Poll: Is this late fee reasonable?

In My Humble Opinion
1

Ok. I’m involved in a case involving an apartment lease. The rent is $661 per month for a one bedroom apartment in Farmington, Michigan. In the apartment complex’s lease they have a late provision. The lease offers no grace period. If the rent is one day late, the late fee is $75; each additional day is $10. Here is my poll:

  1. Do you find the late fee to be reasonable?

  2. Where do you live?

  3. Do you rent or own?

  4. What is your occupation?

  5. What is your age?

  6. What is your gender?
    Thanks to all for help with this survey. Feel free to answer or not answer any of the questions, or provide additional information.

I am neither looking for legal advice nor looking to debate freedom of contract issues. I have those items under control. I am merely curious about people’s reaction to the late fee, and how those reactions spread across demographic categories.

2
  1. Yes
  2. Middle of Nowhere
  3. Own
  4. Landlord
  5. Old Fart, Young at Heart
  6. What’s that gotta do with it?

The answer to #4 pretty much gives it away how I feel about this issue. You wanna pay your bills late, get your own mortgage.

3

Thanks for your candor gato, while we are on the subject, I have a question for that you are uniquely qualified to answer, if you are willing.

How much does it cost you if a tenant pays the rent late? I realize that a number of factors may be involved (for example, how late the payment is and how many other tenants are late) and I’m not trying to argue with you. I’m just curious if you can quantify the cost. I understand if you don’t want to. Thanks in advance.

4
  1. no, it is excessive
  2. Westchester cty, NY
  3. own
  4. financial analyst
  5. 32
  6. male

Generally, when I’ve rented, the places have been more forgiving of an occasional late check. If the landlord has had constant trouble with deadbeats, I can understand being tough on late payers, but $75 for a single day is an awful lot.

gato, if you don’t mind, as a landlord, what kind of fee would you deem excessive for being one day late with your rent?

5

I’m interested in hearing this info too. And on the other side of the coin, how much are your late fees, renters?

6

  1. Unreasonable? No.

  2. Knoxville, TN

  3. Rent - and I’ve rented in Atlanta (GA), Jackson (MS), Nashville & Murfreesboro ( both TN)

  4. Student

  5. 30

  6. female.

7

From the City of Chicago Residential Landlord and Tenant Ordinance
Municipal Code Title 5, Chapter 12, no more than:

“…$10.00 per month for the first $500.00 in monthly rent plus 5% per month for any amount in excess of $500.00 in monthly rent for the late payment of rent;”

No grace period is needed.

8
  1. $50 if 3 days late
  2. San Francisco
  3. Rent
  4. ID Management

As long as $75 with no grace period is not violating a state or local law regarding payment of rent, it’s not excessive. Instead, it’s a condition of tenancy that the tenant willingly agreed to. $75 is a lot, but as long as it’s not illegal, it’s not excessive.

With regard to the harm done to a landlord if they’re paid late, it can be very harmful, especially to the small ones that need the rent paid on time so they can pay the mortgage on time.

9

Actually, no. In many states, including this one, a penalty clause is unenforceable. A penalty is an arbitrary amount that is agreed to be paid on the occurence of some condition. A late fee that is found to be a penalty clause is not enforceable under the rule just mentioned. OTOH, a liquidated damages clause is enforceable. In order for a late fee to be determined to be liquidated damages the landlord must show:

  1. That the amount of anticipated actual damages is uncertain in advance of the non-payment; and
  2. That the late fee is reasonably related to the landlord’s actual damages.

See, e.g.,

http://courts.co.calhoun.mi.us/quest461.htm

http://rhol.org/rental/miguide2.htm

http://law.freeadvice.com/general_practice/legal_remedies/liquidated_damaged.htm

I know that in Ohio, for instance, the Courts have held that damages for late payment are easy to ascertain because the damages for non-payment of money are the statutory interest rate.

Some states also apply the usury statute to late fees that amount to interest above the usury rate.

