Senate Bill 1414, which Texas REALTORS® supported in the 2019 legislative session, goes into effect Sept. 1 and amends the section in Chapter 92 of the Texas Property Code regulating fees for the late payment of rent.
The bill prohibits the collection of late fees until any portion of the rent has remained unpaid for two full days after the original due date.
Previously, late fees were allowed after one day.
The bill establishes a safe harbor where if late fees do not exceed a certain percentage, the fee is automatically considered reasonable under the law.
The bill continues to require that any late fee be reasonable. Under the safe harbor, for a rental dwelling located in a structure with no more than four dwelling units, a late fee is considered reasonable if the fee is not more than 12% of the amount of rent for the rental period under the lease.
For example: The tenant’s monthly rent is $1,000, and the tenant fails to timely pay rent. To fall under the safe harbor, the total amount of late fees the landlord collects for that late rent payment should be no more than $120.
For a rental dwelling located in a structure that contains more than four dwelling units, a late fee is considered reasonable if the fee is not more than 10% of the amount of rent for the rental period under the lease.
A late fee that exceeds the safe-harbor amount can still be considered reasonable.
Staying under the safe harbor limits automatically makes those fees reasonable. But even a late fee exceeding those limits can be considered reasonable, as long as the fee is in line with the damages to the landlord that might reasonably result from the late payment of rent. For example, those damages could include the cost associated with the collection of a late payment.
The bill allows a tenant to request a written statement of his late fee.
The tenant can ask for a written statement of whether he owes a late fee and, if so, the amount of that fee. The landlord must provide the statement to the tenant through a means regularly used for written communication between the landlord and the tenant. For example, if the landlord and tenant usually communicate by email, that would be the way to deliver the written statement. A landlord’s failure to respond, however, doesn’t affect the tenant’s liability for any late fee owed to the landlord.
This bill applies to leases entered into or renewed on or after Sept. 1, 2019.
Changes have been made to the Residential Lease (TXR 2001) and the Residential Lease for a Multi-Family Property Unit (TXR 2011) to reflect the increase in the number of days that the rent must remain unpaid before collecting a late fee, and other minor changes have been made as a result of additional legislation
View the redline changes of the Residential Lease and Residential Lease for a Multi-Family Property Unit. The updated forms will be available on the blank forms page, as well as through our form vendors, on Sept. 1.