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Wednesday, November 25, 2009

Late Fees and Your Rent

Late Fees and your rent.

 If you looked up "late fees," this statute didn't show up, until recently, when the case of Orozco v. Casimiro [(2004) 121 Cal.App.4th Supp. 7] was decided. There, for the first time, an appellate court identified late fees as "liquidated damages" within the meaning of Civil Code 1671, and declared them to be illegal and void, absent extraordinary circumstances.

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But it's in the Lease...

People will sometimes take unfair advantage of others because they have a superior position, and the law has to intervene to protect against those abuses. Labor law arose because employers took advantage of workers' desperation to find work, and paid low wages and exposed the workers to dangerous and unhealthy conditions, all by contract -the workers agreed to whatever, in order to have some money to bring home for food, rent, utilities and clothing. The law intervened to require decent wages and safe working conditions, and made it illegal to pay less than minimum wage or have dangerous conditions. The law would not allow the workers to agree to less, and punished the employers for even trying to get away with it.

Landlord-tenant law has followed a similar path, as the housing shortage [less than 1% vacancy now] has permitted landlord to exploit their superior position. If you want a place to live, you pay whatever and put up with whatever, and they can steal whatever, and you agree in the contract to shut up and let it happen. This is bad for society, and our Legislature has passed laws to protect you, as it did with labor laws. Rent control, just cause eviction, building inspections, repair and deduct remedies, withholding rent, security deposit protections, and now late fees, have become established in the law, to state that landlords cannot hold you to certain contract provisions, even if you agreed, signed the contract, and wanted them.

The landlord can't make a security deposit nonrefundable, but many still have that in their lease form. When challenged, the landlord has to face the judge, who says that it is illegal to even try to keep that deposit, and it is "stricken" from the contract, as though it never existed. So it now is with late fees. If the landlord puts them in, your signing the agreement does not waive your rights to not pay them, get them back if you did, or sue the landlord for trying to get them.

This is not to say that the landlord can't make you pay rent on time. He still has the 3-day notice to pay rent or quit, followed by eviction if you don't pay. If rent is due on the first, and there is no grace period, then he can give you a 3-day notice on the second, which expires on the fifth of the month [subject to weekends, holidays, manner of service, etc.]. He may not want to bother giving you a notice for being a few days late, because it's not worth his time. However, once he gives you that notice, you are held to the timeline.
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Mr. Dangerfield is an I.A.P.D.A Certified Debt Specialist whom has worked in the finance industry for over a decade. He manages and is the author of "A Dangerfield Manifesto" and co-founder of SMG Holdings, the parent company of Squad Music Group, Dangerfield Artistic Entertainment SMG Publishing and Taboo Dangerfield Publishing
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