Eviction - Can I Charge Unpaid Late Fees to Security Deposit?

Question

It happened again. My tenant hasn't paid yet. I should have expected it, but she said she'd pay today and she didn't. So far, she's paid on the day she said she would, usually 3 to 10 days past the first. She's been renting for a year and is now month to month. I'm planning to serve her a 5 day notice to pay rent or quit (for the first time) according to Virginia state laws. Assuming she continues to not pay and either she moves out willingly or I have to evict her...

Can I charge against a security deposit for accumulated late fees that have not been paid?

Since I have less than 2 SFRs, I am not governed by Landlord Tenant Law. The accumulated late fees would be about $600 for 30 days. She has been paying rent late for several months. The rental agreement she signed says "A late fee of $20 per day shall be added and due for any payment of rent made after the 1st of the month." She has not been paying the late fee along with her rent payments. I have informed her multiple times that $20/day additional is due, but only her rent amount is deposited to the bank. (I don't deposit a check, she transfers it bank to bank). I have not sent her specific written late fee invoices after just the rent was received. I know she has collectors after her for medical bills. I have not noticed significant damage to the property, so most of her security deposit would be returned if I did not dock her for the late rent payments. I have not yet been to court for an eviction - any problem tenants have moved out willingly and have never contested my keeping of most of the deposit for itemized repairs. Thank you for any insights!

Kim Meredith Hampton · Answer

@Natalie Vane unfortunately because you have not taken any action against her previously and allowed  her to remain in the property with no legal action, you have created a precedence.

If you charge her security deposit for the late fees, and it goes to court, you most likely will lose. We had a similar situation and lost. Next time stick to your guns and not accept the rent until ALL monies are paid, they will get the idea that your not messing around.

Natalie Schanne · Answer

@Kim Meredith Hampton - Thank you for your experience. I don't think I'll try to dock her security deposit upon move-out for any previously delayed rent. I won't be lenient with "accepting payment" without the late fees going forward. After I sent the letter this morning, I was paid about 60% of the balance due for March today. I informed her that any payments summing to less than the balance would not be considered "in full" and late fees would continue to accrue until it was paid in full. Her 5 day notice to pay rent or quit the premises ends on Thursday.

Account Closed - I guess it all depends if in your CA leases your late fees are noted as additional rent or not. I was not suggesting that I touch the "security deposit escrow account" before move-out. I was trying to see if there's justification for adding accrued late fees as additional unpaid rent against her security deposit on move-out.

I'm assuming she'll move out soon, which is OK because the rental demand is much better now that it's Spring. In the past when I've had a late-paying tenant, within a short period she's vacated willingly. I've encouraged this tenant to find a more affordable place to stay if she couldn't pay the rent, but then she's always paid it a few days later.

I made the mistake of not clearly setting my expectations the first time rent was late, and I think I've been made a lower priority than other bills.  Lessons learned!

Account Closed · Answer

The wording of your late fee notice makes the late fee the same as rent, and you can collect it under the same terms and conditions as you would collect rent.  The fact that your rental agreement states that the month-to-month tenancy is governed by the rental agreement means that you are in good shape.

By the way, that sounds like a good document.

Just remember, when you accept someone else's money, under specified conditions, you assume the responsibility of a "fiduciary."

And that means that you meed to provide a written accounting upon termination.

But you probably already knew that.

Thomas S. · Answer

You have a bad tenant that should be terminated. Since she is now M2M give her 30 days notice you are not renewing and look for a descent tenant.

You should probably raise your screening standards on the next tenant.

Account Closed · Answer

Do you have a separate written agreement regarding the security deposit, or is that agreement part of the rental agreement?  The separate agreement, or the paragraph in the rental agreement regarding the security deposit must specify exactly what can be withheld from it before it is refunded.

Also, if you have a separate security deposit agreement, it is still in effect even though the rental agreement has ended and she is converted to a month-to-month tenant, and you can continue to charge the late fee.

But if your rental agreement has ended, there is a question about whether the month-to-month terms are the same as the rental agreement terms, including the late fee.

I hope this helps.

Jeff B. · Answer

The question is sensitive to the specific State - - Calif Late Fees are not taken from Deposits.

In general, the deposit should be held until the move-out reconciliation.

Eviction - Can I Charge Unpaid Late Fees to Security Deposit?

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