Change on late rent penalties

[Stephen1]

WA - state law changed (effective 6/11/20) so that we have to allow a 5 day grace period but if they exceed that the penalties can go back to the first day they were late. Example from a LL association: "if rent is due on the 1st then the tenant has through the 6th of each month to pay before the late fees are legal. However, if the rent is not paid until the 7th or the later than the landlord may be able to charge late fees all the way back from the 2nd, assuming the rental agreement allows for that."

My leases all say rent due on the 1st and penalties start after the 5th. As I see it, if they pay on the 7th then I can charge a penalty for the 6th & 7th. That would be the same as I would do today (before the effective day of the law change.)

My questions:

- Do I need to notify my tenants of this change that there will be no penalty if paid on the 6th?
- Would the idea that I would assess the penalty from the 6th change what I need to tell them?

 

[LdiJ]

WA - state law changed (effective 6/11/20) so that we have to allow a 5 day grace period but if they exceed that the penalties can go back to the first day they were late. Example from a LL association: "if rent is due on the 1st then the tenant has through the 6th of each month to pay before the late fees are legal. However, if the rent is not paid until the 7th or the later than the landlord may be able to charge late fees all the way back from the 2nd, assuming the rental agreement allows for that."

My leases all say rent due on the 1st and penalties start after the 5th. As I see it, if they pay on the 7th then I can charge a penalty for the 6th & 7th. That would be the same as I would do today (before the effective day of the law change.)

My questions:

- Do I need to notify my tenants of this change that there will be no penalty if paid on the 6th?
- Would the idea that I would assess the penalty from the 6th change what I need to tell them?

As long as you follow the law I don't see why you would need to notify them of anything. After all, its not going to change what you are doing due to the way that the lease is written.

 

[zddoodah]

WA - state law changed (effective 6/11/20) so that we have to allow a 5 day grace period but if they exceed that the penalties can go back to the first day they were late.

Who are "we" and "they," and what is the specific statute that you're talking about?

My leases all say. . . .

Please quote the exact language.

Do I need to notify my tenants of this change that there will be no penalty if paid on the 6th?

No, and why would you want to do that?

Would the idea that I would assess the penalty from the 6th change what I need to tell them?

I don't really understand what this question means.

 

[Stephen1]

Please quote the exact language.

The exact language may have been revised over the years (some tenants go back multiple years) but the latest version is: "If rent is not paid on or before the _5th day of the month, a late fee of $______ will be assessed, all of which shall be considered to be additional rent and must be paid at the time the delinquent rent is paid. Additional daily late fees of $____ per day will be incurred beginning the day after the first late fee is incurred until the end of that month or until the rent is paid current, all of which shall be considered to be additional rent and must be paid at the time the delinquent rent is paid regardless of any partial payments being tendered and accepted."

 

[Stephen1]

No, and why would you want to do that?

No? OK. I'm not saying I WANT to do that. I was asking whether I needed to do that as it is a change from what the lease currently says.

 

[zddoodah]

Again, what's the specific statute that is changing/becoming effective in June?

 

[Stephen1]

Who are "we" and "they," and what is the specific statute that you're talking about?

Specific statute: RCW 59.18.170 as amended by HB 2535, effective 6/11/2020.
We = landlords;
They = tenants

 

[Zigner]

My leases all say rent due on the 1st and penalties start after the 5th.

If that is the actual wording of your clause, then it would (could) be struck as invalid. In my opinion, it would be wise to modify your policy and notify every tenant of such modification. I would also point out that you need to run this by your attorney before doing anything.

 

[LdiJ]

If that is the actual wording of your clause, then it would (could) be struck as invalid. In my opinion, it would be wise to modify your policy and notify every tenant of such modification. I would also point out that you need to run this by your attorney before doing anything.

Why do you think it could be invalid? The law says that late fees cannot be assessed until 5 days after the rent is due, but once the 5 days have passed they can go back to the first day late and charge fees, assuming the rental agreement allows for that.

Stephen's leases do not allow for that (going back to day one to charge late fees). Stephen's 5 day grace period is a true 5 day grace period. He intends to follow the law. What reason do you believe causes him to have to notify the tenants that he is going to follow the law, which is consistent with their lease?

