In the 2020 General Assembly, a number of bills were passed that impact property managers. Virginia REALTORS® will provide a comprehensive summary of those changes after the April 22, 2020 “reconvene session” where the General Assembly meets to vote on whether to accept changes the Governor recommends. One bill that was contains recommended changes by the Governor, House Bill 1420, could have a more immediate impact on you, as property managers.
The original bill updates the Virginia Residential Landlord Tenant Act (VRLTA) to say that a landlord cannot charge a tenant for late payment of rent unless such charge is provided for in the written rental agreement. Additionally, no late charge shall exceed the lesser of 10% of the periodic rent or 10% of the remaining balance due and owed by the tenant.
The Governor’s proposed amendment would make this bill effective immediately, not on July 1, 2020, like most bills. Note that if the Governor’s proposed amendment is accepted on April 22, 2020, this new provision would be effective immediately and apply to any late charges for May and June rents. Continue to watch for more information from Virginia REALTORS® after April 22, or you can check the status of the Governor’s recommendation on the Legislative Information System.
In the likely event that the Governor’s proposed amendment is adopted on April 22, you should include the following language in the additional terms portion of any lease signed before July 1, 2020, when the language will be incorporated into the body of the lease, along with other legal changes effective July 1:
The late fee language contained in Paragraph 1(h) of this lease is superseded. Late Fee will be the lesser of 10 percent of the total Monthly Rent or 10 percent of the balance due and owed by Tenant.
This language will also be available on the Virginia REALTORS® COVID-19 Resources and Updates page, under the Property Management FAQs, if the Governor’s amendment is approved.
Please remember that any landlord with properties with a federally insured mortgage (Fannie Mae, Freddie Mac, FHA, HUD, VA) are currently prohibited from charging late fees or other penalties under the Federal CARES Act from March 27 to July 25, 2020 (120 days – Please note, this date may be extended by future legislation).