We bought a park in Minnesota a little more than a month ago, and we are really struggling to get the tenants to pay on time. In Minnesota, the max late fee you can charge is 8% of rent.
So, the max late fee we can charge on our $295 lot rent, is a measly $23.60.
We came up with an idea… we want to increase our lot rent by $100 to $395. But if the tenants pays on time, then they get $100 discount. So the lot rent will remain $295 for those who pay on time.
We ran this by our lawyer, and he says “To my knowledge this legal question hasn’t been tested by the courts, but it might be worth a try. The argument against it would be that it’s just a disguised late fee, and since it exceeds 8%, it wouldn’t be allowed. Your argument is that it’s merely a rent discount if they pay on time. I would try it for maybe 6 months to see if it works. The only danger is that Legal Aid could test this and if a court were to agree with them, you might have to repay some of these monies. If you want to give it a try, please send me the wording you would use in your lease so I can review.”
Could the members of the forum please give us some advice/thoughts?
Thank you very much.