Rental Late Fees???
I have a unique situation that my younger brother has come across. He was two months late with his rent payment and he was charged a very steep fees that he does not feel is right. The lease says that delinquent rent bears interest at 9% per annum or $18. Rent is $800/mo (800 X .09 / 12 = $6 per month----month 1 was two months late or $12, month 2 was 1 month late or $6----$12+$6=$18)
The landlord however has the following fee schedule (rent is due on the 1st):
3 day late penalty (received on the 2nd, 3rd, or 4th): $25
Rate per day after: $5
Month #1: 59 days late---so $25 + $280 (56 days X $5) = $305
Month #2: 29 days late---so $25 + $130 (26 days X $5) = $155
Total of $460 in late fees
If you were the tenant…how would you handle this? I’m partial to the side of the landlord but the landlord failed to put this in his lease or even give him notice until afterwards what the late penalties would be. My brother just got a letter one day saying that he owed $460. Thoughts??
Thanks
If late fees and penalties were not spelled out clearly within the lease agreement, and the landlord didn't give notice at any other time of the late payment penalties, it probably would not hold up in court.
It's doubtful if it would anyway as that sounds excessive. Most judges would throw it out, in my opinion. The sad part is that your brother will likely have to go to court to fight it, unless the landlord is more levelheaded than it sounds.
I've seen this late payment trick before. Landlords tired of receiving late payments try this in hopes of getting them on time for once. What it usually does is make an angry tenant. Angry tenants are hard to work with and cause damages.
Roger
I wonder if the landlord-tenant laws limit the amount that may be charged as a late fee. In one area where I have rental property, the late fee is limited to a maximum 5% of the outstanding rent for each occurrence.
I have a similar late payment schedule on some of my units. It's amazing how effective it is for motivating the tenants to pay on time. But clearly what the landlord failed to do was include schedule this in the lease. You can't implement changes of this nature without getting the tenants agreement. So if the landlord didn't agree this with your brother, he can't honestly expect to receive it. Your brother should offer to discuss this and find a mutually agreeable solution. If the landlord refuses, your brother should just pay late fees as per the lease. If the landlord doesn't like it, he can go to court.
As to whether this sort of fee schedule is excessive, I would probably have to agree that it is. But I'm not a bank. And my goal is not to punish the tenant for getting the rent in late, but rather to motivate them to pay it on time. So if an excessive late charge has this effect, then I see nothing wrong with it.
[addsig]
In my state (Unless something has changed recently), late fees on a residential rental are not legal. Nevertheless, some landlords put them into their leases and some tenants pay them having no idea that the fees are unenforceable.
In an effort to circumvent this law, we started writing leases that offerred a "discount" for timely rental payments. If push came to shove........ we (the landlord/manager) would lose on this in court. However, it should be noted that our laws (MA) are famous for favoring the tenant.
Seems like a lot of states have 5% rules, its what I use in my leases. Anyways if its not the lease, he doesn't have to pay it. But your brother is still lucky, he would have been on the street by now if he was in one of my properties, Due on 1st, late on 5th, eviction started on 12th.