Cap on Late Fees for Rentals in Virginia?

[April Eilers]

Hi All,

A few questions... 

1. Does Virginia Residential Landlord Tenant Act Apply to Landlords that own fewer than 5 properties? I saw some older articles that said small landlords are not subject to the Act, but I'm now reading the Act itself and I don't see any such global exemption for small landlords.  

2. Am I reading this correctly that I can not charge late fees that total more than 10% of the monthly rent even if I have a different amount in my lease and only own 3 rental properties in Virginia? My current lease states that my late fee is $25/day following the due date so if it was 10 days late the total late fee due would be $250. The monthly rent is $1800, so is it correct that I cannot legally charge $250 and would be capped at $180 max per month regardless of how late the rent is? 

3. I see that there is a 5 day grace period enforced by the Virginia Residential Landlord Tenant Act as well. If unpaid past the 5 day grace period, can I back charge for the late days within the grace period? So for example, if rent was paid on day 7 after the due date, am I entitled to ($25 x2 = $50 in late fees or $25x7 = $175 in late fees)? 

Thanks a bunch!

April

[Colleen F.]

@April Eilers I have never heard of a landlord tenant act not applying to those with 5 units or less. It looks like in VA if you have 4 units or less they give you some leeway on notice of rent increases and notice of payment plans. Maybe someone from VA can jump in. It does not look like late fees are something you get exempted from the limits on amount.

As for the late fee you have a cap so just make the late fee a set and not a daily amount in your next lease. 

[Patti Robertson]

Hi there.  Long-time Virginia landlord and property manager here.  I can shed some light.

LAW EXEMPTIONS - There are very few parts of the VRLTA that allow an exemption for people based on units owned, and late fees is not one of them. You are exempt from the "source of income" protection though, which means you are allowed to deny an application just because they have a housing choice voucher, which would not be the case if you owned more than 4 units.  The law now also requires landlords with more than 3 properties to give at least a 60 day notice of termination.  If you own 3 or less, which you do, you are exempt from this and can offer a 30 day notice of termination.  (Note - No tenants will be sucessful moving with only 30 days notice in this market.  I recommend you stick with 60 if you want to avoid issues.)

LATE FEES - The max late fee you can charge is the greater of 10% of one month rent or the balance owed.  Your lease cannot charge a higher fee.  If the tenant pays half of the rent on-time, you can only charge 10% on the remaining balance.  Your $25/day lease clause is not legal or enforcable.

GRACE PERIOD - You are reading the law wrong here.  It is a common mistake. The VRLTA does not require you have a grace period.  My rent is due on the first, late on the second.  What it does say is IN ABSENCE OF A WRITTEN LEASE, the late fee is 10% with a 5 day grace period.

[April Eilers]

Quote from @Patti Robertson:

Hi there.  Long-time Virginia landlord and property manager here.  I can shed some light.

LAW EXEMPTIONS - There are very few parts of the VRLTA that allow an exemption for people based on units owned, and late fees is not one of them. You are exempt from the "source of income" protection though, which means you are allowed to deny an application just because they have a housing choice voucher, which would not be the case if you owned more than 4 units.  The law now also requires landlords with more than 3 properties to give at least a 60 day notice of termination.  If you own 3 or less, which you do, you are exempt from this and can offer a 30 day notice of termination.  (Note - No tenants will be sucessful moving with only 30 days notice in this market.  I recommend you stick with 60 if you want to avoid issues.)

LATE FEES - The max late fee you can charge is the greater of 10% of one month rent or the balance owed.  Your lease cannot charge a higher fee.  If the tenant pays half of the rent on-time, you can only charge 10% on the remaining balance.  Your $25/day lease clause is not legal or enforcable.

GRACE PERIOD - You are reading the law wrong here.  It is a common mistake. The VRLTA does not require you have a grace period.  My rent is due on the first, late on the second.  What it does say is IN ABSENCE OF A WRITTEN LEASE, the late fee is 10% with a 5 day grace period.

This is super helpful, thank you! Guess we owe our tenants some refunds on previous late fees. Bummer but good to get it straightened out. 

Thanks,

April