TENANT RESOURCES
No Application Fees!
A landlord may not charge an application fee to anyone in order to apply to rent a residential unit or property. In Vermont State Law see: (V.S.A., TITLE 9, Chapter 137, § 4456a. Residential rental application fees; prohibited)
Limits on Late Fees
Tenants have an obligation to pay their rent on time. Landlords rely on timely payment from their tenants in order to meet their own payments for mortgages, taxes, maintenance, etc. If a lease so provides, a landlord may charge the tenant for expenses the landlord incurs because the tenant is late in paying rent. However, this charge may only cover actual expenses incurred by the landlord because the tenant’s rent is late. For example a reasonable interest charge could be charged on unpaid rent balances as this would compensate for a lost financial opportunity for the landlord. However a fee may not be charged simply as a penalty. A late fee, which is not reasonably related to the landlord’s expenses, is invalid and the tenant does not have to pay it. (This was established by a Vermont Supreme Court ruling in 1991. See note below.)
The case law is not clear (at least we received some conflicting legal opinions regarding this) on whether a landlord may offer a “discount” to a tenant for timely payments, for example by saying the rent is $50 less per month if payment is made by the first of the month. There is an argument that this amounts to a hidden late fee. The question is whether the extra amount due if payment is not made by the first of the month has to be reasonably related to the landlord’s extra expenses incurred because rental payment is late.
If a landlord tries to charge a late fee, the tenant should insist on first seeing documentation that the late fee is equal to the landlord’s expenses. If the landlord cannot or will not show this documentation, the tenant may refuse to pay the late fee.
A Vermont Supreme Court decision in 1991 (Highgate Associates, Ltd. v. Lorna Merryfield, Supreme Court Docket No. 90-032) established a prohibition against late fees levied as penalties. That ruling established that fees may be charged only as actual compensation for costs incurred by landlords as a result of rent payments being late.