Can landlords set penalties for late rent payments at whatever level they think is right? The complaint for this class action says, “Not in Texas,” and compares the charges of Firmus Management and Construction with the provisions for late fees in the Texas Property Code.
The class for this action is all persons who (a) were residential lease tenants in Texas with written leases, where Firmus Management and Construction is shown as lessor or owner, (b) who were charged (and who, according to Firmus’s records, paid) at least one initial rent late fee.
Plaintiffs Brittany Foxx and Keith Perkins took a fourteen-month lease on an Firmus apartment in Algarita Village apartments. The lease runs from May 19, 2017 through August 26, 2018.
Although the Texas Apartment Association offers form lease for landlords to use, the lease they signed was a Firmus document. The complaint quotes it as saying, “Should the Lessee(s) rent payment not be received in full … within three (3) days of the rent due date, a late charge of $50.00 will be added on the 4th of the month and $10.00 a day, thereafter, until paid in full.”
However, the complaint claims that Foxx and Perkins had difficulty with the payment portal, which sometimes did not record their rent as being paid on the first of the month. Although the company at first waived some late fees, it later re-imposed them.
In addition, the complaint points out that the initial late fees charged were more than the amount specified in the lease. For example, the late fee charged on December 3, 2017 was $75, plus the additional fees of $10 per day, for a total of $105.
The Texas Property Code’s Section 92.019 has the stated purpose of protecting residential tenants from “excessive fees and unwarranted penalties.” The complaint quotes it as saying that a late fee must be “an estimate of uncertain damages to the landlord that are incapable of precise calculation and result from the late payment of rent…”
The complaint argues that the landlord probably does not suffer any damages “that meet the statutory test” when tenants pay rent a few days late. Firmus uses automated computer systems to keep track of rent payments, so no additional effort is required for that from the landlord.
According to the complaint, “a landlord is prohibited from instituting a late fee scheme until or unless it first makes an estimate of its damages… And then, the rent late fee must be reasonably tied to that estimate of damages.” The complaint alleges that Firmus has never made any such estimate.
The complaint also says that the Code prohibits late fees from being used to generate additional income or to serve as penalties for the late payment.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Firmus Management Late Rent Fees Violate Texas Property Code Complaint
June 28, 2018
Can landlords set penalties for late rent payments at whatever level they think is right? The complaint for this class action says, “Not in Texas,” and compares the charges of Firmus Management and Construction with the provisions for late fees in the Texas Property Code.
firmus_management_tenant_class_action_complaint.pdfCase Event History
Firmus Management Late Rent Fees Violate Texas Property Code Complaint
June 28, 2018
Can landlords set penalties for late rent payments at whatever level they think is right? The complaint for this class action says, “Not in Texas,” and compares the charges of Firmus Management and Construction with the provisions for late fees in the Texas Property Code.
firmus_management_tenant_class_action_complaint.pdf