If a tenant misses several months of rent, can a Minnesota landlord (including a housing authority) charge a new 8% late fee each month based on the cumulative total of unpaid rent, and does the landlord have to recalculate the late fees down if the tenant later makes a partial payment?

Plain-English summary

The Duluth Housing and Redevelopment Authority (HRA) had a standard lease provision saying that if a tenant failed to pay rent by the fifth of the month, the HRA could charge an 8% late fee. The HRA assessed that fee on the sixth of every month, but it calculated the 8% against the cumulative unpaid balance, not just the current month's missed payment. So in the HRA's worked example, a tenant who failed to pay $100 in January was charged an $8 fee on January 6. If the tenant also failed to pay $100 in February, the HRA charged another 8% fee, this time on the $200 cumulative balance, producing a $16 fee on February 6. By month four with $400 outstanding, the new fee was $32, and the running total of late fees had reached $72.

The Duluth HRA's General Counsel asked the AG whether this method complied with Minn. Stat. § 504B.177(a), which provides that "in no case may the late fee exceed eight percent of the overdue rent payment." Tenant advocates had argued the total late fees on any given day could not exceed 8% of the total late rent, putting a $24 ceiling on the worked example.

Assistant AG Susan Gretz wrote the opinion. The answer to the cumulative-balance question was no.

The statute uses singular nouns: "the late fee" on "the overdue rent payment" calculated against "the due date" with a single specified date for assessment. The AG read this language plainly to cap the fee at 8% of the particular rent payment that was overdue on a single date in time, not at 8% of a running cumulative balance. The plural-from-singular canon in Minn. Stat. § 645.08(2) does not apply because, per § 645.08, canons yield when their application would be inconsistent with the manifest legislative intent or repugnant to the statute's context.

The legislative history confirmed the reading. The Senate Judiciary Committee discussion in 2010 specifically addressed whether the 8% was annual, per-month, or per-payment. The drafters chose "the overdue rent payment" specifically to cover varying payment frequencies (weekly, biweekly, monthly). That deliberate choice signals an intent to attach the cap to each rent payment, not to a cumulative point-in-time balance.

The AG worked the example. January's payment overdue on January 6 gets a single $8 fee. February's separate payment overdue on February 6 gets its own separate $8 fee. The January payment is not re-overdue on February 1 and does not get re-assessed. Each month's missed rent generates a one-time 8% fee, not a monthly recurring fee.

On the recalculation question, the AG concluded that the statute does not require a landlord to reduce or refund a previously assessed late fee when a tenant later makes a partial payment. The phrase "in no case may the late fee exceed 8%" was read in context: "the case" refers to the individual late fee imposed on the particular date, not a fluctuating cap based on the current balance.

This reading rested on two grounds. First, the singular phrasing of the statute described a single fee imposed on a single past-due payment. Second, the policy mischief consideration. Requiring recalculation upon partial payment would incentivize strategic partial payments. The AG's worked example: a tenant with three months of $100 missed rent owes $24 in stacked late fees. If a $250 partial payment forced reassessment of the late fee, the cap would drop to $4 ($50 × .08 = $4). That outcome would frustrate the legislative intent to use late fees to incent timely payment without excessively burdening tenants.

The opinion ended with a corrected table showing the proper application: each month gets its own one-time 8% fee, partial payments reduce the principal but not the previously assessed fees.

What this means for you

For housing authorities and other large landlords with multi-tenant lease systems: audit your late fee billing procedures. If you are charging 8% each month on a cumulative balance, the practice violates § 504B.177(a) under this AG opinion. Reconfigure your accounting so that each month's missed rent triggers a one-time 8% fee on that month's payment only. Document the change so prior overcharges can be identified for refund or credit if a tenant disputes.

For private landlords using standard lease forms: review the form language. If the lease says "late fee will be assessed on past due rent" without specifying that the fee attaches to each missed payment once, the language can be misread to permit monthly cumulative assessment. Rewrite for clarity tracking the AG's reading: an 8% fee applies once per missed payment, on the date specified in the lease, and is not reassessed.

For tenant advocates and legal aid attorneys representing tenants in housing court: this opinion is a useful weapon against landlords applying cumulative 8% fees. The AG's analysis of the legislative history and the worked example are quotable. The opinion is not binding on courts but is persuasive AG analysis.

For property managers calculating monthly statements: structure your billing to apply the late fee on the assessment date specified in the lease, against the missed rent for that period only. Add the fee to the running balance once. Do not reassess.

For tenants who think they have been overcharged: ask for an itemized account showing the date each late fee was assessed and the rent it applies to. If the same rent payment has been assessed multiple late fees over different months, that practice violates this AG opinion. Raise it with the landlord first; if not resolved, raise it as a defense in any unlawful-detainer or rent-collection proceeding.

For Section 8 housing administrators and others operating under HUD or state regulations: this opinion does not override or alter HUD or other federal requirements. Local late-fee practice must comply with both the AG opinion's reading of state law and any applicable federal program rules. If a federal regulation imposes different limits, follow whichever is more protective of the tenant.

