We talk a lot about late rent fees and incentives at RenterUp and sometimes I forget that people live in different states with different laws pertaining to late rental payments, fees, and discounts….
In California, Equity Residential, a property owner with about 25,000 units is currently undergoing a class action lawsuit for excessive fees, which alleges the landlord generates profit from the tenants’ fees. The tenants also complain they have no way of knowing their late-fee balances and that the late-fee policies are not clearly documented. According to a Chicago Business Journal article by Lauren Hepler, the late fees in this case can “pencil out to more than 1,000 percent interest.”
This opens up a can of worms, right? Why should anyone pay rent on time if the state is going to protect them from paying any late fees? However, should property owners be able to realize 1,000 percent interest on late rent fees?
Let’s look at an alternative way to consider the problem, through discounts. Many property owners choose to offer a refund or discount for early pay or even payment on time. For example, your rent might be $1,000 when the landlord only needs $950, so they might say “pre-pay your rent before the 1st and get $50 off your rent.” This takes fees out of the discussion and certainly should look good to a judge, right? Wait! In many states, including Connecticut, “No penalty or discount of any kind can be assessed or offered as long as the landlord is paid by the 10th of the month.” Ouch.
Conclusion? I’m glad I live in Georgia and…..you might do well to look at your state’s laws before getting creative with your fees and discounts. Take a good look at your leases to make sure all fees are clearly documented and consider using a software application, like RenterUp, to help automate communication of any unpaid rent and/or fees which might be accruing.
What about your state? Any good stories of discounts or fees?
The post Assigning late rent fees? Check state laws first. appeared first on RenterUp.