10

Actually, for the reasons you brought up, it is very difficult to put an actual “cost” or “dollar amount” on any given late payment. A late payment sets into motion a process that could ultimatly result in eviction. No fun for anyone. So, the short answer is “I don’t know”. If the payment comes in one, two or ten days late, you would have a different answer.

11

  1. No. And no grace period on top of that is outrageous.

  2. Lawrence, Kansas

  3. Rent

  4. Retail.

  5. 25

  6. I’m a little Miss.

If you’re going to have a grace period, you can have as high a late fee as you want, in my opinion. I’m not a landlord nor am I a lawyer. I don’t know the late fees anywhere as I always get the rent in by the due date (three day grace period).

12

Thanks again. I have represented both landlords and tenants, and neither has a very happy perspective in an eviction case. Everyone loses.

13

  1. No

  2. Glens Falls, NY (halfway between NYC and Montreal)

  3. Rent

  4. Insurance Agent

  5. 40

  6. Girly

$75 seems unusually high. It could be that the landlord has burned so many times that’s the only way to ensure getting the rent on time. $10 or $20 seems more reasonable.

In my own situation the rent is due anytime between the 1st and the 5th. There’s no mention of a late fee in my lease and my payment has never been made after the 5th, so I don’t know what would happen in that case.

14

  1. Do you find the late fee to be reasonable? No.

  2. Where do you live? Madison WI, where late fees are illegal (so landlords “discount” the rent if paid on time)

  3. Do you rent or own? Rent

  4. What is your occupation? Financial Services Advisor

  5. What is your age? Saw me in half and count the rings

  6. What is your gender? Male

15

Thanks, Filmgeek, Honey, and Otto.

16

  1. Do you find the late fee to be reasonable? I find it excessive, but not un-reasonable.

  2. Where do you live? Chicago

  3. Do you rent or own? Own - and we rent out the top floor of our 2-flat (we charge a $25 late fee after 5 day grace period)

  4. What is your occupation? IT consultant

  5. What is your age? n/a

  6. What is your gender? n/a

17

UK perspective here…

I’ve never had a tenancy contract specify a penalty. However, I’ve always paid monthly by standing order, so the landlord/lady knew I already had the incentive of the bank’s hefty penalty charge if there wasn’t funds for the payment. (For the survey, that was always while I was a student, in Manchester, aged 18-22)

$75 sounds hefty to me, but not outrageous.

18

Thanks Pipper, Gorillaman, gotpasswords, Cheesesteak, Lsura, and Peri.

19

I just want to add the Chicago ordinance applies to buildings with 6 units or more and to smaller properties that are not owner-occupied. If you live in a landlord occupied 2-flat, they can charge anything they want.

20

Sorry for cutting this post short! The wife showed up and I had to run to lunch!

Anyway, I wanted to add that there are always exceptions. If a tenant comes to you before the rent is due and asks for a break for a good reason, they will probably get a grace period and no late charge. If a tenant comes to you the day rent is due with a * partial* payment, the fee may very well be waived. If you get a “no pay, no show” on the due date, the fee will almost always be enforced. “I was in an accident and in the hospital” might be acceptable, but “I was in jail for a DUI” probably won’t get you off the hook. You should always be willing to work with people who are willing to work with you.

I actually have almost no daily involvement with any of this stuff anymore. When you find good, on-site managers, you treat them well and keep them as long as you can. As a kid growing up, I would be at any number of propertys painting, fixing the ever-broken swiming pool pump, repairing plumbing and electrical problems, shoveling snow and even evicting people. (I got real good at changing locks!) My old man had the smarts and foresight to shitcan the trouble property (RE: anything in the state of California, where a scum-bag tenant can destroy your property, not pay rent and live for free virtually forever) and set up a good management team/system. My older brothers and I might stop in once in a while to take care of something and one of the brothers does some bookkeeping, but other than that, our involvement is pretty much limited to cashing the check.

We have an extremely low turn over rate in our rentals, with most new tenents being referred by existing renters. Our rents are on the low side for the area and we tend to keep people for years and years.