New City Law Requires Changes to Leases/Late Fees

[Justin Williams]

FYI...

On March 22, 2021, the Baltimore City Council passed legislation that mandates changes to all residential leases and impacts when late fees may be imposed.

Specifically, the law, entitled “Late Fees for Past Due Rent,” provides that “a residential lease shall include a provision that the landlord may not apply late fees to the rent until the tenant is more than 10 days past due with the rent.”

As drafted, the above provision is required to be included on all residential leases in Baltimore City, whether or not a late fee is actually contemplated by the lease unless a statutory exemption from the lease requirements applies, e.g., it does not apply to leases for rental units within an owner-occupied residence.

If a residential landlord seeks to impose a late fee for delayed or nonpayment of rent, the lease:

(i) The tenant’s payment of the rent is more than 10 days late; or

(ii) The tenant has received the tenant’s regularly scheduled government benefit disbursement if the tenant has previously provided the landlord with written notice that shows the day of the month the government benefit is normally issued or mailed is later than the day on which the rent is due.

The Late Fees for Past Due Rent Law, which was signed by Mayor Brandon Scott on March 31, 2021 and becomes effective on April 30, 2021, only applies prospectively to new leases and shall not have retroactive effect on leases entered into prior to April 30, 2021.

[Joe Splitrock]

@Justin Williams thank you for bringing this forward for investors in that area. I have a question. Would it be acceptable for landlords to offer early pay discount? For example, rent amount of $1000 is due on the 1st of the month. If it is paid prior to the first, tenant can take a $50 early payment discount. Paid between the 1st and 10th, it is $1000 and paid after the 10th it is subject to late fees.