Part 2 of this 2-part article looks at whether rental fees like parking fees, late payment of rent fees, and lease break fees are legal under Alberta’s Residential Tenancies Act.
Over the past year, CPLEA has been hearing about confusion over fees that landlords are charging tenants. The first part of this article series, All About Rental Fees: Refundable vs non-refundable, already covered the law as it relates to refundable fees and non-refundable fees.
So, what about the other fees we promised to cover in part two? Like parking fees? Or fees for late payment of rent or breaking a lease?
Parking fees: probably allowed if agreed on
The RTA is silent on parking fees and there is no relevant caselaw about them. However, the updated RTA handbook (at page 41) notes the following:
There is no requirement for a rent increase notice when a landlord and tenant agree to add a parking stall to a residential tenancy agreement.
If a residential tenancy agreement states that parking fees are included in the rent, then an increase for parking charges or the introduction of a new parking fee is subject to the rent increase notice provisions.
So, parking fees are probably allowed if both landlords and tenants agree to them in the lease. But, any increase in parking charges or the introduction of new parking fees must follow rent increase notice rules under the RTA.
Fees for late payment of rent: unenforceable if they are punitive
The courts and RTDRS have made it clear that fees for paying rent late must be reasonable. Late fees are not enforceable if they are punitive in nature. The threshold for what may be punitive and therefore unenforceable is lower than one would think. For example, in one case, the Alberta Court of Justice (previously the Provincial Court) found a $5 late charge on rent of $325 to be punitive. In other cases, the Court found that a $25 daily late fee to be punitive and a $40 late fee for being 15 days late on mobile home rent to be punitive.
Lease break fees: unenforceable because they are punitive
There is authority in both the Alberta Court of Justice and the Court of King’s Bench, as well as the Residential Tenancy Dispute Resolution Service (RTDRS) that says that a lease break fee is purely a penalty clause. They are windfalls for the landlord and are not a genuine pre-estimate of damages. As such, the RTDRS and courts will not enforce contractual lease break fees.
The law around rental fees is like a maze to navigate – the RTA is not the only source of law to refer to. Sometimes, it takes a good deep dive into caselaw and even the RTA handbook to get additional information on the topic. So, as a quick recap from the All About Rental Fees article series:
- Refundable fees must follow the Residential Tenancies Act’s (RTA) security deposit restrictions as they form part of the security deposit. So, the total security deposit including refundable fees cannot be more than one month’s rent
- Non-refundable fees are likely enforceable if the landlord and tenant agrees to them –but they must be reasonable.
- Any non-refundable fees that a landlord charges should reasonably reflect an actual cost recovery.
- The courts or RTDRS may not enforce a fee if it does not reflect actual cost recovery or if it exceeds cost recovery.
- Parking fees are probably allowed if agreed on, but there are rules to follow when increasing them or introducing new parking fees.
- Fees for late payment of rent are unenforceable if they are punitive.
- Lease break fees are purely punitive and therefore, unenforceable.
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DISCLAIMER The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.