Relating to a late fee for failing to pay rent under a residential lease.
The bill's passage would result in more stringent regulations around late fees in residential leases, thereby providing greater protection for tenants against excessive fees. It emphasizes transparency, requiring landlords to specify potential late fees within lease documents. Existing tenants who have entered leases prior to the bill's enactment would continue to be governed by the regulations in place before this change, thus respecting previous agreements.
House Bill 1821 proposes amendments to the Property Code regarding late fees that landlords can impose for unpaid rent. Specifically, the bill stipulates that landlords may charge an initial late fee and a daily fee for up to 15 days of continued non-payment. However, before a late fee can be charged, the landlord must include notice of the fee in the lease agreement, and the initial fee must not exceed eight percent of one month's rent, with subsequent daily fees capped at one percent. This change is aimed at clarifying the conditions under which late fees can be assessed and ensuring they are reasonable.
The sentiment expressed in discussions surrounding HB1821 appears largely supportive among tenant rights advocates who see it as a necessary measure to prevent landlords from imposing unfair financial penalties. However, there may be reservations among landlords regarding potential restrictions on revenue collection for late payments. Consequently, the bill highlights the ongoing debate between tenant protections and landlord rights within residential property management.
One notable point of contention associated with HB1821 is the definition of what constitutes a 'reasonable' late fee in practice. Landlords may argue that the limits imposed by this legislation could adversely affect their ability to manage cash flow in property operations. In contrast, tenant advocates insist that such regulations are essential to curtail exploitative practices and to offer tenants stability and predictability in their rental agreements.