platform, which provides boilerplate leasing forms used by more than 9 million rental units globally.

Asked for comment, the National Apartment Association’s General Counsel, Ayiesha Beverly, said in a statement: “NAA’s comprehensive Click & Lease is meticulously reviewed to ensure compliance with all federal, state and local laws and strictly updated to reflect changes to legal precedent, laws and regulations. The NAA lease streamlines the leasing process for rental housing providers and residents alike and offers all parties the reassurance of a reviewed and sound legal contract.”

In effect, the class action waiver allows wrongdoers to get away with whatever bad thing they’ve done and allows them to “escape accountability,” Chalos said.

Waiving right to jury trial 

Finlay lived at Eastside Heights for more than two years before purchasing his first home. While living at the apartment, he was unaware that he waived his right to a jury trial and agreed to pay his landlord’s attorney fees.

“It seems a little shady, a little sketchy for these things to be included in these lease agreements,” Finlay said. 

Steadfast Management Company, Inc. currently owns Eastside Height Apartments and includes a class action waiver addendum in its leases. The company did not respond to the Banner’s request for an interview.  

Elizabeth Leiserson, project director for the Legal Aid Society Eviction Right to Counsel program in Davidson County, said the waiving of the right to a jury trial is common in most rental agreements.

Waiving the right to a jury trial doesn’t mean much in Davidson County because eviction cases are filed in General Sessions Court, where trials are only seen by a judge, Leiserson said. But if a tenant wanted to appeal their case to the Circuit Court, which has jury trials, they signed away that right, she said. 

The Seventh Amendment is just as important as the First, Second or any other amendment, Chalos said. 

“When you’re waiving that, it shouldn’t be something buried in the fine print,” he said. 

Rise of arbitration agreements and waivers

Before Congress enacted the Federal Arbitration Act in 1925, which deems arbitration agreements enforceable, the federal courts did not receive arbitration agreements well, according to Maria Glover, a Georgetown law professor who wrote “Beyond Unconscionability: Class Action Waivers and Mandatory Arbitration Agreements” in Vanderbilt Law Review in 2006. 

At the time, one Senator foresaw the arbitration contracts creating a take-it-or-leave-it situation for consumers, according to Glover, but he was assured it wouldn’t happen. 

Then, in the 1980s, the courts’ view shifted, and businesses began implementing provisions in many documents to resolve disputes rather than the courts, Glover wrote. Along with that came the rise of class action waivers in the 1990s. 

“Companies’ use of class action waivers is motivated by the view that plaintiffs exploit the class action procedures in order to wrest large and unfair settlements from defendants,” Glover wrote, adding that it is viewed as a way for companies to defend themselves against consumers who are ‘ganging up’ on them.” 

Kevin Amolsch, president of Pine Financial Group, Inc., a real estate investment company based in Colorado, advised landlords to implement class action waivers in apartment leases to prevent “frivolous lawsuits that are becoming more common” in a 2022 YouTube video. 

The class action waiver addendum in Finlay’s lease reads, “Any claim that all or any part of this Class Action waiver provision is unenforceable, unconscionable, void, or voidable shall be determined solely by a court of competent jurisdiction.”

The majority of courts have enforced class action waivers, according to Glover, but certain courts in California, Illinois and the Ninth Circuit have refused. 

It depends on the judge, Colorado State Rep. Steven Woodrow said. 

“You get a conservative judge, they’re going to say, ‘You signed the lease. You could have read it; you didn’t have to live here. You could have moved somewhere else,’” he said. “Other judges are going to say, ‘You know what, that’s a pretty harsh term; I’m not going to enforce it.’ But you still have to file the lawsuit and get in front of a judge just to find that out.”

Colorado banned the use of certain provisions — such as waiving the right to a jury trial and class action suits — in written rental agreements in 2023. 

“For a long time, it’s been a landlord’s market and tenants have been at a real disadvantage,” Woodrow said, adding that the point of a class action lawsuit is to incentivize a lawyer to take the case on contingency so that the tenant doesn’t have to pay anything out of pocket.

Woodrow, a class action lawyer, co-sponsored the legislation and is representing a group of tenants in a class action lawsuit against a property management company in Colorado that has been ongoing for four years , he said. 

If a class action waiver had been in the tenants’ leases, the lawsuit never would have been a possibility, Woodrow said. 

Fees and time crunches create pressure to sign provisions

Despite renting for a few years, Tori didn’t see a class action waiver in her lease until she was approved for an apartment at Tapestry at Brentwood Town Center. The 26-year-old, who felt uncomfortable releasing her full name out of fear of ​​retaliation from property management, signed the addendum but had concerns. 

“If something really big happens and they’re at fault, they’re just trying to make sure that as a group, the residents can’t go after them because that’s usually a much more effective way to settle issues,” she said, adding that property management companies have more resources to participate in a lawsuit than an individual.

As she signed the waiver, she thought about her partner, who almost participated in a class action lawsuit against his former landlord for negligence in maintaining the property.

Tori never expressed her concerns to Greystar — which manages Tapestry at Brentwood Town Center — or Tapesty’s leasing agents. Hers was a typical situation: She was on a time crunch to find an apartment and paid more than $200 in application and administrative fees before reviewing the lease.

“We didn’t really feel like we could back out of it,” she said. “We didn’t really have time to go back and re-spend all the money we spent on the application fees on another apartment. And what if that apartment also had the same clause? You kind of get put into a bind with time and the cost you’ve already put into the process by the time you actually see the waiver.”

Like Finlay, Tori also waived her right to a jury trial. She said if she had known about the provisions, she would have asked for a sample lease during the tour.

“It never crossed my mind because I never realized these kinds of things could be in there,” she said. 

Greystar Real Estate Partners, LLC did not respond to the Banner’s interview request. 

Leiserson said that renters should pay attention to application fees when looking for a place to rent. Tennessee does not have a statute that limits application and administrative fees, she said, adding that knowing if fees are refundable is important before applying in case a renter backs out of the process due to provisions and other fees.

“And if you can, you have the right to negotiate,” she said, adding, “If they won’t negotiate, you are stuck in a position of deciding to take it or leave it and how valuable is this to you.”

Renters might know how valuable class action waivers could be to them, Leiserson said.

Published by the Nashville Banner on May 6, 2024.