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Tenancy Fees – What to Charge, When to Charge, and How to Get Paid!

By Tia Politi, General Manager, Acorn Property Management – Springfield

(Screening charges are charged pre-tenancy, and are not addressed in this article.)

A fee is a non-refundable payment of money from a tenant to a landlord, most often for a violation of the rental agreement, but also for certain landlord expenses. A landlord is not obligated to account for or return to the tenant any lawfully charged fee. A fee must be described in a written rental agreement.

Contractual fees include late payment of rent, smoke/CO alarm tampering, dishonored check, lease-break, HOA/COA move-in or move-out, and municipal or utilities pass-through

Non-compliance fees include late payment of a utility or service charge, failure to clean up animal waste (pet or assistance animal) from a part of the premises other than the dwelling unit, failure to clean up garbage, rubbish or other waste from a part of the premises other than the dwelling unit, parking violations or improper use of vehicles within the premises, smoking/vaping in a clearly designated nonsmoking unit or area of the premises, or keeping on the premises an unauthorized pet capable of causing damage to persons or property, as described in ORS 90.405.

Contractual fees require no further notice prior to assessment, other than being described in a written rental agreement. Once the tenant commits the violation, the landlord sends the bill for the fee.

Non-compliance fees have additional notification requirements prior to assessment, and the amount of the fee varies based on the type of non-compliance. Prior to charging a fee, the landlord must send a written Warning Notice.

 

CONTRACTUAL FEES

Late Rent

A landlord may charge a fee when the tenant pays rent beyond the statutorily allowable grace period, under certain conditions. If allowed by contract a landlord may assess a late fee for any rent payment received after 11:59 p.m. on the 4th day of the rental period. If not allowed by contract, or in cases of reasonable accommodation, a landlord may assess a late fee for any rent payment received after 11:59 p.m. on the 7th day of the rental period. To have the right to charge a late rent fee, the landlord must provide the tenant with information on how and where to submit their rent payments. The fee must be reasonable and is limited by statute to, an amount not to exceed the amount customary in the local area.

If there is no written rental agreement, a landlord may provide a 30-day notice of change-in-terms to effect the change to an oral agreement.

Insufficient Funds

Landlords may assess a fee of $35, plus bank charges for any dishonored check submitted as payment by a tenant.

Lease-Break

Landlords may charge a fee not to exceed 1-1/2 times the monthly rent for a tenant who breaks a lease, with some restrictions: 1) The landlord may not recover unpaid rent for any period of the fixed term tenancy beyond the date that the landlord knew or reasonably should have known of the abandonment or relinquishment. 2) The landlord may not recover damages related to the cost of renting the dwelling unit to a new tenant. 3) The landlord may not charge a lease-break fee in cases of termination of tenancy related to domestic violence, sexual assault or stalking as described in ORS 90.453(2), or for a tenant being called to active duty military service as described in ORS 90.472 or 90.475.

Smoke/CO Alarm Tampering

Landlords may assess a fee for tampering with a properly functioning alarm. The fee is not to exceed $250 per occurrence, and a landlord may not assess the fee if the Fire Marshall has already done so.

HOA/COA Move-in/Move-out

Landlords may pass through move-in or move-out fees assessed by a condominium or homeowner’s association. The fee must be described in the written rental agreement. The landlord must bill the tenant within 30 days of receiving the association’s bill, provide a copy of the invoice with the bill, and allow the resident up to 30 days from the date of billing to pay.

Municipal and Utilities Pass-Through

Landlords may pass on municipal fees and charges to tenants. The pass-through charges must be stated in the written rental agreement. The charge must be imposed on the landlord by a utility or service provider, on behalf of the provider or a government agency for municipal services, or for general use of a public resource related to the dwelling unit, including assessments for street maintenance, transit, public safety, or parks and open space. The landlord must bill the tenant in writing within 30 days of receipt of the provider’s bill, and include a copy of the bill. The landlord must give the tenant 30 days or more to pay. If not stated in the written rental agreement, the fee may be added to an existing periodic agreement with 60 days’ written notice.

 

NON-COMPLIANCE FEES

The late payment of a utility or service charge

A landlord may require tenant to pay utility or service charges as described in ORS 90.315. A landlord may require that a bill to the tenant for a utility or service charge is due upon delivery of the bill. Otherwise, a landlord shall treat the tenant’s payment as timely if the payment is made by a date that is specified in the bill and that is not less than 30 days after delivery of the bill. If payment is not tendered by the specified time, the landlord may assess the fee.  A landlord must provide 60 days’ written notice to a tenant to amend an existing rental agreement for a month-to-month tenancy to require a tenant to pay a public service charge that was adopted by a utility or service provider or a local government within the previous six months.

