In most cases, there are no specific rules on how late payment fees can be structured, as long as they are set and agreed in advance by both parties. But even in the case of a signed contract that accepts late fees, they may not be legal. The CARD Act is a federal law that came into effect in 2010 and establishes a wide range of credit card rights for consumers, including the fees they can charge. Here are some of the rules set out in the CARD Act: Where it becomes a grey area is the legal amount of late payment fees. While there are no federal laws limiting what most companies and entities can charge as late fees, a number of state courts have ruled that “excessive” late fees may not be enforceable. Where it gets even grayer is when you try to define what counts as “excessive” late fees. Sometimes the landlord charges a late fee on a separate piece of paper or verbally because they know it`s illegal. If you pay the correct rent, it will apply the rent FIRST to late fees, claiming you haven`t paid the full rent and trying to evict you for non-payment of rent. Your payment records should show the amounts paid in a general ledger so that his failure to credit the full amount you paid for rent stands out as a dishonest practice and he loses the case because he did not credit the full payment. The mandatory grace period of 15 days, late notification to the tenant must be made in writing and late fees are limited to 4% of the rental amount.
Resources used to compile this list of maximum late fees per state include Nolo.com, World Population Review, and Spark Rental`s interactive map. Note that some states, cities, and counties may have their own late fee regulations. A “lump sum damages” provision is a statement in a contract that sets a specific penalty for breach of a certain part of the contract in any amount of money. Liquidity refers to cash. Compensation refers to losses suffered as a result of the violation. For example, if we agree to meet every morning at the entrance of the park to go jogging, we have a contract. If we agree that whoever is more than 5 minutes late owes one beer to the other, then we have a “contractual penalty” in our agreement. Why a beer? Who knows? What is worth waiting more than 5 minutes in the cold morning air? We agree that a beer is a satisfactory punishment for being late without having a different standard. Beer is a “late fee,” but it is valid under Section 1671(b) because it is reasonable and does not involve a residential lease.
No limit on late fees in the state`s landlord-tenant laws, but Louisiana`s consumer credit laws limit the maximum late fee to 5% of the outstanding amount, or $10, whichever is greater. If you look at section 1671, you will see that paragraph (c) states that the validity of any penalty determined under paragraph (d) applies if it is included in a lease [the “lease” generally refers to all leases]. Unlike paragraph (b) where late fees are valid unless they are unreasonable, paragraph (d) invalidates late fees unless: (1) the parties agree [i.e., they are included in the lease] and (2) “by the nature of the matter, it would be practically impossible or extremely difficult to remedy the actual damage.” The Orosco case states that the landlord must both plead [in the claim] and prove [by evidence at trial] that the determination of late fees is not void. A late payment fee is a penalty imposed if you don`t pay a bill on time. Some companies and entities that frequently charge late payment fees include: No limit on late fees, although they must be reasonable. If you were looking for “late fees,” this law only recently came to light when Orozco v. Casimiro [(2004) 121 Cal.App.4th Supp. 7] was decided. There, an appellate court identified late fees for the first time as “liquidated damages” within the meaning of the Civil Code of 1671 and declared them illegal and void without extraordinary circumstances. Rivera did the math and realized that the late fee represented an annual interest rate of 642% on his rent payment. To him, it seemed excessive, so he took legal action. “The penalty is illegal and therefore void because it is excessive and unrelated to the actual damages suffered by [Invitation Homes] when rent or other fees are paid late,” the complaint reads.
“Some people have been evicted solely because of this late rent penalty and in particular this practice of multiple sentences.” That doesn`t mean the landlord can`t make you pay rent on time. He always has the 3-day notice period to pay or cancel the rent, followed by eviction if you don`t pay. If the rent is due first and there is no grace period, it can give you 3 days` notice on the second, which expires on the fifth of the month [subject to weekends, holidays, type of service, etc.]. They may not want to bother giving you a notification if you`re a few days late because it`s not worth their time.
