Late fees limited in Ohio

There are two things that limit the amount that a landlord may charge to a tenant in Ohio for late fees. The first is that under the normal rules of contract, courts will always award a party suffering damages due to a breach of contract (such as failure to pay on time) that parties actual damages. The second is Ohio Revised Code Section 5321.06 which allows the court to refuse to enforce any clause in the rental agreement that is unconscionable. As Ohio’s 11th District Court of Appeals put it in reviewing the decision of a lower court to reduce the amount of late fees a landlord could charge: “We would also note that the trial court could have declared the late fee provision of the lease agreement unconscionable under Ohio’s Landlord Tenant Act, R.C. 5321.14. However, the court instead relied upon general contract law pertaining to liquidated damages in finding the late fee provision an unreasonable penalty, and we have concluded its decision was not [*5] an abuse of its discretion.” Wadsworth v. Starcher, 1998 Ohio App. LEXIS 2909.

The trouble of course with late fees is that other than annoyance, often a slight delay in getting the payment to the landlord does not cause any actual damages. Ohio’s Eighth District Court of Appeals ruled that: “Any party due money could claim that the resultant decrease in cash flow might result in late charges against it. That is unduly speculative.” Siara Mgmt. v. Nedley (1992), 1992 Ohio App. LEXIS 5265.

Thus the case law holds that demanding too much for a late fee, even if the tenant agrees in the lease to the amount, will not be legal. In determining how much is too much though, the 11th District Court of Appeals left that up to the sound discretion of the trial courts. Calabria v. Greene, 1995 Ohio App. LEXIS 3903.