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  1. #1
    Gus141 is offline Junior Member
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    Late fee for commercial rent payment

    What is the name of your state? California

    I've been searching on the web for two days and also searched this forum but did not find a clear answer to my question about late fees for commercial leases. There's a lot of stuff about residential but it's not clear that this applies to commercial.

    I entered into a lease on a commercial property commencing in July of 2003. My understanding of the lease was that rent was due on the first and late payments and interest would be imposed beginning on the 7th of the month. Here is the text of the lease:

    (quote lease)

    LATE CHARGE ON DELINQUENT PAYMENTS: Tenant hereby acknowledges that late payment by Tenant to Landlord of any installment of Minimum Rent, or any other amounts or charges payable under the terms of this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such cost (sic)
    include, but are not limited to, processing, administrative and accounting costs, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if Tenant shall fail to pay, when same is due and payable, any installment of Minimum Rent, or any other amounts or charges payable hereunder, Tenant shall
    pay a late charge equal to the greater of One Hundred Dollars ($100) or ten percent (10%) of the delinquent payment, payable forthwith with the late payment. The parties hereto agree that such late charge payment represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition, any Rent Payment
    which is not made within seven (7) days after the same is due shall bear interest at the maximum rate an individual is permitted by law to charge.

    (end quote of lease)

    I paid the rent for July to October between the first and fifth of each of those months. There was no communication or other indication from the property management company (PMC) that anything was wrong with this.

    I paid the November rent on the fifth of November. The billing statement for December's rent included a late charge of 10% of the rent ($397 on a rent of $3970). I did not examine the statement carefully and did not notice this charge, and paid my December rent on 12/6. The statement for January included another late charge of the same amount.

    I called the PMC and spoke with a clerk there. She replied that any payments made after the third were subject to the late charge. I pointed out that there was no text to that effect in the lease; explained my interpretation of the lease regarding a grace period, and claimed it was an honest mistake and asked for forgiveness of the charges. She said she
    would talk to her manager about it.

    Well, this PMC is very hardnosed. They responded by sending me a demand letter by certified mail and assessed a $4.42 charge for doing so, even though there is no text in the lease which permits such a charge. When I called to ask what was going on, the clerk told me that there was no grace period, the charges would not be forgiven, and that any future rent payments would be due by the first or more late charges would apply.

    I spoke to about half of the other tenants in the complex and none of them had ever had a late charge imposed even though they regularly paid between the first and third of the month.

    After a couple more calls discussing it, the clerk told me that the charges would not be removed but that the PMC would not pursue it, either. I took this to be a face-saving move and let it go at that. Meanwhile, I have paid my rent on every month since January no later than the first of the month.

    Seven months went by without any further discussion about these charges, then without warning I received a letter from this clerk saying that if the charges were not paid by 10/4, the PMC would deduct them from the security deposit and I would then be liable under the terms of the lease to restore the security deposit to its original amount.

    Sorry if all this is too much information. Here are my questions:

    1) For a commercial lease, would this charge ($397) be considered excessive by a court for being late less than one week? No one disputes that all payments were made within seven days and no interest charges have been imposed. I realize there is no sure answer to this but would like an informed decision on my chances.

    2) If the answer to the first question is "no", is there anything else in the circumstances I described that I could argue to eliminate or reduce these charges, or does the PMC have me by the grapes?

    Yes, I know I blew it by reading this to mean there is a 7 day grace period. In over 25 years of renting commercial properties, I have never had a landlord assert a no-grace-period policy.
  2. #2
    HomeGuru is offline Senior Member
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    Quote Originally Posted by Gus141
    What is the name of your state? California

    I've been searching on the web for two days and also searched this forum but did not find a clear answer to my question about late fees for commercial leases. There's a lot of stuff about residential but it's not clear that this applies to commercial.

    I entered into a lease on a commercial property commencing in July of 2003. My understanding of the lease was that rent was due on the first and late payments and interest would be imposed beginning on the 7th of the month. Here is the text of the lease:

    (quote lease)

    LATE CHARGE ON DELINQUENT PAYMENTS: Tenant hereby acknowledges that late payment by Tenant to Landlord of any installment of Minimum Rent, or any other amounts or charges payable under the terms of this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such cost (sic)
    include, but are not limited to, processing, administrative and accounting costs, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if Tenant shall fail to pay, when same is due and payable, any installment of Minimum Rent, or any other amounts or charges payable hereunder, Tenant shall
    pay a late charge equal to the greater of One Hundred Dollars ($100) or ten percent (10%) of the delinquent payment, payable forthwith with the late payment. The parties hereto agree that such late charge payment represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition, any Rent Payment
    which is not made within seven (7) days after the same is due shall bear interest at the maximum rate an individual is permitted by law to charge.

