California’s Ban on Mandatory Arbitration Provisions in Rental Agreements Applies to CCRC Contracts

A California appeals court rules that the state law banning mandatory arbitration provisions in rental agreements applies to continuing care retirement community (CCRC) contracts. Harris v. University Village Thousand Oaks, CCRC, LLC (Cal. Ct. App., 2nd Dist., No. B293290, June 1, 2020).

A California CCRC had a contract that contained an arbitration provision. Five residents sued the CCRC, alleging it made false representations about security and disputing fee increases. The court ordered their disputes to arbitration. The arbitrator found for the CCRC, and the court confirmed the arbitrator’s decision.

The residents appealed, arguing that the arbitration agreement was void as contrary to public policy. California law prohibits mandatory arbitration agreements in dwelling lease or rental agreements.

The California Court of Appeals reverses, holding that the state law banning arbitration provisions in rental agreements applies to CCRC contracts. The court rules that the arbitration ban “applies to the continuing care contracts here because the fees paid by appellants include payment for the right to live in a residence.” According to the court, “to deny residents of a continuing care retirement community the protection given others who contract for lodging would be inconsistent with” express policy of protecting tenants who are in an inferior bargaining position.

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