Late fees on late fees?

[Newlydivmomto4]

What is the name of your state (only U.S. law)? Kentucky

Quick question (I hope) for my neighbor. She struggled with income over the summer and had a hard time paying her rent. She was late in May, got charged a 100 dollar late fee, that's what the max the management company charges. Paid June's rent, but not the late fee as she just had enough to cover June's. The company did not put all the money to rent, they first put it towards the late fee, then the rent, leaving her short on rent and they charged her another late fee. She didn't realize this was happening until September when she got a statement saying she owed 400 dollars in past due rent.

Can they charge late fees on late fees like that?

 

[Zigner]

What is the name of your state (only U.S. law)? Kentucky

Quick question (I hope) for my neighbor. She struggled with income over the summer and had a hard time paying her rent. She was late in May, got charged a 100 dollar late fee, that's what the max the management company charges. Paid June's rent, but not the late fee as she just had enough to cover June's. The company did not put all the money to rent, they first put it towards the late fee, then the rent, leaving her short on rent and they charged her another late fee. She didn't realize this was happening until September when she got a statement saying she owed 400 dollars in past due rent.

Can they charge late fees on late fees like that?

They're not charging late fees on top of late fees. The late fee is being paid first, which makes her short on the rent.

 

[Gail in Georgia]

When late fees are owed (and not paid), it is very common for a portion of the rent to go toward the owed late fees. It appears your neighbor was aware of the late fee and did not include this in her next rent payment. Over time, this can build up quite a bit.

Gail

 

[LdiJ]

They're not charging late fees on top of late fees. The late fee is being paid first, which makes her short on the rent.

Still though, it's a pretty preditory way to handle it. Not everyone would handle it the same. Its still perfectly legal though.

 

[Newlydivmomto4]

Thanks, I feel bad for her because she has brain cancer and two small boys, not to mention struggling financially. It just doesn't seem fair, though what doesn't seem fair doesn't nessecarily mean its illegal.

Thanks for your help.

 

[You Are Guilty]

A $100 late fee may very well be unenforceable though. How much is the rent overall? ($100 on say, $500/mo is much different than on $3000/mo.)

 

[Newlydivmomto4]

The late fee is 5 dollars a day til day 7, then it goes to 100 dollars. Rent is 800.

 

[You Are Guilty]

So after Day 7 there is a $65 jump? I doubt that will hold water. Late fees are not supposed to be punitive. "Late payment fees should remain reasonable and related to the landlord's actual expenses incurred."

I do not think Kentucky has a statute limiting late fees, so a review of the case law will be needed to know where courts are setting the limit.