Senate Bill 1414, which Texas REALTORS® supported in the 2019 legislative session, goes into effect Sept. 1 and amends the section in Chapter 92 of the Texas Property Code regulating fees for the late payment of rent.
The bill prohibits the collection of late fees until any portion of the rent has remained unpaid for two full days after the original due date.
Previously, late fees were allowed after one day.
The bill establishes a safe harbor where if late fees do not exceed a certain percentage, the fee is automatically considered reasonable under the law.
The bill continues to require that any late fee be reasonable. Under the safe harbor, for a rental dwelling located in a structure with no more than four dwelling units, a late fee is considered reasonable if the fee is not more than 12% of the amount of rent for the rental period under the lease.
For example: The tenant’s monthly rent is $1,000, and the tenant fails to timely pay rent. To fall under the safe harbor, the total amount of late fees the landlord collects for that late rent payment should be no more than $120.
For a rental dwelling located in a structure that contains more than four dwelling units, a late fee is considered reasonable if the fee is not more than 10% of the amount of rent for the rental period under the lease.
A late fee that exceeds the safe-harbor amount can still be considered reasonable.
Staying under the safe harbor limits automatically makes those fees reasonable. But even a late fee exceeding those limits can be considered reasonable, as long as the fee is in line with the damages to the landlord that might reasonably result from the late payment of rent. For example, those damages could include the cost associated with the collection of a late payment.
The bill allows a tenant to request a written statement of his late fee.
The tenant can ask for a written statement of whether he owes a late fee and, if so, the amount of that fee. The landlord must provide the statement to the tenant through a means regularly used for written communication between the landlord and the tenant. For example, if the landlord and tenant usually communicate by email, that would be the way to deliver the written statement. A landlord’s failure to respond, however, doesn’t affect the tenant’s liability for any late fee owed to the landlord.
This bill applies to leases entered into or renewed on or after Sept. 1, 2019.
Changes have been made to the Residential Lease (TXR 2001) and the Residential Lease for a Multi-Family Property Unit (TXR 2011) to reflect the increase in the number of days that the rent must remain unpaid before collecting a late fee, and other minor changes have been made as a result of additional legislation
View the redline changes of the Residential Lease and Residential Lease for a Multi-Family Property Unit. The updated forms will be available on the blank forms page, as well as through our form vendors, on Sept. 1.
Since State is now regulating when a rent is late and the limit of the late fee (no daily late fees) can we now ask the court for judgement on late fees as well as rent?
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So my place charges an initial late fee of $250 plus $10 a day until paid. Is this legal? It is in my lease agreement.
It appears that the new “late fee changes” are effective September 1, 2019 for new tenants. From my understanding of this Senate Bill 1414, you will have to abide by your current lease terms until you renew your lease contract.
So am I reading this right? That late fees can not exceed 12% of the original rent regardless of days late? If so, what compels the renter to get current? Doesn’t this make eviction almost institutional in nature? How is that in the best interest of any party involved? Someone please advise.
I would also like the answer to that question about the 12% late fee. also there use to be a grace period. Has that now gone away with the rent being late after the first day
I would also like to know if the late fees changes when your tenant is on a month to month or does it stay in effect as to the previous lease?
Exactly it use to be …. Now days everything is changing and going up… everyone needs to stop living in the past and stop living like everything is the same as before .
My assumption would be that the late fee(s) can accrue up to 10 or 12% of the monthly rate, per month, until the tenant is caught up. Whether each late month can accrue that percentage, standing alone, is a big question as well. If a tenant is 3 months behind on a $1,000 lease (in a 5+ unit complex), can they be held for $600 in late fees or only $300? Either way, this rule seems to blunt one of the few tools remaining for landlords to keep abusive tenants in check.
The bill continues to require that any late fee be reasonable. A late fee is automatically considered reasonable if the fee is not more than 12% of the amount of rent for the rental period under the lease.But even a late fee exceeding those limits can be considered reasonable, as long as the fee is in line with the damages to the landlord that might reasonably result from the late payment of rent.
Damages to the Landlord are a fluid number since there is no way of calculating that and each lease is different but the basic terms (like late fees per diem, etc) should be the same to prevent any claims of discrimination. “12% of the amount of rent for the rental period under the lease” – does this mean taking 12% of the rent to be collected over the entire lease term and dividing that up to come up with a reasonable number for the initial late charge and the per diem charge? Example: a 12 month lease at $1500 per… Read more »
so there is a one time fee and there after per day fee. What if they are late 7 days and it exceeds the 12%. 12% total late fee or daily and one time? This is so confusing. And what were the laws before this was changed.
My realtor charged me 890 in late feed one month is that legal?
