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LegalGems
LegalGems, Lawyer
Category: Consumer Protection Law
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I have a storage unit in the state of Indiana. Monthly rent

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I have a storage unit in the state of Indiana. Monthly rent on it is $30. Unfortunately the rent hasn't been paid since December 2012. Now the storage company has padlocked the unit and wants to charge me a $2 a day late fee adding up to nearly $900 on what should be a $240 bill. They claim I agreed to these terms when I signed a contract several years ago but I don't remember it. Past practice was that when I was late on the payment they would send me an invoice and charge me a $10 late fee. While 33% late fee could be seen as unreasonable it is no where near the over 200% they want to charge me. They have made no verifiable attempt to contact me in the 8 months that the late fees have been incurring. Are there laws to protect the consumer in Indiana against exorbitant late fees. I offered to pay the landlord the past rent plus a 33% late fee and pay for one year in advance but he had no interest in this. Seems more interested in punishing me then making things fair.
Submitted: 11 months ago.
Category: Consumer Protection Law
Expert:  LegalGems replied 11 months ago.

LegalGems :

Hi! LegalGems here. I have extensive consumer law experience and will use this to assist you with your issue today. While Indiana does not have a statute that specifically regulates this (a few states have been proactive and have enacted legislation that caps the late fees), any unconscionable late fee can be contested. Unfortunately, in order to determine this, you would need to file an action in court and get a declaratory ruling as to whether this is excessive. Such an action cannot be done in small claims as that court is limited to dealing only with monetary awards, versus specific performance/declaratory judgments. In such a situation, a letter from an attorney explaining that exorbitant fees are generally found unconscionable and therefore not enforceable may help resolve this problem without court intervention.

LegalGems :

I did further research and was able to find a statute somewhat related. While there is not a statute that expressly addresses Storage units, there is one that addresses rental purchase agreements- if you write a demand letter you can analogize the situation to that, to give your argument more weight. (Lawyers do that all the time- for example, stating while there is no law directly on point, an excessive fee in rental purchase agreements is considered $X and the court is likely to come to a similar finding in a storage unit case). IC 24-7-5-5
Late charges or delinquency fees
Sec. 5. (a) The parties may contract for late charges or delinquency fees as follows:
(1) For rental purchase agreements with monthly renewal dates, a late charge not exceeding eight dollars ($8) may be assessed on any rental payment not made within five (5) days after:
(A) the renewal date for the agreement; or
(B) the return of the property is required under the rental purchase agreement.
(2) For rental purchase agreements with weekly or biweekly renewal dates, a late charge not exceeding the amount specified in subsection (e) may be assessed on any rental payments not made within two (2) days after:
(A) the renewal date for the agreement; or
(B) the return of the property is required under the rental purchase agreement.
(b) A late charge on a rental purchase agreement may be collected only once on any accrued rental payment, no matter how long it remains unpaid.
(c) A late charge may be collected at any time after it accrues.
(d) A late charge may not be assessed against a rental payment that is timely made, even though an earlier late charge has not been paid in full.
(e) The amount that may be assessed under subsection (a)(2) is as follows:
(1) Three dollars ($3) for any payment not greater than twenty dollars ($20).
(2) Five dollars ($5) for any payment greater than twenty dollars ($20).
As added by P.L.254-1987, SEC.1. Amended by P.L.138-1990, SEC.8; P.L.14-1992, SEC.63; P.L.213-2007, SEC.30; P.L.217-2007, SEC.29.

Customer:

The way that I am understanding this as a layman is that the max he can charge me on a monthly rental of $30 is $5. Is this correct? Also it would seem that he can't just keep letting these fees pile up without contacting me when basically the lease is being renewed automatically each month. If I din't make a payment I should have been notified and the lease cancelled. Is that a correct interpretation?

LegalGems :

The statute is regarding rental purchase agreements (like those stores where you rent a couch). I was including the statute so it can be used for negotiating purposes. The idea is that the owner of the storage unit has a liquidated damage clause (the amount the consumer pays for late fees). If this is excessive it is likely that a court will deem it unenforceable as against public policy -unconscionable. The statute can be referred to in the demand letter to show the owner a circumstance where there are statutory limits, stating that the situation can be analogized and thus the $900 on a $240 bill is excessive. As far as the automatic renewal, if that is the provision of the contract, then it can be automatically renewed up until cancellation is requested in accordance with the cancellation provision in the contract. Another point- if they did not adhere to the terms of the contract you can argue acquiescence based on past practices- that since he only charged $10 late fees in the past, he modified the contract by his actions, and thus cannot rely on the terms of the contract now, as you "justifiably relied" on his actions.

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Expert:  LegalGems replied 11 months ago.
I hope you found the information I provided useful.
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Customer: replied 11 months ago.

In further developments involving this,

Attachment: 2013-10-07_015105_img063.pdf

the landlord sent me a copy of my contract that coincidentally wasn't signed and dated. I would believe this makes any late fee they want to charge me non-en forcible as it would seem I didn't agree to it. I attached a PDF copy of the contract for you to see. Let me know what you think. Thanks again.

Expert:  LegalGems replied 11 months ago.
Good morning. Unfortunately it would still be binding as an oral contract - and an acquiescence. If one party does not sign a contract but still enjoys the privileges associated with that contract, most judges (and they do have discretion) will hold, based on equitable principles, that the party is still obligated under the contract, as it would be unfair to allow someone to reap the benefits without likewise assuming an obligation for the use of the premises.
Customer: replied 11 months ago.

I am not arguing that I shouldn't pay for the services just the unreasonable late fee. I fully intended to pay the monthly rent.

Expert:  LegalGems replied 11 months ago.
Thanks for that clarification.

Since the contract was never signed, and thus that portion was not specifically agreed to (and it is a lateral issue, as opposed to the very subject matter of the contract) it can be used as further evidence that you did not consent to the "unconscionable" amounts being assessed for late fees. For example, had you initialed separately that provision, the owner could use that as evidence of your consent. However, since the provision was contained within the contract (hidden so to speak) and the contract was not signed, it can be argued there was no "meeting of the minds" or explicit consent to the excessive late fee provision. This coupled with the owner's past behavior (not enforcing this provision) further bolsters the evidence.

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