    (end quote of lease)

    I paid the rent for July to October between the first and fifth of each of those months. There was no communication or other indication from the property management company (PMC) that anything was wrong with this.

    I paid the November rent on the fifth of November. The billing statement for December's rent included a late charge of 10% of the rent ($397 on a rent of $3970). I did not examine the statement carefully and did not notice this charge, and paid my December rent on 12/6. The statement for January included another late charge of the same amount.

    I called the PMC and spoke with a clerk there. She replied that any payments made after the third were subject to the late charge. I pointed out that there was no text to that effect in the lease; explained my interpretation of the lease regarding a grace period, and claimed it was an honest mistake and asked for forgiveness of the charges. She said she
    would talk to her manager about it.

    Well, this PMC is very hardnosed. They responded by sending me a demand letter by certified mail and assessed a $4.42 charge for doing so, even though there is no text in the lease which permits such a charge. When I called to ask what was going on, the clerk told me that there was no grace period, the charges would not be forgiven, and that any future rent payments would be due by the first or more late charges would apply.

    I spoke to about half of the other tenants in the complex and none of them had ever had a late charge imposed even though they regularly paid between the first and third of the month.

    After a couple more calls discussing it, the clerk told me that the charges would not be removed but that the PMC would not pursue it, either. I took this to be a face-saving move and let it go at that. Meanwhile, I have paid my rent on every month since January no later than the first of the month.

    Seven months went by without any further discussion about these charges, then without warning I received a letter from this clerk saying that if the charges were not paid by 10/4, the PMC would deduct them from the security deposit and I would then be liable under the terms of the lease to restore the security deposit to its original amount.

    Sorry if all this is too much information. Here are my questions:

    1) For a commercial lease, would this charge ($397) be considered excessive by a court for being late less than one week? No one disputes that all payments were made within seven days and no interest charges have been imposed. I realize there is no sure answer to this but would like an informed decision on my chances.

    **A: no because per the contract that would be 10% for late payment.
    *****

    2) If the answer to the first question is "no", is there anything else in the circumstances I described that I could argue to eliminate or reduce these charges, or does the PMC have me by the grapes?

    **A: next time read your lease AND your rent statements.
    **********

    Yes, I know I blew it by reading this to mean there is a 7 day grace period. In over 25 years of renting commercial properties, I have never had a landlord assert a no-grace-period policy.
    **A: and in your 25 year history of renting commercial property, did you ever have an attorney read your lease and explain the terms and conditions therein?
  3. #3
    Gus141 is offline Junior Member
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    Quote Originally Posted by HomeGuru
    **A: and in your 25 year history of renting commercial property, did you ever have an attorney read your lease and explain the terms and conditions therein?
    It's really disheartening to seek assistance here only to be insulted.

    Does anyone have any practical advice, or is this just a place for knowledgable people to flame the ignorant?
  4. #4
    Happy Trails is offline Senior Member
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    Quote Originally Posted by Gus141
    It's really disheartening to seek assistance here only to be insulted.

    Does anyone have any practical advice, or is this just a place for knowledgable people to flame the ignorant?
    Did you read HG's response to you inside your thread. He reviewed it for you and now you have your answer.
  5. #5
    HomeGuru is offline Senior Member
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    Quote Originally Posted by Happy Trails
    Did you read HG's response to you inside your thread. He reviewed it for you and now you have your answer.

    **A: Yeah did you READ IT?
  6. #6
    JETX is offline Senior Member
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    Lets try this again.....

    Quote Originally Posted by Gus141
    1) For a commercial lease, would this charge ($397) be considered excessive by a court for being late less than one week?
    Nope. It is called 'liquidated damages' and you agreed to it when you signed the lease. And since you agreed, no court will find it excessive. The time to have negotiated a reduction was BEFORE you signed the lease.

    If the answer to the first question is "no", is there anything else in the circumstances I described that I could argue to eliminate or reduce these charges, or does the PMC have me by the grapes?
    Nope. And he only has you by the 'grapes' because YOU agreed!!

    I have never had a landlord assert a no-grace-period policy.
    And I can't recall any commercial tenant simply 'assuming' a grace period when not specifically noted such in the lease.
  7. #7
    Gus141 is offline Junior Member
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    Quote Originally Posted by HomeGuru
    **A: Yeah did you READ IT?
    Yes, HG, I certainly did read it.

    Your first response: "**A: no because per the contract that would be 10% for late payment." is useless. I stated at the outset of my post that "I've been searching on the web for two days and also searched this forum but did not find a clear answer to my question about late fees for commercial leases. There's a lot of stuff about residential but it's not clear that this applies to commercial." There is abundent references on the web to late charges being related to actual losses as a result of the delinquency, and that a late fee that is obviously out of line with that can be considered a penalty and not enforceable. But all of this discussion is about residential. Does your response indicate that there is a different set of guidelines for residential than commercial? Who can say, because in your mania to fire off insults you don't include that information.

