Waiver, Holdover Rent, and Late Fees
Recently, I had a client consult that brought up some questions that I do not hear frequently, but strike me as very common.
- If a tenant pays "X" amount per month for a period of years as a holdover tenant, but the lease expressly states that the tenant should have been paying "Y," is the landlord entitled to the difference when the landlord/tenant relationship ends?
- Similarly, if the landlord is entitled to late fees pursuant to the terms of the lease for late rental payments, but continues to collect rent without assessing the tenant late charges, has the landlord waived the ability to collect the late fees at a later date?
The landlord/tenant relationship is a delicate one. As a result, landlords can be hesitant to enforce lease provisions for late fees and holdover rent increases. So long as the tenant is paying relatively regularly, most landlords will ignore these clauses. The age old adage comes to mind: don't step over a dollar to pick up a dime.This saying holds true, but it is important for landlords and tenants to know the future ramifications of their past actions. It is well settled Ohio law that waiver is a voluntary relinquishment of a known right. Waiver of a contract provision may be express or implied. As a result, a lessor can waive the right to collect late fees when it continues to accept late rental payments without objection. In the same vein, a lessor can waive the right to collect holdover rent when it continues to accept the original rental amount after expiration of the lease. That being said, every landlord should evaluate their own situation before being a stickler about nominal fees. Again, don't step over a dollar to pick up a dime. More importantly, however, landlords may be tempted to deduct these late fees from a tenants security deposit upon termination of the landlord/tenant relationship. If a court determines that waiver has occurred, any amount not returned to the tenant will likely be deemed wrongfully withheld, and accordingly, the landlord would be liable for double damages and attorney fees. On the other side of the coin, tenants should examine the itemized list of deductions that their landlord provides them. Not every deduction is permissible, and if a tenant feels that there has been anything wrongfully withheld they should consult with a landlord/tenant attorney for a evaluation of the deductions.