Westminster Management, LLC, et al. v. Tenae Smith, et al.

Overview

(Supreme Court of Maryland, March 25, 2024): The Supreme Court of Maryland found that a rental property management company violated state law by charging excessive fees for late payment of rent and other charges and using those late fees and charges as a basis for filing eviction proceedings. The tenant-plaintiffs alleged that the management company illegally defined the excessive late fees as rent in their leases so that when a tenant paid their rent, the management company would first deduct late fees, making the tenant’s rent payment insufficient, triggering more late fees and often eviction filings. The Court found that this scheme violates state law in two ways. First, the practice of charging collection fees beyond a 5% late fee violates Maryland’s statutory limit on late fees. Second, the Court held that rent “means the fixed, periodic payments that a tenant makes for the use or occupancy of the premises” and that the management company’s attempt to add additional charges to the definition of rent in lease agreements is illegal. As a result, the management company must apply rent payments only to rent due and may not initiate eviction proceedings based on non-payment of other fees. The case was remanded to the lower court to reconsider allowing the plaintiffs to proceed under class certification, allowing all tenants of the management company to seek relief based on these legal findings. Read the full decision here.

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