Common Landlord-Tenant Disputes Part 2: Late Fees & Repairs

This blog post is the second of two parts that address the three of the topics that clients most frequently seek advice on in the residential landlord/tenant realm. Part 1 addressed what is commonly referred to as the Security Deposit Statute, and can be accessed here. This post will address the following: (1) late fees that a landlord can lawfully charge a residential tenant; and, (2) when a landlord is required to make repairs.

Late Fees:

First, in order for a landlord to charge a late fee due to late rental payments, there must be a provision included in the lease agreement that specifies the amount of the fee, and when it will be assessed. If a lease agreement does not specify how and when a late fee will be charged, a landlord should not attempt to charge one.

However, it is well settled law in Michigan that parties to a contract can agree in advance to a set amount that will be paid in the event of a breach. Accordingly, a residential lease that requires a tenant to pay a late fee is enforceable, but, the amount charged must be reasonable.

There is no bright-line rule that will answer the question of whether or not a late fee is reasonable. However, courts require that there be a relationship between the fee, and the damage caused by the late payment to the landlord. A late fee is appropriate, but it must align with the actual damages a landlord suffers as a result of the late payment.

A landlord will likely have costs associated with trying to enforce the late payment, such as preparing and sending demands for possession, or administrative costs related to extra accounting. Therefore, to determine if a late fee is reasonable ask the following question: Is the fee a reasonable assessment of how much if will cost the landlord to take steps to obtain the rent? If so, the fee is likely enforceable.

Repairs:

The law in Michigan requires residential landlords to maintain rental properties in reasonable repair, fit for all intended uses, and to comply with the health and safety laws where the premises are located. A landlord bears this responsibility regardless of whether or not it is expressly spelled out in the lease. A landlord would likely be required to make repairs to a broken hot water heater, malfunctioning locks on exterior doors, flooding, and leaks in a roof. This list is by no means exhaustive, but should provide a sense of the types of repairs a landlord is accountable for.

A landlord is expected to keep a rental property in reasonable repair, and a tenant is required to make timely rental payments. However, these obligations are not independent of one another. If a landlord fails to maintain premises so as to be fit for the intended use, a tenant will be within their rights to withhold rent. Therefore, if at any point in the course of a tenancy a required repair arises, even if it is subsequent to a tenant falling behind on rent, the landlord is required to make the repair. A landlord should never refuse to make a required repair for any reason. A landlord will encounter serious difficulty if they seek to evict a tenant who is behind on rent if the tenant can show that the landlord has failed to maintain the premises in accordance with the law.

The attorneys at Pear Sperling Eggan & Daniels, P.C. are experienced in handling disputes arising out of residential and commercial leases. PSED Law represents both landlords and tenants. If you have questions about your rights under a lease agreement, or need advice about drafting or negotiating the terms of a lease, please call PSED Law at our Ann Arbor location at 734-665-4441.