Phil Querin Q&A: Resident Over Pays Rent - How to Account for Late Fees
Question. We had a situation come up recently that we would like your opinion on. With this particular lease, rent is due on the 1st and a late fee is assessed if not received by midnight of the 5th. We send 72-hour notices on the 8th of the month at the earliest. In this situation, a tenant has purposely over-paid rent on a number of payments in order to build up a credit balance with us. He has accrued several late fees that have been assessed due to late payments after the 5th of the month - but before a 72 hour notice is ever sent. We recently deducted the accrued late fees from the credit balance he had built up. Because there was still a credit balance showing on his account after deducting the late fees, we did not send him any further notices about the late fees being assessed or deducted. He is now claiming that it was illegal to deduct the late fees from the credit balance without our sending him a notice or invoice. Your thoughts?