No get this, my landlord charged me over two thousand eight hundred Dollars for one month! for moving and not being able to find a sub renter. I had to move back and pay it so as not to have a poor rating and not be able the rent anywhere. Once I completed lease and cleaned it thoroughly they billed me like 4 grand which was a lie
exactly!
So i take it that this only applies to Residential leases and NOT Commercial leases? The bottom of the article says that they will be updating the Residential leases but still no mention of the Commercial. They should at least have addressed it in the article whether or not the bill affects commercial.
Ok, there is a 12% ceiling on the late fees. Currently you write in the lease contract a late fee if rent is not paid on time, or after the grace period. There is now an option now to claim a charge for each day thereafter until rent and fees are paid. So how does this square with the 12% ceiling?
The bill continues to require that any late fee be reasonable. A late fee is automatically considered reasonable if the fee is not more than 12% of the amount of rent for the rental period under the lease.But even a late fee exceeding those limits can be considered reasonable, as long as the fee is in line with the damages to the landlord that might reasonably result from the late payment of rent.
So my rent is $999. If it is late there is an initial charge of $250 plus an additional $10 a day until paid. 12% of my rent is only $120.
So, to be clear. Is it the initial late fee can’t exceed 12% or is it the combined initial late fee combined with additional day’s late fees, that can not exceed 12%?
I am wondering the same thing. It is so vague. And what is considered “reasonable”?
It must be the total of all the late fees. BTW, it is 10% for structures with more than 4 residences (i.e. apartments)
The reason that i think it is total is because our apartments instituted a new policy based on this law that eliminated the daily fees, and just slapped you with a 10% late fee of the 4th of the month.
Someone has a lot of clarifing to do.
Owners even how they can charge a 12% late fee, always loose, the tenant did not pay, he gets a notice, , then 3 days have to pass, court gives you a date 2 weeks later, then 5 more days, then a week to get the rit of possession, ,It takes so long, the owner loses more than a month’s rent and on top has to spend a lot of money to put the property in good shape to rent it again because the deposit is normally not enough to cover the damages. The agent has to post the notice,… Read more »
“That’s real estate!” But how many time have you had to evict? I have learned to be more discriminating and careful since the one time. Agents and their prospects get pissed at me but all of my Tenants have performed well and my Clients are happy. BTW… I am also picky and discriminating with my Landlords. If they do not care for their properties OR their Tenants then I will not represent them anymore. 10 or 12%…
that’s enough. Usually more than fair.
I don’t think discriminating is the right word to use.
It is a proper and acceptable use of the word. Simply because you are discriminating doesn’t automatically imply you are doing so illegally.
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So someone explain to me how does this help realtors/property managers. Specifically why our association, that is supposed to have our backs, supported this legislation.
It only helps apartment locators and residential tenant rep folks, truly.
Maybe it is supposed to give some protection to the Consumer… you know… the Tenant. Aren’t Realtors supposed to be concerned about them also? Aren’t these folks our neighbor also?
This is BS. The socialist are coming and the freedom to conduct open contractual business is being regulated once again. Shame on the lawmakers who passed this.
‘Fair’ is what the tenant and the landlord agree upon in the lease. This is a business based on an agreement between two parties. In a free society it is fair as long as both parties accept the agreement. If tenants do not like the terms, then they should not sign it. This is a free country. It is everyone’ responsibility to read the contract and either agree and sign or disagree and not sign it. We are all adults here and everyone should be held personally accountable. This new law stinks because it creates a situation where the tenant… Read more »
Mike, I agree completely! The lease should determine the late fee. Thank
Mike, You are very correct. It is now a new government we are dealing with. Not only do you have to deal with tenants excuses if they are late, or handle their repairs and making sure you make the owner happy as a property owner, we now have to be careful as to not let our own trade association support the legislature to pass laws that impose hardships on our owners. If a tenant paid their rent on time then there would not be a late fee. I would hope that one day I would get some relief from a… Read more »
agreed. It will also open up the door for lawsuits against any property manager attempting to recover “reasonable costs” associated with the collection process, i.e. preparing, sending, then delivery notices, property visits to make sure the tenants have not skipped on the rent, etc.
This is a cut and paste from the revised lease to be used after 9-1 “Additional late charges for any one payment may not exceed more than 30 days.” The new change maxes it out at 12%. So anything above and beyond 12% sounds like the same argument about transaction fees in your listing agreement. Meaning you’d have to substantiate and somehow “prove” why you needed to charge the amount above 12%. This almost suggests that anything above 12% is “too punitive & unfair” I don’t like it one bit. There are 2 members of the public here: The Tenant… Read more »
Wow – “Additional late charges for any one payment may not exceed more than 30 days” is abysmal language. That could easily be construed to mean there is no limit on the time period: “more than 30 days” is an undefined time period. There’s no way to exceed a non-finite number. The “more than” shouldn’t be there.