Common questions

Q: Does this opinion bind the courts?
A: AG opinions are advisory in Minnesota; they are persuasive authority but not binding on the courts. That said, this opinion contains a careful textual and legislative-history analysis and would likely be cited and given weight in housing court.

Q: What if the lease itself specifies cumulative late fees rather than per-payment fees?
A: A lease cannot exceed the statutory cap. § 504B.177(a) is a consumer-protection statute. A lease term that purports to authorize cumulative monthly assessment in excess of the AG-interpreted cap would likely be unenforceable as to the excess.

Q: Does the recalculation rule apply if a tenant pays all the principal but the late fees themselves are unpaid?
A: The AG opinion's recalculation answer says the late fee, once validly imposed, is still owed even if rent is later partially paid. Full payment of principal does not retroactively reduce or eliminate the late fees. They become a separate enforceable debt.

Q: Can a landlord charge a daily or weekly late fee instead of monthly?
A: The opinion does not directly address daily or weekly fees. § 504B.177(a) requires the lease to "specify when the late fee will be imposed." The AG reads the statute as applying to one fee per missed payment on one specified date. A lease that purports to charge daily compounding fees would likely violate this reading.

Q: What if rent is paid biweekly?
A: The opinion specifically notes that the legislative history contemplated biweekly and weekly payments. The 8% cap applies to each biweekly or weekly payment, not to a monthly aggregation. A biweekly rent of $400 missed on its due date gets one 8% fee of $32; if a separate biweekly payment is later missed, that gets its own separate 8% fee.

Q: Does the 8% cap apply if the landlord is the federal HUD or HUD's contractor?
A: § 504B.177 applies to "a landlord of a residential building" in Minnesota. Federal housing authorities operate under different rules; HUD's preemption analysis would govern those facilities. State and local housing authorities operating residential rental properties are within § 504B.177's scope.

Q: Are application fees, pet fees, or other charges covered by this opinion?
A: No. § 504B.177(a) is specifically about late fees on overdue rent payments. Application fees, security deposits, pet fees, and similar charges are governed by different sections of Chapter 504B.

Background and statutory framework

Minn. Stat. § 504B.177(a) is the 2010 statutory cap on residential late fees. It provides:

A landlord of a residential building may not charge a late fee if the rent is paid after the due date, unless the tenant and landlord have agreed in writing that a late fee may be imposed. The agreement must specify when the late fee will be imposed. In no case may the late fee exceed eight percent of the overdue rent payment.

The statute uses singular nouns throughout: "the late fee," "the overdue rent payment," "the due date." The AG read this as deliberate and meaningful.

The legislative history showed a deliberate choice. The Senate Judiciary Committee on March 16, 2010 (Act Relating to Real Property; Landlord and Tenant; Hearing on SF 2595) considered whether the 8% was annual, per-month, or per-payment. Ron Elwood of Legal Services Advocacy Project explained that "rent payment" was used to cover variable payment frequencies. Senator Scheid moved to insert "the overdue" before "rent payment" to clarify. The motion passed. So the bill drafters specifically rejected the cumulative-balance reading.

The statutory construction framework uses three rules:
- Plain-meaning rule: Minn. Stat. § 645.16; Engfer v. General Dynamics (Minn. 2015); In re Reichmann Land & Cattle (Minn. 2015).
- Singular-includes-plural canon, with the "manifest intent" exception: Minn. Stat. § 645.08, .08(2).
- Mischief-and-consequences consideration: Minn. Stat. § 645.16(3), (6).

The AG also drew on parallel "in no case" provisions in Minnesota statutes to confirm that the phrase functions as a single-point cap rather than a fluctuating one: Minn. Stat. §§ 15.0575, subd. 2 (deadline absolute), 48.24, subd. 2 (loan-to-value absolute), 244.04, subd. 2 (good-time loss absolute).

The opinion is signed by Assistant Attorney General Susan C. Gretz on behalf of Attorney General Keith Ellison.

Citations and references

Statutes:
- Minn. Stat. § 504B.177(a)
- Minn. Stat. § 645.08, including subd. 2 (singular/plural canon)
- Minn. Stat. § 645.16 (legislative intent)
- Minn. Stat. § 645.16(3), (6) (mischief and consequences)
- Minn. Stat. § 15.0575, subd. 2
- Minn. Stat. § 48.24, subd. 2
- Minn. Stat. § 244.04, subd. 2

Cases:
- Engfer v. General Dynamics Adv. Info. Sys., Inc., 869 N.W.2d 295 (Minn. 2015)
- In re Reichmann Land & Cattle, LLP, 867 N.W.2d 502 (Minn. 2015)

Legislative history:
- Act Relating to Real Property; Landlord and Tenant; Hearing on SF 2595 before the S. Judiciary Comm., 86th Legis., 2010 Reg. Session (Minn., Mar. 16, 2010)

