Court Finds 5 Percent Late Rent Payment Fee Unenforceable

Landlord sued former tenant in small claims court, claiming that tenant owed $2,100 in legal and late fees. Tenant in turn claimed $5,000 in legal fees. The court ruled against landlord and awarded tenant $5,000 for attorneys' fees. Landlord appealed and lost. Landlord claimed tenant owed 5 percent late fees for unpaid rent. But an appeals court had already ruled that a 4 percent late fee, amounting to 48 percent per year, violated the criminal law prohibition on interest charges of more than 25 percent per year. The 5 percent late fee, while not technically interest, amount to a 60 percent per year fee and was unenforceable as against public policy. Landlord also wasn't entitled to attorneys' fees. Although tenant was evicted, landlord had discontinued one of the prior proceedings on which its claim was based, and landlord failed to explain which fees pertained to each of its prior proceedings against tenant. Tenant's attorney fee award was affirmed, since landlord didn't raise this issue before the lower court or in its initial appeal papers.

Hillside Park 168, LLC v. Benjamin: 65 Misc.3d 133(A), 2019 NY Slip Op 52119(U) (App. T. 2 Dept.; 12/20/19; Pesce, PJ, Elliot, Siegal, JJ)