Consumer Protection Law
Consumer Protection Law Questions? Ask a Lawyer Now.
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.
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.
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?
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.
In further developments involving this,
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.