The solution is simple… only a fool would wait more than 10 days. Three Day Notice… and go forward from there. Why would you want to go thirty days without getting payment? So you can make a bunch of money on late fees? Great Capitalist strategy I guess??? After 5 days… the Three Day Notice goes out. If it is not 100% resolved BEFORE the constable shows up then they are gone. Period. As a “socialist” investor my focus is having a decent property that keeps my tenant happy and safe. A good Tenant that performs well is like gold… Read more »
If a landlord is still dealing with a tenant for non payment after 30 days, they are in the wrong business. Evict!
The “Additional late charges for any one payment” phrase is not new to the latest revision of the lease – it was in there in the 1-1-16 version as well. All it means is you can’t charge the daily late fee for past due rent for more than 30 days total. If the rent is late on 9/2/19, then you can charge the daily late fee up to 10/1/19, but not past that.
So, if we manage one condo in a complex that has more that 5 units, it would fall under the multifamily and late fee capped at 10% not 12%?
I was Wondering the same thing. When you look at the actual bill it does not say anything about the 10%. So am i to assume that this was removed from the bill or is there another bill that i should be looking for?
I have a question about the new law. An email was just sent by my complex’s office this morning reminding that rent was due (not an issue for me, as I alway pay on payday, which is the last day of the month). I’ve been trying to look up the information about the new law in Texas trying to see if the following comment by my complex management is true (as I think it sounds fishy)… They stated that per the new law, a one time fee of 99.9% of the rent amount should be paid if rent is received… Read more »
My landlord is saying they can legally no longer allow me to pay late fees and rent on my payday 7th of each month which they always have. My lease say due the 3rd but for 3.5 years I have always paid on the 7th with my late fees.
Unfortunately, your landlord is making a correct business decision in view of the limits of the new law that prevents him/her from collecting sufficient late fees to cover the risk of delaying eviction. Due to the new law, I (as landlord) will not even bother with late fees. 3 day “Pay or Vacate” notice on the next day after rent is due, even if the tenant has promised to pay by X days after due date, plus late fees. The potential late fees I can collect with the new law does not cover the risk of tenant missing even the… Read more »
Steven. Where do I get Pay or Vacate notice from?
I am a Texas Realtor, so I use the standard form available only to Realtors. There are many sample forms available online that others can use. If you plan to DIY, please make sure you read and understand Texas Property Code, especially chapters 24 and 92. Any mistakes in not following the proper procedure can be very costly, as you may end up having to delay eviction AND pay your tenant’s legal fees, if you lose in the justice court. I have seen this happen several times before. Unfortunately, I cannot give legal advice since I am not an attorney,… Read more »
I am adding this incase anyone needs this. I would research accommodations, modifications. Request for date to align with check. Start by sending msg requesting the need to have payment to stay with the rules that were already accommodated prior. They cannot refuse but would require additional info if there was no prior documentation (such as in emails) as regards to why there were changes established and add how the change could affect you- Distress, anxiety could be a reason that would be sufficient. You do not have to have the request in writing to ask for the accommodation, it… Read more »
Who considers a 10% cap on late fees reasonable and fair? And for whom exactly? So residents in larger floorplans paying a higher rate per month pay more in late fees than someone, say in a one bedroom? How is that reasonable and fair? Where exactly is the sense of urgency to pay on time?
Also, please be aware that if your lease date reflects an executed date before 9-1 than you fall under the previous late fee schedule as stated in your lease contract.
Late of and on for bout a year…how far back can they collect late charges..rent all cought up.
Great Bill (No. 1414) for residents of rental properties in the State of Texas. So many people fall on hard times and perhaps can’t pay their rent on time. They’ve previously been the “ideal” tenant, prompt with payments, but an uncontrollable situation surfaces. They can never become current with a $50-$100 first time late fee and $5-10 fee after the 3rd of the month. Let me be perfectly clear, this Senate Bill 1414 is a blessing and breather for “Non-Abusers” of rental contracts.
Disagree. I am a landlord and used to be okay with tenants asking to pay rent a little later as long as they pay their late fees. Now, the late fees are too low to offset the risk that tenants may not even pay by their new promised late date. So, it will be 3 day “Pay or Vacate” for me from now on, starting from the day after rent is due. No exceptions! Any late rent will no longer be tolerated because the fees are not painful enough for tenant to quickly catch up, and the low fees does… Read more »
Hi there. I was wondering if you could advise about my current situation. I am a new landlord dealing with an eviction, monday will be the 5th day before writ of possession , My tenant paid half of the rent last month and haven’t pay anything this month. can I keep the security deposit to recover the lost rent and eviction cost?.
