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.
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.
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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.
