Late charges in California residential leases and rental agreements

A late charge in a California residential lease or rental agreement is the topic of this blog post. A late charge clause is also known as a liquidated damages provision in a residential lease or rental agreement and is governed by Civil Code section 1671. While many California residential leases and rental agreements include a late charge clause that does not mean they are valid as will be shown by this blog post.

California Civil Code section 1671 states that,

“(a) This section does not apply in any case where another statute expressly applicable to the contract prescribes the rules or standard for determining the validity of a provision in the contract liquidating the damages for the breach of the contract.

(b) Except as provided in subdivision (c), a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.

(c) The validity of a liquidated damages provision shall be determined under subdivision (d) and not under subdivision (b) where the liquidated damages are sought to be recovered from either:

(1) A party to a contract for the retail purchase, or rental, by such party of personal property or services, primarily for the party’s personal, family, or household purposes; or

(2) A party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support.

(d) In the cases described in subdivision (c), a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.”

In a published case the Appellate Division of the Superior Court in Los Angeles County held that, “As is apparent from the language of section 1671, a liquidated damages provision in a residential lease is normally void, except where the parties specifically agree and “when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.” Orozco v. Casimiro 121 Cal.App.4th Supp. 7, 10, 11, (2004).

The Court also ruled that unless the landlord can present evidence that any late fee is in fact the amount of damages caused by late payment of rent, the late fee is void and unenforceable. The Court in Orozco v. Casimiro reversed the judgment entered against the Defendant and Appellant and ordered the Trial Court to enter judgment in favor of Defendant and Appellant.

“Although respondent may have been able to present evidence below that would have shown in this particular case that damages resulting from the late payment of rent were impracticable or extremely difficult to fix, he did not do so. In the absence of such evidence, he was not entitled to the presumption that the late fee was the amount of damage caused by the late payment. Thus, under the evidence in this case, the late fee was void and unenforceable.” It should be noted that the Court also held that, “Once the landlord shows that it was impracticable or extremely difficult to fix actual damages, the amount the parties agreed upon is presumed to represent the amount of damage suffered by the breach.” Orozco v. Casimiro 121 Cal.App.4th Supp supra at 11.

Tenants in California should take the information contained in this blog post into account.

Attorneys or parties in California who would like to view a portion of a sample answer to an eviction complaint for California that includes 15 affirmative defenses, including the affirmative defense that the late charge claimed in the three day notice is void can vist the link shown below.

Sample Answer to California eviction complaint  

To purchase and download a California eviction document collection containing over 20 sample documents and selling for only $59.99 visit California eviction document collection and choose the eviction document collection.

The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal who has worked in California and Federal litigation since 1995 and has created over 245 sample legal documents for California and Federal litigation.

*Do you want to use this article on your website, blog or e-zine? You can, as long as you include this blurb with it: “Stan Burman is the author of over 245 sample legal documents for California and Federal litigation and is the author of a free weekly legal newsletter. You can receive 10 free gifts just for subscribing.  Just visit Subscribe to FREE weekly legal newsletter for more information. You can view sample legal document packages for sale by going to Sample legal document packages for sale

DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.