Property Management Q & A - Summer 2019

Invoice stamped with Past Due

Question

I have heard that I can no longer force tenants to pay late payment charges. Is this true?

Answer

My guess is that you heard someone talking about SB 5600, a law recently adopted by the legislature which adopts substantial changes to the state Residential Landlord Tenant Act (RLTA). This bill, which becomes effective July 28, 2019, seeks to reduce homelessness by adopting a new definition of what rent can be used as a basis to evict a tenant (among other revisions). A full review of SB 5600 is beyond the scope of your question, but all property managers are strongly advised to review their lease forms and procedures to become compliant with SB 5600.

RCW 59.18.030(25) has been amended to adopt a definition of “Rent” or “Rental Amount” (neither were defined terms previously). The new law says that this “recurring periodic charges identified in the rental agreement for the use and occupancy of the premises, which may include charges for utilities. Except as provided in section 6(3) of this act, these terms do not include nonrecurring charges for costs incurred due to late payment, damages, deposits, legal costs, or other fees, including attorneys’ fees.”

Since you can only include “Rent” in a Pay Rent or Vacate Notice, non-rent charges can’t be included in that form. Whether you agree with the intent or not, the legislature determined that it didn’t want to see tenants evicted from their homes for non-payment of any monies owing other than rent (please note you can still evict for non-monetary defaults under a standard Ten Day Notice to Comply or Vacate).

Another thing that the legislature did is to require that any monies received get applied to rent first (unlike many rental agreements which apply payments to other monetary obligations before they are applied to rent). The new law specifically states, “a landlord must first apply any payment made by a tenant toward rent before applying any payment toward late payments, damages, legal costs, or other fees, including attorneys’ fees.”

The new law cross-references RCW 59.12.030 (the unlawful detainer statute) to make it clear that a residential tenant can only be in default for non-payment of rent if they owe “rent” as defined in RCW 59.18.030(25). It goes on to say, “except as provided in RCW 59.18.410 [which is technically unrelated to your question], the tenant’s right to possession of the premises may not be conditioned on a tenant’s payment or satisfaction of any monetary amount other than rent. However, this does not foreclose a landlord from pursuing other lawful remedies to collect late payments, legal costs, or other fees, including attorneys’ fees.”

What this means is that tenants do in fact owe late payment charges that are properly assessed against them (again, a full discussion of when late fees are unenforceable is beyond the scope of this article). But, although the tenant does in fact owe them, you can’t use the unlawful detainer process as a means to collect them, or as a penalty for non-payment. In most cases, unpaid late charges will continue to accrue until the end of the tenancy, where the landlord can deduct them from the Security Deposit (provided that the lease authorizes that as one of the terms under which the deposit is refundable). In other cases, an aggressive landlord could conceivably refer late fees and other charges to a collection agency or try to collect them in small claims court.

So, turning back to your original question (and sorry for the long digression), you can force tenants to pay late fees. You just can’t use unlawful detainer as a mechanism for doing so.

Christopher T. Benis
Christopher T. Benis is an attorney with Hecker, Wakefield & Feilberg in Seattle. The information contained herein is not legal advice. You are encouraged to consult with your attorney before relying on anything contained herein.



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