Survey of State Laws Governing Fees Associated With Late Payment of Rent

ABSTRACT

The information used in developing this survey was obtained through an exhaustive review of each state's relevant statute and court rules, as well as a thorough review of appellate court opinions interpreting a relevant statute or providing guidance in the absence of statutory directive. In most instances, tenants are provided the lease on a take-it-or-leave-it basis with no opportunity to negotiate any of its terms, including provisions related to late fees.1 States that impose late fee maximums vary greatly on the amount and form of the limitation. In most of these states, the reasonableness requirement is established by courts rather than through legislation. * Arizona For residential tenancies, it is implied within its eviction statutes that late fees must be reasonable. * California Must be reasonably related to costs the landlord faces as a result of rent being late. * Connecticut Fees must bear a reasonable relationship to the actual damage that the landlord sustains, and the court may void if excessive. * Illinois Must be a reasonable forecast of damage caused by the breach. * Kentucky Must be reasonable;$20 or 20 percent of the rental fee for each month is deemed reasonable. * Ohio Must be reasonable in proportion to the rental rate and have a rational basis supporting the imposition of the charge. * Oklahoma Must be reasonably related to actual costs incurred. * Pennsylvania Late fees must be reasonable. * Texas Must be reasonable;presumed reasonable if not more than 12 percent of the amount of rent for a dwelling located in a structure that contains no more than four units or 10 percent for a structure that contains more than four units. * Vermont Late fee allowed if reasonably related to costs incurred. * Washington Presumably must be reasonable. * West Virginia Presumably must be reasonable. Most of these moratoriums were expired as of the date of the initial publication of this survey. * California Renters who have submitted a declaration of COVID-19-related financial distress cannot be charged a late fee for the late payment of rental payments (no expiration date). * Colorado Executive order prohibited landlords and lenders from charging late fees for any rent incurred between May 1, 2020, and April 27, 2021, due to the pandemic (expired). * Connecticut Executive order 7X granted tenants an automatic 60-day grace period for April 2020 rent and made a 60-day grace period for May 2020 rent available upon request.