I would really appreciate your response. ✌
Unfortunately, I am not an attorney, so I cannot give you legal advice. A good place to start of DIY’ers is to read the “Texas Property Code”, especially Chapters 24 and 92 and/or consult an attorney.
Compliance to the process of eviction, and handling security deposit has to be followed closely. Penalties for landlord who does not follow proper procedures can be harsh. I have seen a landlord being asked by a judge to pay a tenant’s legal fees (about $1800) because landlord did not follow certain procedures properly.
Wish it had come sooner… I rented for 2 years no problem, the land lord sold basically every house he owned on the street I live on. When the new land lord took over we had to move to another house across the street our lease started July 1st 2019 with %50 rent increase and $200 increase in SD. October 2019 with dislocated toe and torn ligament I fixed myself because my income doesn’t allow for anything else, had to pay rent due on the 5th at a closed location, the building locked, no way to get to the suite… Read more »
I agree. The Law doesn’t take into account that some people are being paid after the 1st of the month. It wouldn’t be better saying every fifth of the month.
Okay if I moved in in dec2018 and I signed a year lease I’m I considered to be in that new law or I have to renew is when it comes to affect for me.
With the 12% max cap on allowable late fees, this makes it hard to calculate the per diem late fee that would be entered in paragraph 6 A (2). Also, if the tenant doesn’t pay the rent and the Landlord files for eviction, that 12% number isn’t sufficient to even cover court filing costs much less costs of collection attempts before eviction is filed.
My client went under contract in march of 2019, tent is $2400 a month. The lease states the initial late fee is $50 and $45 each additional day. She was late last month due to personal reasons and is not being charged close to $400. Can this be contested?
so if lease was signed on August 1st, 2019 what are the rules for that time period. And when they say late fees can not be more than 12% does that mean if one time is $100 and $50/day after and they are late 5 days and it becomes more than the 12% what then??
This law is so vague
Once you pay the rent, do the late fees stop or do they continue until you pay in full, meaning rent plus late fees.
Rent due on 1st $990
Late fee added on 3rd $50
Late fee added on 4th, 5th, and 6th @ $10/day
Paid rent on 6th $990
Still owe only for late fees
Additional late fees continued to be added on 7th, 8th, 9th, 10th, 11th, 12th, 13th, 14th. 15th @ $10/day
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If I’ve already paid rent but not the late fee just yet, can the landlord continue charging late fees until they’re paid or is that illegal?
I’m wondering the same thing. Also, can they “lockout” if the late fees aren’t paid? My rent is paid in full and they charged a 10% of the rent late fee for the $42.00 utility not being paid.
If the rent is not paid my damages are 100% of the rent if the tenant moves plus clean up?
My landlord charges $35 whenever they send me a notice to vacate letter. Is this legal?
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If my rent is paid in full but I owe late fees and court cost can they take that off of my next rent payment. Late fees and court cost happened during the co id 19
My rent is 800 a month. Can my landlord charge me 750 a month in late fees?
Is there a limit for how many days I can charge late fee until rent is paid
The Texas REALTORS® Legal Hotline can offer guidance on your question: 800-873-9155.
Just trying to be clear. Is the most a landlord can charge for late fees is 10% of rent? Does SB1414 means that?
I get paid on the 3rd of each month and sometimes earlier due to weekend or holiday. It’s a 2hr bus trip to landlord office. I had problems with online payments options at Walmart. I normally send the rent through the mail next day. Unless there’s a snow storm there usually not much delays. Yet I am being charged late fees for things I have no control over. 1 I pay for next day delivery to a P.O. Box. 2. My Landlord works Monday through Friday and doesn’t check the mail during the weekend. Yet I am still being charged… Read more »
I use a Cashier check and it’s dated the 3rd of the Month
Can a landlord evict over a 10 dollar unpaid late fee? I paid rent in full but I didn’t have the remaining 10 dollars. I told them I would pay with my next month’s rent but I have a 24 hr notice now to vacant over a 10 dollar late fee ? Which sounds silly considering the amount of money they will loose evicting me if I’m unable to get 10 bucks.
Okay, rent is considered late after two full days from the 1st. So my question is: what if you paid the rent in full on the 4th day before business opening hour either via money order date on the fourth in the drop box or through a online portal system,can you be charged a late fee?
If the rent is paid late and doesnt include the late fee, can we conintue to charge a daily late fee untill it is?