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P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
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Experience:  12+ yrs. of experience including real estate law.
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In Alabama, can a landlord charge a late fee of 10% of the

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In Alabama, can a landlord charge a late fee of 10% of the total rent due every 5 days (even if only a portion of the rent is paid late)? This seems to be a mechanism to bypass usury laws.
Submitted: 4 years ago.
Category: Real Estate Law
Expert:  P. Simmons replied 4 years ago.
Thanks for the chance to assist

Can you give some context...was this in the lease (this late fee language). What does it say exactly?
Customer: replied 4 years ago.
Yes, it is in the lease. Here is the language: If the lessee fails to tender payment of rent and/or CAM fees on or prior to the 1st day of the month - the due date of such rental and/or CAM fees - a late fee in the amount of TEN(10) percent of the total due shall apply on the Second Day of the month which shall be added to the amount due and shall be paid along with sain rent and/or CAM fees, and therafter, for each successive FIVE day late payment period. Lessee agrees that non payment of Rent/CAM/late fees applicable, on the due daye, shall automaticlally start a fifteen day time period, at the end of which the lessor may withour further notice, terminate the lease for non payment. One problem with this is it is essentially a minimum of a 730% interest rate. The lease also states: No failure to enforce any term shall be deemed a waiver.
Expert:  P. Simmons replied 4 years ago.
Can you tell me what CAM fees are...what is this exactly?

Customer: replied 4 years ago.
CAM = common area maintenance fee to cover landscape, security lights, water, dumpster, etc.
Expert:  P. Simmons replied 4 years ago.
Got it.

Thanks

OK...as a general rule, parties to a contract can include whichever terms they feel they need to protect themselves in the contract. Again, as a general rule, so long as the terms are not otherwise illegal and relate to the contract as a whole, the parties are free to add whatever terms they like.

So, late fees can be added to a contract...and if both sides agree they can be enforced. At some point, if the fees become so excessive, the court could strike the provision. But it would need to be an excessive fee.

The analogy to usury is not the best...since the purpose of a late fee is to encourage compliance. The purpose is NOT to lend money.

If you can show that the fee is not designed to encourage prompt payment...but rather as a trap to try and generate money...now that would be a great argument to have the provision struck from the contract. How to do that? Well, if you have any evidence of this (from your or from other contracts)...that this is a predatory practice designed to generate income...then you would have a shot.

But if the landlord can show that the only reason for this is to encourage on time payment...that would be a valid reason for the fee.

I agree, its a high late fee...but you would need some additional evidence to get a court to strike this language (or to agree not to enforce, were he to sue on it)

Please let me know if you have further questions; if so I will do my best to answer them. If not please hit the accept button, its the only way I get credit for my work.



P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 26513
Experience: 12+ yrs. of experience including real estate law.
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