Maximum late fee charge on a promissory note with a commercial property mortgage?

[Jpony]

Florida

I was able to find that, according to Florida statute, there is a maximum late fee of 5% of the payment due that a lender can charge on a "high-cost home loan". I can not find if there is a maximum for a mortgage on a commercial property. The lender is charging $150 on a $750 payment. That same statute also requires a minimum grace period of 10 days.

The loan is in default and the borrower is trying to catch up, they are 7 months behind, they are now being told there are 27 late charges. They had not been informed at anytime that there were late fees owing, although it is clearly states in the note that there is no grace period and the amount of the late fee. The loan was taken out about 3 years ago, at 18%.


Asking for a friend, is this legal, the high late fees and no grace period on a commercial loan?

 

[adjusterjack]

I was able to find that, according to Florida statute, there is a maximum late fee of 5% of the payment due that a lender can charge on a "high-cost home loan"

What statute number? The statute that I found is not limited to "high-cost home loan."

See 687.03(2)(c):

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0687/0687.html

Unfortunately, if I'm reading it correctly, the 5% limit applies only to loans involving the "selling or leasing merchandise, goods, or services which are for other than personal, family, or household purposes," Neither the 10 day grace period minimum nor the 5% late charge limit would apply to a mortgage for the purchase of commercial property.

they are 7 months behind, they are now being told there are 27 late charges.

That doesn't make any sense.

They had not been informed at anytime that there were late fees owing, although it is clearly states in the note that there is no grace period and the amount of the late fee.

The borrower WAS informed. The late fees are in the contract. Is the borrower one of those dodos that signs things without reading and understanding them?

Asking for a friend, is this legal, the high late fees and no grace period on a commercial loan?

As far as I can tell, it could very well be.

I suggest that your friend have a lawyer review his contract.

 

[Jpony]

Thanks for the reply, yeah, unfortunately he is one of those dodos. The late fees are very clearly spelled out. He said he was late on many of the payments that he did make but I have not seen the break down of the late fees. If they are charging a late fee for every month each payment was missed, ie Jan would now have 5 late payments or if he was late on 27. I was referring to the fact that as he was going they didn't send him a statement saying X payment was late and you now owe an additional $150. So if there was no attempt to collect a late payment from 27 months ago, is there a statute of limitations on that? Although it looks like most debts are 3-5 years anyway.

This is the statute that I found
http://www.leg.state.fl.us/statutes/index.cfm?mode=View Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=494.00791&URL=0400-0499/0494/Sections/0494.00791.html

I don't know why it was limited to "high-cost loans" in this section because from what you found it's the same thing.

So I am going to advise him to pay the $ to have a lawyer take a look.

Thanks again

 

[adjusterjack]

I was referring to the fact that as he was going they didn't send him a statement saying X payment was late and you now owe an additional $150.

There is no obligation for the lender to do that unless it's required by the contract. I imagine it's not.

So if there was no attempt to collect a late payment from 27 months ago, is there a statute of limitations on that?

The same SOL for breach of contract applies.

This is the statute that I found
http://www.leg.state.fl.us/statutes/index.cfm?mode=View Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=494.00791&URL=0400-0499/0494/Sections/0494.00791.html

There is no .00791. It ends with .0077:

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0400-0499/0494/0494PARTIIIContentsIndex.html

So I am going to advise him to pay the $ to have a lawyer take a look.

Good idea.

 

[Zigner]

If you go here: https://www.flsenate.gov/Laws/Statutes/2011/Chapter494/All, and scroll down, you can see section 00791.

EDIT: To be clear - my link is to the 2011 statutes. They are NOT current and only explain where the OP got the information from.

 

[adjusterjack]

My link was to 2019 statutes.

Thanks for explaining where the OP got his.