Do you charge late fees on overdue water bills? is it legal?

The city now bills me for the tenants water usage. I forward the bill to the tenant. The late charge is 5% of the outstanding overdue balance. I pass this on to the tenant if it occurs and I am being told this is illegal.

I also had an amount roll over on to my taxes, so I was also charging 5% late fee for overdue balance. Again, I am told this is illegal.

Per the tenant who does really have a lawyer:

The water late charge you're attempting to collect is illegal and my attorney has advised me not to pay any of your "fees".

Ask the tenant where that language came from. MI law? what section? Check for yourself if thats what it really says.

If yes, then it is clear that your fee may be illegal. What is the actual cost to you for the tenant being late? You are allowed to be compensated for your actual costs, but it cannot be called a "fee". Instead, call it "damages" due to tenants' breach of contract.

Dont mention any late fee. Just refer to the citys bill , and say they agreed to pay that amt. Full stop.

From reading your other post, how do you know your tenants have an attorney? As it stand right now, it doesn't look like the attorney is actually representing them as they are doing the communicating with you, not the attorney.

Correct me if I am wrong, but don't attorneys who are representing a client want the clients to cease communication and let the attorney handle it?

The real problem here is that, again, you are in a bad financial position.

The proper way to handle this, in my opinion, is that you get the bill, you PAY the bill, and you give a copy of the bill to the tenants to pay you. I've said this many times before: if a bill is in your name and will hurt YOU if it is not paid (like a municipal water bill like this), then YOU should pay it. I'd never pass that off to a tenant and trust that they would take care of it when it is in MY name and will hurt ME if they mess up.

So, you should just get it, pay it, and bill them. No late fees -- ever -- because you pay it on time.

Unfortunately, based on your other posts, you're just barely getting by and don't have the money to do that -- is that correct?

- John...

Naturally, I know nothing about MI law so I won't comment as to whether it's legal or not.

But, going forward with the next tenant why not raise the monthly rent by $30 (or whatever the averge bill is) and tell the tenants you'll "audit" their water account every 6 months and they need to pay the difference or will receive a credit.

Did you have some issues and burn through all of your reserves? I am sorry if something happened. If you've been doing this for 29 years and have bought several properties, it really worries me that you are late on your mortgage payment if one tenant doesn't pay (as you mentioned in the other thread).

Is that normal or is this just a temporary thing? If temporary, then I suggest you do as mentioned above and keep the bill yourself and then just bill them. Again, not worth it to leave something that would harm YOU (that you could get a lien against you for) in the hands of bad tenants.

- John...

John2 (MI), you hit the nail on the head: "the tenant pool is used to what the majority of us do in town." That is absolutely true. We spend so much time informing our tenants that we don't care what their past landlords may have done - This is your current lease, we are your current landlord, we are following the law, and so must you. We don't have any properties with combined utilities, nor with utilities that we pay.

Start off with sorry for the long post but...

Withholding rent due to a late fee dispute doesn't appear legal when I review the reasons to withhold rent in MI. The only reasons listed for legal withholding is landlord’s breach of the warranty of habitability and duty to repair.

If it is truly in an escrow account, who is the governing agency administering the complaint and determining when the funds can be released? Also, were you given proper notice in order for them to take this action as required by the state? Were you given the account information including the banking institution holding the funds? Sounds like this attorney guy is asking for a complaint letter sent to the state bar.

If they are withholding purely for late fee of water bill then post your states 7 day pay or quit notice for non payment of rent as soon as it is legal to do so by your lease or state rules and handle the water late fees separately like the big boy attorney/tenants should have...

Fun bit of info: Under the Truth in Renting Act - A landlord may increase the rent with a written 30 day notice as long as there is a clause in the original lease that allows you to adjust the rent for changes required by federal, state, or local law, rule, or regulation; changes in rules relating to the property meant to protect health, safety, and peaceful enjoyment; and changes in the amount of rental payments to cover additional costs incurred by the landlord because of increases in property taxes, increases in utilities, and increases in property insurance premiums(Tenants and Landlords, a practical guide -Building Division of the Michigan Department of Consumer and Industry Services)

Security deposit can be dinged for: unpaid rent, unpaid utility bills, and damages to the rental unit beyond reasonable wear and tear caused by tenant

Water bill late fees fall under increases in utilities. Send out a 30 day notice that their new rent will increase by whatever the cost of the average late fee is from the water bill - $30.00 a month because of increases in utilities.

BTW, I found nothing about it being illegal to pass thru late fees on water bills but I did find that the 24th district court stated that rent and utility bills agreed to be paid by the tenant should be paid timely and that a late fee could be administered as long as it was exact damages and not a penalty. The wording was not specific to the utilities when stating a late fee was appropriate for untimely payment.