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Can Landlords Charge Late Fees in Maryland?

by Oct 21, 2021Anne Arundel County, Anne Arundel Property Management, Innovative Properties, Property Management, Rent

Can Landlords Charge Late Fees in Maryland?

The Maryland legislature has recently passed a bill (Effective October 1, 2021) that will greatly impact tenants and property owners in a number of different aspects. However, one aspect that is crucial you be aware of is “Can Landlords Charge Late Fees?”. Now, that may seem like a question with an obvious answer. “Of course landlords can charge late fees. They can do whatever they want, can’t they?” Well, landlords can indeed charge late fees, but in a much more regulated and reduced fashion. This all falls under the Senate bill that passed titled “Concerning Rights Related to Residential Rental Agreements”. This is not a full breakdown of this bill. We will simply be going over a few highlights of the bill so that landlords and tenants are equally informed of their rights.

Is There A Cap on Late Fees in Maryland?

A question that often comes up is “Is there a cap on late fees? Or can I set it to however much I want it to be?” In the past, a landlord could write a late fee of any size into their lease agreement. However, Maryland judges would not enforce anything that wasn’t reasonable. Maryland judges had ruled that 10% of a tenant’s rent was a legally reasonable late fee. Anything over 10% would not be allowed. The NEW cap on late fees is this: No greater than either 5% of a tenants rent or $50.

When Can A Late Fee Be Charged in Maryland?

Another big question that landlords have regarding the new legislation is “When can a late fee be charged?” Before this legislation, landlords typically offered a grace period of a few days. If your rent is due on the 1st, typically you would have until the 3rd or 4th to pay before a late fee would be charged. Under the old law, this grace period was simply governed by the lease. 

Well, the legislature has decided that 2-3 days is not enough time. Maryland state law now says that late fees can only be charged after the rent is 7 days late. So, if rent is due on the 1st but still has the grace period until the 3rd, that means your late fee cannot be charged until 7 days after the grace period ends. This may lead to an unintended consequence of this otherwise well-meaning bill, which is that landlords may stop offering grace periods since they will have to wait 7 days anyway. This way, instead of being charged a late fee on the 10th or 11th, tenants could be charged a late fee on the 8th. It’s a quite convoluted section of the bill, but one to be mindful of nevertheless.

Can I Be Evicted For Not Paying Late Fees in Maryland?

A big question tenants have regarding the new legislature is “Can I be evicted for not paying late fees?” With this new bill, landlords may NOT evict for nonpayment of late fees. Also, landlords must first apply tenant payments to rent due. In the past, a trick landlords would do is apply a section of the late rent payment to the late fee, leaving a tenant’s rent balance outstanding 10%. Maryland state law now prohibits this practice. All of the payment must first go to the rent. If there is anything left, then the landlord may apply that to the late fee. However, once again, no matter how much the tenant may owe in accrued late fees, a landlord cannot evict.

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Are you looking for professional property management services in Anne Arundel County? At Innovative Properties we specialize in turnkey property management solutions for residential homeowners and commercial property owners in the Annapolis Maryland area. Property owners can feel at peace knowing that Innovative Properties is managing their investment. We treat each property we manage as if it were our home and our core principles of honesty, integrity, and professionalism are at the core of each service we offer. Learn more about our services by contacting our team today.

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