- The Washington Times - Wednesday, September 21, 2016

For the first time, Washington, D.C., will regulate how much a landlord can charge in late fees and how much time renters have before those fees can be applied.

The D.C. Council on Tuesday unanimously approved a bill that caps late fees on rental units and creates a grace period for renters who make late payments.

Previously, landlords in the city could charge whatever they wanted in late fees and choose to provide no extra time for renters to pay.

Renter advocates say the legislation will help tenants from getting lost in an endless cycle of late fees, but housing providers argue that landlords rarely squeeze renters with outrageous late fees.

The Rental Housing Late Fee Fairness Amendment Act of 2016 limits late fees to no more than 5 percent of a tenant’s monthly rent and sets a five-day grace period for a renter to make a late payment.

Council member Anita Bonds, the at-large Democrat who introduced the legislation, said Tuesday that the act “will provide over 156,217 rental units, whether or not under rent control, with new protections against unscrupulous landlords and outrageous late fees when they fall behind on their monthly rental payments.”

Kirsten B. Williams, vice president of government affairs for the Apartment and Office Building Association of Metropolitan Washington, said Wednesday that the proposed bill “was far more onerous than that adopted by full council yesterday. What was passed, we feel, is reasonable and based on industry practices.”

In a May 16 public hearing on the bill, a building association member argued that landlord late fees already were reasonable. Arianna Royster, executive vice president at Borger Management, also noted that fees for late payments on mortgages, cellphones and car loans are often much higher than 5 percent and involve interest on the fee.

“Why should practices of rental housing be any different?” Ms. Royster said. “This practice fails to take into consideration the obligations and administrative costs of housing providers when tenants are late on their payments.”

It is not clear who will enforce the regulations or whether the act will require the city to hire more staff at one its housing-related agencies.

The bill defines a late payment as any amount of rent that is not paid within five calendar days from the time a rent payment is due. An earlier draft of the bill called for a 10-day grace period, but the building association fought to pare it to five days, which it said is the industry standard.

“Ten days would put undue burden on housing provider,” Ms. Royster said.

The bill also would bar landlords from deducting late fees from future payments, which Ms. Bonds said can lead to a cycle of mounting late fees. Under the legislation, late fees would be paid separately from the rent. If renters pay their rent on time but fail to pay a previous late fee, the landlord cannot use part of the rent payment as the late fee.

That part of the legislation is “critically important,” said Laurie Ball Cooper, a staff lawyer for the Legal Aid Society who often represents tenants in eviction proceedings.

When landlords use rent payments for late fees, it leaves the renter short for that month, triggering another late fee, she said.

“Late fees pile up when rent is being paid,” Ms. Ball Cooper said. “The landlords then continue charging late fees upon late fees, compounding the amount due even if only one month was ever paid late.”

The legislation says landlords can apply a late fee only to the portion of rent paid by the tenant. If a renter is receiving government assistance for housing, the late fee will apply only to the portion paid by the renter.

The District’s bill mirrors laws in several states, including Maryland, that restrict late fees to 5 percent or less. Virginia does not have any laws regulating rental late fees.

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