What is a Stipulation Agreement?
The stipulation agreement is a contract to settle the claims between parties. The defendants and plaintiff (landlord) stipulate to the entry of judgment and the payment of rent required by the contract. The primary purpose of the stipulation is to terminate the eviction case without judgment being entered against the defendant. In Los Angeles County , the case is stopped (stayed) for one year while the tenant pays rent and also provides the landlord with information on income and employment to determine if the tenant is eligible for rental assistance. If the tenant signs the stipulation, the case is resolved unless the defendant does not fulfill the term and conditions. If the tenant breaks the stipulation the landlord can request a judgment from the judge and the case will proceed as if the defendants had no defense.
Legal Authority for Stipulation Agreements
Stipulation agreements are a formalized way of agreeing to how a particular case is going to proceed – it’s a contract, to some degree. Vague agreements won’t be enforced, however – parties have to both agree to the terms in question and make them clear. Generally, this means that each side (the landlord and the tenant) agrees to something, for example "a $900 payment plan over 3 months" as opposed to a somewhat vague "a payment plan." Who makes what payment and when? For example, you can get more specific with "The tenant will pay $900 on the 15th of each month with a $50 late fee on or after the 16th."
Stipulation agreements aren’t always in the tenancy law; in some states, there are no codes that deal with them explicitly, so court decisions (called case law) may be used to create standards. Even where you do have legal codes, however, they may not always be as clear as you might want – further decisions made by a court may add to or clarify the codes in question.
Beyond that, many stipulation agreements follow their own set of rules. For example, a lot of the time, parties are prohibited – by statute, case law, or both – from making an agreement that is excessively lengthy. This is a way to avoid the tenants simply dragging things on – no plans that last more than about 14 months are generally permissible.
Because of all of this, you almost never want to enter a stipulation agreement without at least consulting with a lawyer. Even if it does seem like an innocent thing to do to represent yourself, stipulation agreements carry long-term consequences; this means that it’s important that someone well-trained in the law helps you make your decision.
Pros and Cons
There are certainly positives to entering into a stipulation agreement. It provides the parties with an opportunity to work out a reasonable solution to the problem and proceed forward without the expense and stress of litigation. For example, where a tenant’s income is basically non-existent and also very sporadic, the landlord may find it in his/her best interest to stipulate with regard to the arrearages and allow the tenant to keep possession. It may be worth having the cashflow to cover the mortgage instead of initiating eviction proceedings. Certainly it could be looked at as a benefit to a tenant who is basically homeless to have a roof overhead whether they actually have the funds to pay the rent or not.
On the other hand, there are all kinds of potential negative consequences for landlords unless their attorney is crafting the stipulation language and ensuring their client understands exactly what they are signing. For example, if the tenant is already several months behind and is simply agreeing to pay "catch up" within a few months, while there is some benefit to the landlord, the catch up would only equate to future rents if the tenant keeps making the payments. In fact, in some cases, the stipulation is not going to bode well for the landlord even if the tenant does have the funds to catch up. In this area, for example, I am observing landlords completely at the mercy of the tenant because the landlord agreed to accept late payments as timely payments. Accordingly, it is very easy for a tenant to "catch up." Though I am sure the intent was to assist the tenant to "do the right thing," the stipulation basically allows that tenant to live rent free for a few additional months because as long as they pay the older portion of the lease on time, they will have fulfilled the stipulation agreement. Overall, it is very easy to see how landlords could run afoul of tenants who are aware that landlords have needs just as they do and may sign a stipulation just to bide their time until they can locate new housing or new employment. And, just like the scenario above, it is easy for a tenant to go along with whatever a landlord proffers, even if the tenant has no intention of upholding the agreement.
Standard Terms
Stipulation agreements typically commence with the name and address of the involved parties, stress the purpose of the agreement, the date the agreement was written, and incorporate the terms of the settlement offer. The agreement then goes on to outline the obligations of each party to the agreement and a breakdown of the monetary amounts due. For example, a tenant facing an eviction, unable at the present time to remedy the issue prompting the proceedings, may request a payment plan in order to cure any default. The landlord, accepting the cited explanation, may then agree to a move-out date that permits an orderly transition to new premises. As is common, both parties will set out any monetary amounts in the agreement. That is, the past due rent/unpaid rent will be delineated, as well as any associated legal fees and discovery costs.