 

[zddoodah]

Specific statute: RCW 59.18.170 as amended by HB 2535, effective 6/11/2020.

Ok. The current version says the following: "If at any time during the tenancy the tenant fails to carry out the duties required by RCW 59.18.130 or 59.18.140, the landlord may, in addition to pursuit of remedies otherwise provided by law, give written notice to the tenant of said failure, which notice shall specify the nature of the failure."

This doesn't have anything to do with late fees.

The new version makes the existing language subsection (1) and adds two new subsections. New subsection (2) starts by saying that "[t]he landlord may not charge a late fee for rent that is paid within five days following its due date." So far, this is almost consistent with what your lease language says. However, if the rent is due on the 1st, then you may not charge a late fee if the rent is paid on or before the 6th (so, you'll have to wait one more day than your lease specifies, and there's certainly no need to notify your tenants about that.

New subsection (2) continues by saying that, "If rent is more than five days past due, the landlord may charge late fees commencing from the first day after the due date until paid." This isn't relevant to you given the language you quoted.

New subsection (2) concludes with some additional language not relevant to this discussion. New subsection (3) is something you should familiarize yourself with, but it's also not relevant to this discussion.

There might be an argument that this new law cannot be applied to leases entered into prior to its effective date, but that's probably not something that would be worth your while to fuss over given that this change seems to have minimal impact on your leases.

Please let me know if this hasn't answered all of your questions.

If that is the actual wording of your clause

An example of the actual wording is quoted in post #4 in the thread.

then it would (could) be struck as invalid. In my opinion, it would be wise to modify your policy and notify every tenant of such modification. I would also point out that you need to run this by your attorney before doing anything.

I also don't understand what you're getting at. At worst, the revised law would mean the OP can't start assessing late fees until one day later than the lease currently provides.

 

[Zigner]

I also don't understand what you're getting at. At worst, the revised law would mean the OP can't start assessing late fees until one day later than the lease currently provides.

At worse, the entire clause can be stricken from the agreement. Without the clause, there is no guarantee that a court would uphold late fees since they are not included in the lease.

 

[Stephen1]

Thanks for your thoughts. I think we will do nothing at this time. If/when an existing tenant is late with the rent (7th of the month or later) we probably will assess late fees starting on the 6th. Next new tenant gets whatever new verbiage the LL Assn comes up with. As long as our 7 units keep paying and/or talking w/us about financial issues before the rent is due this will be moot until some time after the pandemic is under control.

 

[zddoodah]

At worse, the entire clause can be stricken from the agreement.

On what basis?

Without the clause, there is no guarantee that a court would uphold late fees since they are not included in the lease.

Obviously, but without any legal basis for striking the entire clause, this is pretty much a moot point.

 

[Zigner]

On what basis?




Obviously, but without any legal basis for striking the entire clause, this is pretty much a moot point.

It's stated in the revised code. If a section of the lease is contrary to the code, then that section is unenforceable (i.e. stricken).




Sec. 2. RCW 59.18.230 and 2011 c 132 s 11 are each amended to read as follows:

(1) Any provision of a lease or other agreement, whether oral or written, whereby any section or subsection of this chapter is waived except as provided in RCW 59.18.360 and shall be deemed against public policy and shall be unenforceable. Such unenforceability shall not affect other provisions of the agreement which can be given effect without them.
(2) No rental agreement may provide that the tenant:

(a) Agrees to waive or to forgo rights or remedies under this chapter; or

(b) Authorizes any person to confess judgment on a claim arising out of the rental agreement; or

(c) Agrees to pay the landlord's attorneys' fees, except as authorized in this chapter; or

(d) Agrees to the exculpation or limitation of any liability of the landlord arising under law or to indemnify the landlord for that liability or the costs connected therewith; or

(e) And landlord have agreed to a particular arbitrator at the time the rental agreement is entered into; or

(f) Agrees to pay late fees for rent that is paid within five days following its due date. If rent is more than five days past due, the landlord may charge late fees commencing from the first day after the due date until paid. Nothing in this subsection prohibits a landlord from serving a notice to pay or vacate at any time after the rent becomes due.

(3) A provision prohibited by subsection (2) of this section included in a rental agreement is unenforceable.


( http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session Laws/House/2535-S.SL.pdf )