    Your second response: "**A: next time read your lease AND your rent statements." doesn't even address the question at all. It's just a flame, as is your last comment.

    I thought my post was long enough without trying to justify my actions, nor did I think I was going to have to defend myself. I spent many hours reading and correcting numerous instances of extraneous, conflicting, or non-applicable text in the various drafts of the lease before it was signed. The leasing agent even complimented me for my thoroughness. Last year, I had a Motion to Stay Small Claims Action and Compel Abitration brought against me on an unrelated matter. I researched how to write my own pleadings, filed In Pro Per and won the case. Your snide comments insinuating that I can't read are simply wrong.

    In the situation I described above, I made a mistake by not recognizing the aspect of the no-grace period. That doesn't make me a fool, just someone who needs some help. I've read other posts of yours, and you clearly delight in being needlessly cruel to others here. Well, you go girlfriend, but never forget that there will always be a reciprocal situation where your victim is as knowledgable about some other subject as you are ignorant. But you'll never know, because few of them will share your compulsion to demonstrate their superiority.

    Feel free to take the last word here HG. If you do a really thorough job of it, your thirst for sadism will be sated for the day, and maybe some people can get their questions answered without enduring the attempts at humiliation.
  8. #8
    Gus141 is offline Junior Member
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    Quote Originally Posted by JETX
    Lets try this again.....


    Nope. It is called 'liquidated damages' and you agreed to it when you signed the lease. And since you agreed, no court will find it excessive. The time to have negotiated a reduction was BEFORE you signed the lease.

    GUS141: Thank you. I see a lot of references to late fees being non-enforceable even if they are in the lease if they are deemed excessive. These are all talking about residential leases. Is there a different standard for commerical, or are these references wrong?


    Nope. And he only has you by the 'grapes' because YOU agreed!!

    GUS141: Yes, I understand that part. I seem to recall something in the law to the effect that (applied to this situation) if something becomes customary over time due to non-enforcement, the lessor can't suddenly invoke it at a later date. IOW, if the PMC has had a history of permitting late payments (as they did with me and other tenants), they can't enforce it for punitive reasons without due notification. So perhaps the second instance of the late fee was the only allowable one. I suppose it was a long shot but I thought I would ask anyway.

    And I can't recall any commercial tenant simply 'assuming' a grace period when not specifically noted such in the lease.
    GUS141: As I stated, I polled a number of other tenants, and all of them pay after the first, and none were aware of this aspect of the lease.

    Thanks for your response, though.
  9. #9
    JETX is offline Senior Member
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    Quote Originally Posted by Gus141
    GUS141: As I stated, I polled a number of other tenants, and all of them pay after the first, and none were aware of this aspect of the lease.

    Thanks for your response, though.
    Do NOT 'nest' your responses into someone elses post. Doing so prevents them from being 'quoted' out. I did this manually.

    Thank you. I see a lot of references to late fees being non-enforceable even if they are in the lease if they are deemed excessive. These are all talking about residential leases. Is there a different standard for commerical, or are these references wrong?
    Commercial leases do not have the same protections as residertial, since you are not dealing with persons homes.

    I seem to recall something in the law to the effect that (applied to this situation) if something becomes customary over time due to non-enforcement, the lessor can't suddenly invoke it at a later date.
    Nope. However, it is true that a court might determine some action was 'waived by acceptance', but that would not apply to your case.... would take years of a pattern.... and then only as waived by a court.
  10. #10
    Gus141 is offline Junior Member
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    Quote Originally Posted by JETX
    Do NOT 'nest' your responses into someone elses post. Doing so prevents them from being 'quoted' out. I did this manually.
    Got it. You might want to mention this to Mr. 45000 posts (see post #2 in this thread). I would do it, but he and I are not speaking right now.


    Quote Originally Posted by JETX
    Commercial leases do not have the same protections as residertial, since you are not dealing with persons homes.
    OK.

    Quote Originally Posted by JETX
    Nope. However, it is true that a court might determine some action was 'waived by acceptance', but that would not apply to your case.... would take years of a pattern.... and then only as waived by a court.
    Rats. I was afraid of that. Thanks very much for answering my questions.

    Quote Originally Posted by JETX
    "Why is it that no plastic garbage bag will open from the end you first try?"
    Because you're trying the wrong end. When they come in rolls, that's the leading end off the roll, and the one people naturally try first.
  11. #11
    HomeGuru is offline Senior Member
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    Very good JETX.

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