Del Monte Properties and Investments, Inc. v. Dolan
Facts: A landlord rents a residential property to a tenant. The rental agreement provides the tenant will be charged a flat late fee if rent is not timely paid. The tenant fails to pay rent. The landlord serves the tenant with a three-day notice to pay rent or quit which includes a late fee set as a percentage of the rent. The tenant fails to pay or vacate after three days and the landlord files an unlawful detainer (UD) action.
Claim: The landlord seeks possession of the property and the amount of the unpaid rent plus the late fee, claiming the tenant agreed to the late fee’s flat dollar amount in their lease agreement regardless of how it was calculated.
Counterclaim: The tenant claims the three-day notice is invalidated by the inclusion of the late fee calculation as a percentage of the rent since the late fee needs to be calculated based on losses caused by late rent payment.
Holding: A California court of appeals holds the landlord may not regain possession of the property or collect payment since they did not calculate the late fee based on losses caused by the late payment, rendering the three-day notice defective. [Del Monte Properties and Investments, Inc v. Dolan (May 11, 2018)_CA5th_]
Editor’s note—For more information on the three-day notice, see the Three-Day Notice to Pay Rent or Quit with Rent-Related Fees form published by RPI (Realty Publications, Inc.). [See RPI Form 575]