A Story About Late Fees (Pt I?)

Here's a tenant's story about the late fee at the Falls of Montrose.

In short, the tenant gave a check from an account that didn't have enough money. The check bounced (according to the bank a few days after they had turned it in). They were informed by Management on the 15th that the check bounced and they were responsible for a late fee as well as a bounced check fee. The the late fee stated by Management was over the actual late fee. The tenant was suspicious and the Manager later said she would look it up.

After eventually stating the fee according to the contract, the tenant asked for how the late fee was calculated (according to California Civil Code, they can only charge about the amount they would lose for a late payment and they have to have calculated this). There is no response and the tenant refused to pay asking to speak to the Fall's attorneys.

The attorneys demand payment for the late fee (it's worth noting that it's "a little over $90"), threatening, "If you fail to comply with this demand, legal action, including but not limited to eviction and/or small claims court proceedings will be instituted against you. In proceeding against you, we shall seek, in addition to the unpaid late fee, court costs and attorney fees as allowed by law." The attorney then states they are open to questions "regarding the content of the letter" and can only be replied to via fax or snail mail.

The tenant attempted to reply via fax via the internet--but the attorney refused to even confirm this fax was received. An email copy was sent out anyway. In this letter the tenant asked a few questions regarding how the late fee was calculated which have yet to be aknowledged, let alone addressed.

In short, the Falls of Montrose would rather evict and sue a tenant than explain how the late fee was derived. How sinister is that?

Below is an abridged email conversation with the Management (management in quotes, bolded):

Hey!

Your rent check bounced. I need you to pay your rent, AUM, and late fee now in the form of a money order or cashier's check. When you get a chance, can you either call me at (818) 249-2904 or email me? I'll be in the office to speak with you until 6 p.m.! :O)

Respectfully,

[name redacted]

Oops, I gave you a check and forgot to put the funds in that account for rent.

What is the total? I'll get a cashiers check tomorrow.

You owe me $1,780.63.

Rent: $1,535

AUM: $42.32

Past Due (which you included in this check): $78.93

Late: $99.38

NSF: $25.00

Grand Total Above. :O)

Questions?

Respectfully,

[name redacted]

How exactly was the late fee tabulated? I'm sure it's in the contract, don't have my contract on me. I believe with California Tenant Law it's supposed to be a reasonable estimate of the loss incurred by my tardiness? (So, that'd be interest on the rent/day that'd be going to the mortgage of the property, or something not particularly onerous which I'd consider $100 to be. A quick calculation of the losses, assuming a very liberal 10% interest, is about $50.00. I am certain the rate is less than that.)

Additionally, was the NSF contractually agreed? I don't remember it, but it's quite possible I may have missed it.

At the very least, I will have the rent and utils (AUM) to you tomorrow afternoon in the form of a cashier check. I will include the NSF if it is a part of the contract and I'll include the late fee after reviewing the contract personally, applicable tenant law, and speaking to my attorney to make sure you have the legal right to request that amount.

Our lease conract, which, if you'd like, I can provide another copy of for you, states 6% of the monthly rate. The only way I can see it was off is the late fee was calculated off the ENTIRE amount you owed me. Let me look into it. I am not sure if I can hold you responsible for being late for the ENTIRE aount on the check or just your rent.

Yes, the NSF is also in your lease.

Let me know if you have any questions. :O)

As mentioned, I wil lfind out about the late fee and the correct amount. This is all done in my accounting department, so let me call them up and find out for you.

Tomorrow, just pay me the AUM for THIS MONTH of $42.32, NSF of $25.00, and your rent of $1,535.

I am waiting for a response as to how to go about the late fee. I am totally cool with you paying the 6% of the $1,535. Then, the past due balance of the $99 and change can be paid later. Your late fee should be $92.10. I'll see if we can make the accounting changes on our side.

I don't exactly understand what you mean there. But instead of speculation I'll wait until you hear back from accounting. But I expect an appropriate late fee to be 6% of the prorated rent (as of when you received word regarding the bad check after ), $35.65.

Ill talk to my attorney tomorrow. Let's just wait till then.

Late fee, as I know, is off the entire rent, not pro rate.

Ill get with you tomorrow and we can go from there. :)

Have a good rest of your evening!

It may help if I speak to him/her directly so that we are on the same page.

Feel free to give my cell phone number: [phone number redacted]. I will not be at work tomorrow but I will be out.

later

I just got back and have had some time to look through the contract.

I find the portion in 2. Rent which reads:
"The parties agree...to fix the actually damage."

to be factually incorrect and was seemingly written in bad faith to attempt to circumvent Civil Code 1671 Part D. To that extent, I have affixed approximate damages (approx $35) and emailed them to you. In fact, it was so easy to affix the damages I did it on my cell phone with the rate you gave (6%) in less than a minute. I believe from my interpretation of CC1671 that Starpoint has the burden of proof to show that it is impracticable to affix these damages.

Moreover an interpretation of Civil Code 3302 reaffirms my assertion which defines the extent liquidated damages.

I find my offer to be fair to Starpoint, which I am certain garnered marginal damages at the worst (and likely no monetary losses), from a client who accidentally sent a bounced check.

Again, your attorney is free to contact me tomorrow. I insist that he/she should contact me through email so I have a written account and that I can more easily discuss the matter with my attorney and other legal aid. That said, I intend to get a check paying for last months AUM (utilities) bill, rent, and NSF.

Atfer speaking with my attorney, I find that you are responsible to pay your pate fee of 6% of your rent, as stated in your lease agreement. This applies to EVERY resident without any exceptions.

If you would like to discuss this any further with my attorney, I need your attorney to speak to them directly as they only will only speak to your legal representation. If you would like to continue disputing these charges, feel free to send me the information of your attorney and I can have KTS get in contact with him/her directly.

Byt he way, you still have a balance due for your past due AUM bills. I've outlined the amounts in a prior email to you. Let me know if you would like me to break it down for you again.

Hope you're having a good Monday!

Respectfully,

[name redacted]

So what can we gather from this story:

• The Management flippantly overstated the late fee. Had the Tenant not have persisted, he would have been swindled
  
• As stated the Management would rather sue and evict a tenant for $100 than answer a question
• Management would rather pay for an attorney to sue and evict a tenant than to negotiate personally, accept the settlement, or waive the late fee (which many landlords may do for the first late payment)
  
• According to the Tenant, their lawyer was never contacted, as the Management claimed would happen--therefore it would appear unwilling to talk to the tenant lest they actually discuss the issue productively

While the Tenant is considering what to do and irrespective of whether or not either party is right-this behavior is essentially legal extortion. Threatening a tenant with potentially astronomical legal costs and eviction over the smallest of infractions is downright being a slumlord. Also, the tenant appears to have followed the guidelines in this link for following up about a late fee (pdf). You'd imagine the Management would listen to the California Tenants of Rights-but they rather just trample on it.