HAZELWOOD STATION APARTMENTS v. SIGLER (2025)

In this residential forcible entry and detainer (FED) case, tenant appeals a general judgment evicting him from the apartment in which he had resided for nearly 20 years. The trial court entered judgment in favor of landlord based on its determination that tenant had knowingly and intelligently entered a settlement agreement with landlord under which tenant agreed to move out of his apartment. Because that settlement agreement, on its face, contains indicia of unconscionability, in accordance with ORS 90.135, we vacate and remand for the trial court to determine whether the settlement agreement is unconscionable under that provision.

Oregon's Residential Landlord Tenant Act protects both tenants and landlords from unconscionable agreements. The unconscionability provision is drawn from section 1.303 of the Uniform Residential Landlord and Tenant Act. See Zemp v. Rowland, 31 Or App 1105, 1109, 572 P2d 637 (1977), rev den, 282 Or 537 (1978). Currently enumerated ORS 90.135, it provides that if the court determines that

“[a] settlement in which a party waives or agrees to forgo a claim or right under this chapter * * * was unconscionable when made, the court may refuse to enforce the settlement, enforce the remainder of the settlement without the unconscionable provision, or limit the application of any unconscionable provision to avoid an unconscionable result.”

ORS 90.135(1)(b). When the issue of unconscionability is raised either by a party or by the court on its own initiative, the statute sets forth a process for addressing the issue: “If unconscionability is put into issue by a party or by the court on its own motion the parties shall be the afforded a reasonable opportunity to present evidence as to the setting, purpose and effect of the * * * settlement to aid the court in making the determination.” ORS 90.135(2). As the comment to section 1.03 of the Uniform Residential Landlord and Tenant Act explains, the purpose of the provision is to ensure that courts are policing explicitly whether rental agreements, related settlement agreements, and similar agreements are unconscionable:

“This Section, adapted from the Uniform Commercial Code and the Consumer Credit Code, is intended to make it possible for the courts to police explicitly against rental agreements, clauses, settlements, or waivers of claim or right which they find unconscionable. This section is intended to allow the courts to pass directly on the issue of unconscionability and to make a conclusion of law as to unconscionability. The basic test is whether, in light of the background and setting of the market, the conditions of the particular parties to the rental agreement, settlement or waiver of right or claim are so one-sided as to be unconscionable under the circumstances existing at the time of making the agreement or settlement. Thus, the particular facts involved in each case are of utmost importance since unconscionability may exist in some situations but not in others. Either landlords or tenants may, in appropriate circumstances, avail themselves of this section.”

Uniform Residential Landlord and Tenant Act § 1.303 comment, 7A ULA 499, 517 (1978).

In this case, the parties’ settlement agreement, which we have reproduced as an appendix to this opinion, has sufficient indicia of unconscionability to require further exploration of that question in the trial court under ORS 90.135. Although tenant has not explicitly raised that issue, the text of ORS 90.135(2), along with the comment to the provision in the uniform act from which it is drawn, expressly provide that unconscionability is an issue courts can raise on their own motion, and it would be contrary to that statutory directive to disregard questions of unconscionability that appear on the face of an agreement. And this agreement raises several concerns of unconscionability, especially as applied to a long-term tenant.

Specifically, Oregon law restricts the circumstances under which a landlord can terminate a tenancy that lasts more than a year, generally requiring demonstration of cause and compliance with applicable processes. ORS 90.427(3)(c). The settlement agreement, as structured, would appear to allow a landlord to avoid demonstrating cause and to circumvent applicable processes, effectively depriving a tenant of the tenant's rights. First, the agreement does not specify what dispute the parties settled, creating the risk that the agreement may have resulted from coercive conduct by landlord. Second, while the agreement purports to settle all of tenant's claims, it does not reciprocally settle any of landlord's claims; rather, it simply releases tenant from any future rent obligations. Most concerningly, the settlement contains a one-sided confidentiality clause that prohibits tenant from discussing the settlement or the events that led to it: “Tenant agrees that the terms of this settlement are confidential and agree [sic] that this agreement and its terms will not be disclosed to any third party for any reason, nor shall Tenant communicate in any form matters relating to its tenancy or any events that lead to this agreement.” That provision, if accepted on its terms, would prohibit tenant from seeking legal advice in connection with the agreement (once signed) or from disclosing facts about a landlord or building's habitability even when there is a public interest in disclosure. Not only would the agreement prohibit tenant from talking about his circumstances, it also subjects tenant to a minimum amount of liquidated damages of $2,000, while affording no comparable protection to tenant for disclosures made by landlord. Those concerns are heightened on the facts of this case, where the record indicates that tenant is unable to read and write on his own and signed the agreement without legal advice.

Accordingly, having raised the issue of unconscionability on the court's own motion, we vacate and remand to the trial court to conduct further proceedings in compliance with ORS 90.135.

Vacated and remanded.

APPENDIX

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LAGESEN, C. J.