How much interest can be charged on past due rent?

We do owe some back rent from a few years ago but the landlord was very understanding when my husband lost his job. However he has been sending us notices on the past due balance, and charging interest on the balance and late fee. Also, we are here 7 years. Our lease expired after 2 years and neither party discussed renewal; so we have had no lease for the past 5 years. Is it legal to charge interest (and he has the rate fluctuating based on his loan, as high as 8.50%) on past due rent?

Asked on March 23, 2011 under Real Estate Law, New Jersey

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

This doesn't sound correct; certainly the fluctuating interest is a bit strange. At the very least, you should have your state's consumer protection division review the matter privately. Here is the concern, since you still live there and don't have a lease, you are a tenant at will. Essentially, your landlord can give you notice at any time to move and you would have to move like in a month. I am not sure his charging you late fees and interest on back owed rent is actually legal in your situation because you still technically live there. I don't believe any statute would allow him to collect monies for current rent and not have used it to pay off the back owed rent. To do otherwise runs counter to contract law and the court probably won't allow him to collect extra fees and interest at your expense when you still live there.


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