Landlord’s Corner - Apartment lease agreement Late fees in Ohio
A. Limits As To Amounts
There are two lines of cases in Ohio which house whether or not courts will enforce lease provisions permitting a landlord to charge tenants for late fees. These lines of cases come back to slightly different conclusions, however the underside line is that landlords would like to be very careful in charging tenants for late fees.
The primary line of cases involves us from the Eighth Appellate District. Within the case of Siara Management v. Nedley, 1992 Ohio App. LEXIS 5265 (Oct. fifteen, 1992) Cuyahoga App. No. 61433, unreported, the lease known as for the tenant to pay $30.00 in late fees if he was late five days, and $70.00 additional if he were late 10 days. The owner tried to charge these amounts to the tenant and litigation ensued.
The Eighth Appellate District held that there’s distinction between liquidated damages (allowable) and penalty clauses (not allowable) and {that the} court would use a 3 half test to differentiate between the two. Late fees would be allowable as liquidated damages if they were designed to compensate the owner for damages that were:
(1) unsure as to amount and tough of proof, (2) the contract as a full isn’t therefore manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it will not express the true intention of the parties, and if (3) the contract is in keeping with the conclusion that it was the intention of the parties that damages in the number stated ought to follow the breach thereof.
In Nedley, the landlord failed to make it past the primary hurdle of the test. All that the owner argued in court was {that the} late payment by tenants led to late payment charges assessed to the landlord by his creditors. The Court reasoned that “Any party due money could claim {that the} resultant decrease in money flow may end in late charges against it. That’s unduly speculative.” Had the owner come to the court with proof {that the} tenant’s late payment had caused him to incur damages in specific amounts, then those specific amounts would possibly have been recoverable.
The Eighth District Court of Appeals conjointly came to a similar conclusion in two hundred W. Apartments v. Foreman, 1994 Ohio App. LEXIS 4081 (September 15, 1994), Cuyahoga Co. App. No. 66107 concerning a late fee of only $2.00 per day. In that case the court additionally found it significant that the landlord had shown no proof of its actual damages.
But, another of Ohio’s appellate district treated the matter very differently. In the case of Calabria v. Inexperienced, 1995 Ohio App. LEXIS 3903 (September 8, 1995), Trumbull Co. App. No. 95-T-5181, the Eleventh Appellate District Court held that while late charges of $10.00 per day (for thirty eight days) was not enforceable, “an prescribed, one-time late fee, that’s affordable in proportion to the rental rate, and that features a rationale basis supporting the imposition of the charge, is proper.”
The Eleventh District Court of Appeals once more came to the same conclusion within the case of Wadsworth v. Starcher, 1998 Ohio App. LEXIS 2909 (June 26, 1998) Trumbull Co. App. No. ninety seven-A-0054. In Wadsworth, the Court agreed with the trial court that $5.00 per day in late charges over ninety two days wasn’t enforceable, and {that the} trial court’s reduction of the late fees to $100.00 was proper.
It is clear that “parties to a lease agreement can comply with something they want at intervals the limits of the law.” Village Station Assoc. v. Geauga Co. (1992), 84 Ohio App.3d 448 at 451. The real query is: what are “the bounds of the law”? R.C. 5321.fourteen prohibits parties to a lease from agreeing on illegal or unconscionable terms.
B. No Late Fees Under Oral Contracts
Where there is solely an oral contract between the landlord and the tenant, a minimum of one Ohio Court has held that no late fees will be assessed. Neubauer v. Patzkowsky, 1992 Ohio App. LEXIS 2919 (June a pair of, 1992) Franklin Co. App. No. 91AP-1236.
C. Waiver of Late Fees
Some landlords can try to collect late fees which have congregated over months and months. In the case of Habegger v. Paul, 2004 Ohio App. LEXIS 1971 (April 30, 2004) Wood Co. App. No. WD-03-038, a landlord sued the tenant for late fees which accumulated over a fourteen month period. The Sixth District Court of Appeals held that the landlord waived his right to collect the late fees upon eviction by continuing to just accept the tenants’ rent payments and not pursuing eviction till approximately fourteen months once the first late payment. The Court reasoned that:
A celebration could voluntarily relinquish a known throughout words or by conduct. State ex rel. Ford v. Cleveland Bd. Of Edn. (1943), 141 Ohio St. 124. In Galaxy Development Ltd. Partnership v. Quadax, Inc., 2000 Ohio App. LEXIS 4651 (October 5, 2000) Cuyahoga Co. App. No. 76769, the Eighth District Court of Appeals found that the landlord waived its right to collect holdover rent from the tenant by continuing to just accept the first rental payments once expiration of the lease. The Galaxy court cited Finkbeiner v. Lutz (1975), 44 Ohio App.2d 223, wherein lessees failed to make timely payments of rent on numerous occasions and lessors accepted the late payments. The Finkbeiner court held {that the} failure of the lessors to form timely objection to the late payment of rent amounted to a waiver.
Courts in Ohio will not permit a landlord to collect late fees which have assembled over a vital period of time.
D. Dangers for the Landlord
Where a landlord can get into bother with late fees is during a dispute over a security deposit. Let’s say the owner has collected a security deposit in the amount of $500.00. The tenant leaves at the top of the lease term. The landlord finds $300.00 in damages at the apartment and also assesses $250.00 in late fees. Maybe the owner cannot show the court actual damages in the precise quantity of $250.00. Maybe there was only an oral agreement between the owner or the tenant. Maybe the $250.00 in fees resulted from the landlord’s follow of letting the late fees gather over time.
If any of these are the case, there is a sensible chance that even in the additional landlord sympathetic appellate districts, the owner can solely be allowed to charge the tenant a greatly reduced quantity if the facts work the first example, and maybe nothing the least bit if the facts match the second or third examples.
This will leave $100.00 or more that ought to have been came to the tenant, entitling the tenant to double damages and attorneys fees beneath Ohio Revised Code Section 5321.16. Whereas double damages in the quantity of $200.00 would possibly not be all that massive of a deal, wait till you get to the necessary hearing on affordable attorneys fees. Now we tend to’re talking real money.
If you are making an attempt to evict a problem tenant and your solely basis may be a failure to pay late fees, then the arguments on top of could have an impact upon the problem of who has the proper to possession when you can the F.E.D. hearing. If a tenant can show the court that he stood prepared the least bit times to pay the late fees, however that the landlord was holding out for an unreasonable quantity, or if the tenant can show that he and the owner engaged in an exceedingly pattern of conduct of acceptance lately payments without protest, this might defeat the eviction action.
E. Lessons to Be Learned
One of the teachings to be learned from all of this is that late fees are something of a minefield when it comes to using them to scale back the amount of the protection deposit came to a tenant. The identical is true when we are talking about evictions based upon a failure of the tenant to pay late fees.
Landlords ought to be aware of the issues that may arise when late fees are argued. Informing your attorney of your past practices with regard to late fees can prevent each a heap of embarrassment, and perhaps permit the attorney to change course in his arguments to induce around potential hurdles.
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