Phil Querin Q&A: Can You Update Late Fees?

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April 23, 2014

Question: Our late fees have remained the same for several years, and we want to increase them. What are the current rules about doing so?

Answer: Here is a summary of ORS 90.260, the late fee statute. (1) A landlord may impose a late charge or fee, however designated, only if: • The rent payment is not received by the fourth day of the period for which rent is payable; and • There exists a written rental agreement that specifies: o The tenant’s obligation to pay a late charge; o The type and amount of the late charge; and o The date on which rent payments are due, and the date on which late charges become due. (2) The amount of any late charge may not exceed: • A reasonable flat amount, charged once per rental period. “Reasonable amount” means the customary amount charged by landlords for that rental market; • A reasonable amount, charged on a per-day basis, beginning on the fifth day of the rental period for which rent is delinquent. This daily charge may accrue every day thereafter until the rent (not including any late charge), is paid in full, through that rental period only. The per-day charge may not exceed six percent of the amount of the “reasonable flat amount”, described above; or • Five percent of the periodic rent payment amount, charged once for each succeeding five-day period, or portion thereof, for which the rent payment is delinquent, beginning on the fifth day of that rental period and continuing until that rent payment (not including any late charge), is paid in full, through that rental period only. (3) In periodic tenancies [e.g. month-to-month], a landlord may change the type or amount of late charge by giving 30 days’ written notice to the tenant. (4) A landlord may not deduct a previously imposed late charge from a current or subsequent rental period rent payment in order to make the rent payment short so as to issue a 72-hour notice of nonpayment. (5) A landlord may charge simple interest on an unpaid late charge at the rate allowed for judgments (9.00%) and accruing from the date the late charge is imposed. (6) Nonpayment of a late charge alone is not grounds for termination of a rental agreement for nonpayment of rent, but is grounds for termination of a rental agreement for cause by using a curable 30-day written notice of termination. [Note: The landlord may identify the late charge on the 72-hour notice of nonpayment of rent, so long as it makes clear that the tenant may cure the nonpayment notice by paying only the delinquent rent, not including any late charge.]