ARIZONA STATE SENATE
Phoenix, Arizona
self-storage; late
charge
Purpose
Allows an
operator to impose a reasonable late fee on the occupant for each month the
rent is unpaid and due.
Background
A 1998 class-action court decision in the Maryland Court of Appeals stated that if no statute authorizes late fees, only interest on the unpaid balance can be charged. This case has been asserted in Arizona in consumer class actions to recover damages for late fees from sellers of consumer services. Last year, the Legislature recognized the need for late fees by authorizing a seller of consumer services to impose a delinquency fee on any consumer with an account that has an unpaid balance of more than $10, provided that certain conditions are met (Laws 2000, Chapter 80).
According to the Arizona Mini Storage Association, current law does not apply to the self-storage industry because the current law is mechanically tied to the workings of the cable television industry, which are different from those of self-storage. The Association states that late fees are a necessary part of the self-storage industry because some customers do not honor their commitments to pay their bills on time. The Association indicates that without late fees, burdens created by such customers would have to be added to the basic prices for service.
H.B. 2398 authorizes an operator to impose a reasonable late fee on the occupant for each month the rent is unpaid and due and requires the operator to provide adequate notice to the occupant before the late fee is imposed. A reasonable late fee is deemed as the greater of $10 per month or 20 percent of the amount of monthly rent.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Allows the operator to impose a reasonable late fee on the occupant for each month the rent is unpaid and due.
2. Requires the rental agreement to state that a late fee may be charged by the operator for each month that the occupant does not pay rent when due. Requires the rental agreement to state the date on which rent is due and the date on which the late fee accrues.
3. Requires the operator to provide adequate notice to the occupant before a late fee is imposed. States that adequate notice is provided if the rental agreement complies with prescribed requirements or if a notice is sent to the occupant by certified mail notifying the occupant that a late fee may be charged in any month in which rent is unpaid and due.
4. Includes late fees in the possessory lien placed on the operator of a self-service storage facility from the date the rent is unpaid and due.
5. Specifies that any late fee imposed by the operator is in addition to any other remedy provided by law or contract.
6. Defines “late fee” as a reasonable fee or charge assessed by the operator for the failure of the occupant to pay rent when due.
7. Defines a reasonable late fee as the greater of $10 per month or 20 percent of the amount of monthly rent.
8. Makes technical and conforming changes.
9. Provides for a general effective date.
CED 2/05/01 DP 10-0-0-0
3rd Read 3/05/01 50-0-10-0
Prepared by Senate Staff
March 16, 2001