A typical Stipulation agreement may include the following: This stipulation is made and entered into by the (Landlord/Owner) and (Tenant) to resolve all outstanding rent and issues pertaining to the tenancy between same for the premises located at (Address and Unit). Of the total due under the stipulation agreement, the tenant will agree to pay the sum of $____ within so many days of the settlement agreement being executed. The tenant will also agree to pay all current rent due by the 5th day of each following month throughout the pendency of the terms of this agreement. The tenant will further adhere to its obligation under the Stipulation to comply with all covenants, rules and laws pursuant to C.G.S. Sec. 47a-15 and will pay any damages arising from any such violation. Violation of this provision will include a termination of tenancy. If the tenant has failed to reimburse the landlord for attorneys’ fees and legal costs, the tenant will agree to pay the sum of $_____ by the 5th day of the following month for the duration of this agreement. The tenant will further agree to vacate the lease premises on or before a date certain and return all keys to the landlord or its management company by that date. The landlord may elect to process a Default Notice, certification for a Default Judgment, and/or Application for Execution if the tenant breaches any of the above provisions. The Stipulation will further set forth any other provisions specific to the case before the court.
How to Prepare a Stipulation Agreement
Once a state court’s commissioner or judge hears and grants the parties’ motion for a stipulated judgment the parties will have to draft an agreement memorializing the terms of the judge’s decision. It is important to note that a stipulation agreement should be drafted before the court orders the landlord to draft the stipulation. If not drafted by the time of the court’s order, the unrepresented party will almost always end up with more disadvantageous terms in the agreement, since the landlord will be the one doing the drafting.
A stipulation agreement should state the case number, name of the parties, and all relevant information for the case (rent owed and amount included in the agreement, any payment plan, communication details, date rent is due, and any deadlines). The agreement should explain when the tenant has to catch up on past rent, how the tenant has to pay the rent, and what the landlord will do if the tenant does not follow the terms of the agreement . (In the case of failing to pay rent, the landlord would likely file for a default judgment.) The landlord and tenant should both sign the agreement and get it notarized. Both parties should receive a copy of the agreement.
It is advised that tenants do not sign a stipulation agreement with a provision that awards a judgment to the landlord for non-compliance. A tenant should not sign a stipulation agreement unless all terms are clearly understood and agreed upon, and most importantly, unless they agree to those terms. Tenants should understand the implications of the case being final if they do not comply with the terms of the stipulation agreement. The agreement will specify time frames, conditions, payment plans, and everything else that the tenant has to do during the time of the lease.
Enforcing Stipulation Agreements
In order to enforce a stipulation agreement with other parties to an action, a motion to enforce the stipulation must be filed in the court. Once a judgment has been entered, courts will no longer have the inherent power to enforce the stipulation; thus, this motion needs to be filed with some urgency. A stipulated agreement is enforceable as a contract if the following are found: While it is not necessary that the stipulation be a formal contract, it must contain sufficient and clear terms so that enforcement is possible. A stipulation will only be enforceable if the terms and conditions are clear and unambiguous. Plaintiffs sharing possession of a unit are liable to pay rent for said unit and have an obligation to pay rent even if one is no longer in possession of the premises if it is determined that they have caused a forfeiture against all of the parties. In the event that one of the tenants fails to pay rent, the lease terms remain in full force against the other party and the entire rent may be collected from this party. If the tenant fails to comply with the terms of a written stipulation after the entry of a judgment, the court can enter a judgment according to the stipulation or it may order that the lessee vacate the property. When entering judgment, the court must give notice so that the tenant may object to enforcement. However, in the event of irreparable harm, the court can allow substantial notice but omit the need to provide the tenant notice. Further, if there is an emergency at hand, the court can order that the stipulation is enforced for the tenant’s compliance without first waiting for the chance to object (however, there still is a requirement for a balancing test of interests).