Failure to clean up animal (pet or assistance animal) waste, garbage, rubbish and other waste from a part of the premises other than the dwelling unit

Assessment of non-compliance fees for these violations requires connecting a specific violation with a specific tenant or tenancy. With a tenant in control of their own yard, determining responsibility is easier than in a multi-unit complex. Additionally, the landlord should be certain that what they consider waste is actually waste. Does the garbage bag on the porch contain trash, or does it hold cans ready to be recycled?

Parking violation, or the improper use of a vehicle within the premises

Assessing non-compliance fees for these violations requires that rules establishing where to park or identifying prohibited conditions or activities related to motor vehicles – be stated in writing. Parking restrictions and vehicle tags, prohibitions against vehicle maintenance on the premises, and requirements that vehicles be operable and current on registration are all examples of vehicle restrictions, and may be cause for assessment of a non-compliance fee or termination of the tenancy.

For the above violations the allowable fee is limited to $50 for the second offense, and $50 plus 5% of the rent amount for all subsequent similar violations that occur within one year of issuance of the required written Warning Notice.

 For two other violations, however, the fee is much higher.

Smoking/vaping in a clearly designated nonsmoking unit or area of the premises

A landlord may charge a $250 noncompliance fee as early as 24 hours after the effective date of the written Warning Notice, and repeated fees for every 24-hour period during which the tenant continues to violate this provision.

Keeping on the premises an unauthorized pet capable of causing damage to persons or property, as described in ORS 90.405

A landlord may charge a $250 noncompliance fee as early as 48 hours after the effective date of the written Warning Notice if the tenant fails to remove the unauthorized pet, and repeated fees for every 48-hour period during which the animal remains on the premises.

 

Prior to charging a noncompliance fee, the landlord must issue a written Warning Notice within 30 days of discovery of the initial violation, (Notice of Non-Compliance – ORHA form #35) that states a specific violaton, and the amount of the fee for a second non-compliance, or for any subsequent non-compliance, that occurs within one year after the issuance of the written Warning Notice.

For any specific violation, the right to charge a fee ends one year from the date of issuance of the first Warning Notice. Once the year has passed, landlords must issue a new Warning Notice prior to charging fees again for that specific violation. Non-compliance fees must be assessed within 30 days of the act constituting the violation.

A landlord may terminate a tenancy for a non-compliance instead of assessing a fee, but may not assess a fee and terminate a tenancy for the same non-compliance. An example might be the service of a Pet Violation Notice. A landlord may include a Warning Notice with the Pet Violation, but if the tenant did not remove the pet timely, the landlord would have to choose between terminating the tenancy for the failure to remove the pet or assessing non-compliance fees for the violation. Landlords may, however, terminate a tenancy for failure to pay prior outstanding noncompliance fees billed to the tenant. Confusing, I know.

Look at it this way, if a landlord serves a Notice of Termination With Cause for a specific violation and also serves a Warning Notice for the violation, and the tenant doesn’t cure the violation within the specified time frame, the landlord would then have to choose between following through with the termination of tenancy or the assessment of fees; however, if a landlord chooses to assess and bill the tenant for the fee, and the tenant refuses to pay the lawfully charged fee, the tenancy may be terminated for that violation.

A landlord may not issue a Warning Notice prior to a violation being committed by the tenant. A landlord’s right to charge non-compliance fees may be added to an existing month-to-month agreement with 30 days’ written notice.

 

GETTING PAID

The first step in collecting a contractual or non-compliance fee is to notify the tenant in writing that they owe a fee. Send a bill stating the violation, the fee they owe, the fee they will owe upon future violations, and how long they have to pay. The length of time a tenant has to pay a fee after notification can be defined in the rental agreement; if not defined, 30 days seems reasonable.

If the tenant does not voluntarily pay a bill for a lawfully charged fee, a landlord may send a Notice of Termination With Cause (ORHA form #38), providing a final opportunity to remit the funds or the tenancy terminates. If the tenant neither pays nor moves, the landlord may evict on that basis.

 

PENALTIES AND OTHER CONSIDERATIONS

Landlords incur a stiff penalty if they charge a tenant a fee in violation of this section. The tenant may recover twice their actual damages or $300, whichever is greater. This penalty applies only to non-compliance fees, and not to contractual fees such as: late payment of rent, smoke /CO alarm tampering, dishonored check, lease-break, HOA/COA move-in or move-out, municipal or utilities pass-through.

Concerns about proof

Landlords must take care to ensure they collect and retain proper documentation and proof of the violation prior to issuing a Warning Notice or assessing a contractual or non-compliance fee. If a tenant disagrees with the landlord’s assessment, the conflict could end up in court, where legitimate evidence will be required.

 

This column offers general suggestions only, and is no substitute for professional legal counsel. Please consult an attorney for advice related to your specific situation.

Posted by: Acorn Property Management on July 21, 2017
Posted in: Uncategorized