HB 1670 An Act Relative to the Modification of Late Fees (2014 Session)
Sponsored by Representative Chris Walsh, HB 1670, Modification of Late Fees, would allow landlords or property managers to charge a late fee from the 10th day of the month instead of the 30th. (The current law is at MGL Ch. 186, Section 15B-1C.)
This bill has been extended to June 30, 2014. MassLandlords.net supports this bill. [Update 2014 August: This bill was sent to study at the end of June (i.e., killed).]
Late Fees in Massachusetts Rental Real Estate
The current law prohibits a landlord or property manager from assessing a late fee until 30 days after the rent was due. This effectively bans late fees in rental real estate. By the time 30 days have elapsed, responsible landlords and property owners would have started summary process (aka, eviction).
Late fees provide an economic incentive for tenants to meet their obligations on time. It's easy to forget that landlords and property managers have firm obligations to pay their mortgages, insurance, taxes, and water/sewer bills regardless of whether any tenant is paying rent. Usually these recurring expenses consume the vast majority of the cash flow available in any given month. If the previous month required a large capital expenditure (e.g., new roof), a landlord unable to incentivize prompt payment may enter a cash flow crisis.
Note that the bank holding the mortgage is allowed to charge a landlord a late fee after just 10 days.
Benchmarking Massachusetts Rental Late Fees
To the best of our knowledge, rental real estate is the only industry is Massachusetts that has a 30 day waiting period for late fees.
To the best of our knowledge, Massachusetts is the only state in the country that requires landlords and property managers to wait 30 days.