Typical Pitfalls
Common Mistakes to Avoid in Stipulation Agreements in Eviction Cases
When entering into a stipulation agreement in an unlawful detainer (eviction) case parties must be careful to avoid a few common pit-falls that can lead to problems down the road. One such pit-fall involves an improper waiver of the right to a further hearing on the unlawful detainer itself (the actual eviction case). As mentioned above, parties can avoid an unlawful detainer trial by entering into a stipulation. However, certain rules apply to this situation and they are not always followed. One such rule requires the following: If a defendant in the action is in jail at the time the judgment is entered, and a judgment is entered pursuant to this section and section 1179, the defendant shall be permitted no later than 24 hours after the entry of the judgment to present evidence to the court concerning the question of possession to explain the failure to appear, and trial on the question of possession shall occur if the defendant was in jail for any of the specified reasons. Courts have interpreted the above language to require that an unlawful detainer trial must actually follow after the 24 hour waiting period, if the tenant’s request to contest possession is made. Courts are pretty diligent in following this requirement as we saw in the case of Foroughi v. Mehany. There, the tenant entered into a stipulation with the landlord allowed her to retain possession of the property. For reasons not clear on the record, tenant stopped appearing in the case after having appeared earlier. In that case the trial court entered judgment for the landlord in this situtation and the tenant, who again showed up to the trial court after the fact, appealed the entry of judgment. Tenant argued that the landlord could not have judgment against her because he failed to appear with the required paperwork. The appellate court concurred, but explained the reason why. The court said: In other words, even though the parties entered into a disposition of the action, the landlord failed to comply with section 1179, which requires that the tenant be afforded at least 24 hours to object to the entry of possession. Accordingly, the court erred in entering judgment for possession. Further reflecting on the above legislation, the court stated: Had the landlord gotten the necessary paperwork before the court, and the tenant started to take evidence, the landlord may well have lost on the merits. In addition, the tenant may have been frightened from trial when she saw the overwhelming evidence against her in the landlord’s favor. Or she may otherwise have changed her mind about contesting the unlawful detainer action. Any number of legitimate reasons could explain a tenant’s putting on evidence effectively contesting the unlawful detainer action but failing to bring over additional evidence sought by the landlord. Whatever the reasons, the law requires clear procedures be followed, and those procedures were not followed here. A tenant should not be deprived of a hearing unless the requisite rules were in place. In Foroughi the tenant won.
Case Law and Hypotheticals
Here are a few real-life scenarios where stipulation agreements were negotiated in eviction matters, so you can see the practical realities.
In one case, the tenant paid their rent late several times, indicating they didn’t believe they were required to pay rent until the landlord was able to show them the exact location of the rental unit. The landlord had never done so, and the tenant believed a previous statement that the landlord was coordinating with a neighbor who was familiar with the area.
The Landlord-Tenant Board would only allow the landlord to evict the tenant if they could show that they were having difficulties locating the unit. The Landlord-Tenant Board member in the matter commendably took some time to discuss the possible solutions with both the tenant and the landlord. The problem for the tenant was simple: if the matter came back to the Board, the tenant would be required to pay their late rents as well as the cost of returning to the Landlord Tenant Board, obtain sheriff services to vacate and move their belongings to the landlord’s storage unit.
Instead of having the parties return to the Board, the tenant suggested a simple solution: the landlord should send a text message the tenant had provided, and if the text cannot be delivered, then the landlord could prove that the tenant was difficult to locate. If the text message is delivered, then the tenant is required to pay their rent as agreed. While I would have personally preferred an email or some proof of delivery, the agreement was acceptable to the tenant, and I therefore did not put up too much objection.
In the second case, this was an easy one to negotiate, because there was a strong history: the tenant had always paid their rent on time, if it was a bit late, they self reported it, and there was no outstanding rent owing . This tenant had entered into an agreement to provide a dollar from each payment to go towards a tenant improvement fund, and could renegotiate the payment amount should this be a financial burden for the tenant.
In exchange, the landlord would forgive the rent increase that only takes effect the next day, leaving them without an increase. The landlord passed that bill, because it was very clear that the tenant was a good tenant, and the tankless water heater that the tenant had installed had been a good investment.
In another example, the tenant was causing a significant amount of disrest in their unit. The issue was easily solved by the landlord requiring that the tenant pay 50% of the bill for small tools that went missing. The Landlord agreed, unable to find a legal recourse for this situation.
In yet another example, the tenant had been there for several years; but had accrued a large amount of back rents that the landlord required to be paid in full as a first step to rectify the situation. The landlord further required that the tenant provide a postdated cheque for the balance of the rent that was coming due. The tenant was unhappy with this idea, as they did not have any money left in their budget to pay the bill, but ultimately agreed to the terms of the stipulation agreement because the proprietor would not give in at all.
The Tenant eventually left the property without the landlord cashing the cheque. Ultimately, the landlord lost out on the back rent it was owed, but it still profited considerably off of the tenancy, and was able to use this learning experience to prepare its lease accordingly.