[RPPTL LandTen] Late Fee question.

[Leonard Cabral]

Group:
Theoretical Question for the scholars in the group.  (I don’t get upset with criticism so be as blunt as you wish).


Thanks to our friend for Shutts and Bowen he provided us with a brief on whether Florida usury laws apply to commercial leases written by Jack McDlroy an intern or associate ( I do not remember).  I understand  that usury laws most likely do not apply to late fees because a lease is not vehicle for a loan or lending and/or financing mechanisms does not make up the essence of the transaction. The memo cite so Krupp Realty Company et al v. Joel, 309 S.E.2d 641, 642 (Ct. App. Ga. 1983), a Georgia case which the Court stated the Parties are permitted to provide for liquidated dames in the event of a contract breach and unless the agreement is contrary to any legal principle.

There is nothing in Part II of Chapter 83 with the word “late fee” (please correct me if I am wrong).. Since late fee is not defined in the statute and every lease that I have seen has a late fee provision, I therefore must conclude that a late fee is purely a contract remedy.  If the landlord cannot easily quantify the damages caused by a late payment than contract law allows for  liquidated damages for breaching the terms of the lease requiring a tenant to have the rent on time.

For there to be a late fee based on liquidated damages the landlord must prove when a tenant pays late the  amount of the actual damages are uncertain and difficult to prove.   AND

WHETHER THE AMOUNT OF THE LATE FEE IS REASONABLY RELATED TO THE LANDLORD’S ACTUAL DAMAGES.    (EMPHASES ADDED AS THIS IS THE CORE OF MY QUESTION).  In other words a good faith pre-estimate of the loss the landlord is likely to incur if the tenant is late with the rental payment.

Contract law also dictates that if the liquidated damages (late fee clause) are not related to the landlord’s actual damages and late fees purpose is to enforce performance than the liquidated damages is an unenforceable penalty.

I have a lease provision which states that the Tenant shall be charged $75.00 if no paid within three (3) days of its due date, and $15.00 for each day thereafter and another lease  provision that states that the Tenant shall be charged $75.00 if no paid on the first day of the month, and $25.00 for each day thereafter.  I plugged these number into a payday interest loan calculator and the late fee amounts to 391.07% for the first example and 536.76% for the second example.

Finally the Questions:

1.      Does anyone believe that these late fees are permissible?     Has anyone seen a landlord that has suffered these types of damages for paying their rent late?   Or put a different way is there anyone that thinks they could justify these types of late fees. Any reason that these fee would hold up in Court?

2.      Am I correct that once I challenge a liquidated damages clause as excessive and grossly disproportionate to the amount of damages sustained by the landlord that:

a.       Are  liquidated damages is a question of law for the trier of fact?

b.      Must there be an evidentiary hearing on the matter of liquidated damage?

c.       Must the landlord show how the liquidated damages or late fee are related to the actual cost incurred by the landlord? (or is it up to the tenant?)

3.      What is the remedy if the late fee/ liquidated damages is found to be a penalty or possible remedies considering Florida Statute 83.45(1) Unconscionable rental agreement or provision.— and Florida Statute 83.47(1) 83.47 Prohibited provisions in rental agreements.—

4.      Besides the strong possibility that actual damages can be calculated for late fee, what does anyone think a reasonable late fee would be in a residential tenancy when the rent is $1,600.00 a month?



Anyone try a case with an excessive late fee?  Any help would be appreciated?  Any case law would be appreciated.

Leonard P. Cabral, Esq.
Leonardcabral at lenslaw.com
212 N. Park Ave. Ste. 14
Sanford, FL  32771















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