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Saturday
Sep162017

The New Late Fee Law in DC: What Landlords Need to Know 

On December 8, 2016 the "Rental Housing Late Fee Fairness Amendment Act of 2016" (D.C. Law 21-172) took effect. It's taken some time to figure out what the new law means for landlords in practice. But it added a number of rules for DC landlords about how, when, and how much in late fees you can charge your tenants. Here’s are the five things you need to know to avoid getting into trouble and to take advantage of any remaining rights you have to charge late fees. 

1) Late fees are limited to 5% of the rent. You therefore want to amend future leases to charge 5%. Not a fixed amount. You might think but if I just figure out what 5% is, isn't that just as good? No! When you later increase the rent and your tenant doesn't sign a new lease, which they aren't required to do in DC, you will be charging less than 5%. If your lease doesn't specific a late fee you can't charge it at all. The 5% law brings DC into line with Maryland law, which also caps late fees at 5%. 

2) Late fees can't be charged until after the 5th of the month. 

3) If the tenant has a subsidy or voucher you can only charge the late fee on their portion. So if they pay only $50 per month, you can only charge 5% of $50. However, the lease may specify they pay 5% of the rent, because their potion can change at any time. 

4) If your tenant fails to pay rent, they don't have to pay late fees to avoid eviction. Only rent anod court costs are part of the amount required to be paid to avoid eviction. This rule essentially means you either need to get a money judgment or go to small claims to collect late fees. This has also changed the way some court forms must be filled out and they will be rejected if not properly filled out, so be careful if you aren't sure what to do. It can cost you extra weeks in court and therefore extra months of lost rent if your forms are rejected. 

5) It is still worth charging late fees. Some landlords become so disgusted with the rules they give up even charging late fees. But having an incentive to pay on time in the lease is still important and the law could always change again. Having a 5% cap also stops judges who weren't allowing any late fees on money judgments and may make it worthwhile to get personal service when possible. 

If you have questions or need assistance with a DC landlord tenant matter please contact us to set up a consultation.  

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