Source

• Landing page: https://www.ag.state.mn.us/Office/Opinions/
• Original PDF: https://www.ag.state.mn.us/Office/Opinions/430-20210630.PDF

Original opinion text

HOUSING AND REDEVELOPMENT AUTHORITY: LATE FEES: Statutory cap applies to each overdue rent payment once and may not be applied to a cumulative total of overdue rent that includes rent for which a late fee has previously been assessed. Recalculation of late fee on a partial payment is not required. Minn. Stat. § 504B.177

430
June 30, 2021

Brandon Engblom, Esq.
General Counsel
Duluth Housing and Redevelopment Authority

Re: Request for Opinion Concerning Minn. Stat. § 504B.177(a)

Mr. Engblom:

Thank you for your correspondence requesting an opinion regarding Minn. Stat. § 504B.177(a), which prohibits landlords from charging a late fee that "exceed[s] eight percent of the overdue rent payment." You ask whether a late fee may be imposed each month on the cumulative total of past due rent payments under this statute. Based on the facts presented, we conclude that a landlord may impose a late fee only once on each past due rent payment, and not on the cumulative total. We also conclude that the statute does not require recalculation of the late fee upon partial payment of past due rent.

BACKGROUND

Section 504B.177(a) states in part:

A landlord of a residential building may not charge a late fee if the rent is paid after the due date, unless the tenant and landlord have agreed in writing that a late fee may be imposed. The agreement must specify when the late fee will be imposed. In no case may the late fee exceed eight percent of the overdue rent payment.

You provided an example lease used by the Housing and Redevelopment Authority of Duluth (HRA), which provides that late fees are calculated and charged on the unpaid rent on the sixth day of each month. You also provided an example of how the HRA assesses late fees: imposing an eight percent late fee on the cumulative total of unpaid rent on the sixth day of each month that rent is past due. In your example, on April 6 the total of $72.00 in assessed late fees exceeds eight percent of the total rent due of $300.00.

QUESTIONS

1. If a landlord calculates an eight percent late fee on the total unpaid rent on the date listed in their lease, is the landlord in compliance with Minn. Stat. § 504B.177?

2. In the event that partial payments are credited to the account after the date that the late fee is assessed, is the landlord required to recalculate the outstanding late fees to maintain the eight percent maximum fee?

QUESTION 1

Your first question is whether the landlord may, as illustrated in the example, charge a late fee each month equal to eight percent of cumulative unpaid rent payments and comply with the statute. We answer this question in the negative.

The object of all statutory interpretation is to ascertain and effectuate the intent of the Legislature. Minn. Stat. § 645.16. Words in a statute are to be given their plain and ordinary meaning. Engfer v. General Dynamics Adv. Info. Sys., Inc., 869 N.W.2d 295, 300 (Minn. 2015). When the language is plain and unambiguous, it must be given effect. In re Reichmann Land & Cattle, LLP, 867 N.W.2d 502, 509 (Minn. 2015).

Section 504B.177(a) states that "[i]n no case may the late fee exceed eight percent of the overdue rent payment." The statute thus refers to "the late fee" (singular) on the "the overdue rent payment," again in the singular tense. The statute allows a late fee based on rent due on "the due date," also singular, and requires the lease to provide a specific date on which the late fee will be assessed.

The plain and ordinary meaning of this unambiguous language is to cap the fee at eight percent of the particular rent payment that is overdue on a single date in time, and not on the cumulative total of multiple overdue rent payments.

Applying the statute to the illustration provided, January's payment is due January 1; if not paid it is subject to a single eight percent penalty on January 6, and it remains due until paid. The January rent payment is not due again on February 1; nor is it subject to a second late fee. The cap applies to "the overdue rent payment," which became overdue once, on January 6.

Penalizing a late rent payment at the statutory maximum more than once immediately violates the statute because, as shown in the example provided, imposing the maximum late fee multiple times on the same late payment results in the late fee exceeding the eight percent statutory cap.

We are mindful of the canon of statutory construction providing that the singular includes the plural. Minn. Stat. § 645.08(2). However, canons are applicable "unless their observance would involve a construction inconsistent with the manifest intent of the legislature, or repugnant to the context of the statute." Minn. Stat. § 645.08.

The intent of the Legislature to impose the cap on a singular rent payment and not a cumulative total is further supported by the legislative history. At the Senate Judiciary Committee hearing on the bill that became Minn. Stat. § 504B.177, Senator Limmer asked whether the eight percent cap was an annual limit, or what the eight percent was based on. The discussion revealed that the phrase "of the overdue rent payment" was chosen specifically to cover varying payment frequencies (weekly, biweekly, monthly).

The discussion reveals an intent that the percentage cap apply to an individual rent payment regardless of frequency.

Based on this manifest intent of the Legislature, we believe Minnesota courts would reject application of the canon of statutory construction providing that the singular "rent payment" includes the plural. Under Minn. Stat. § 504B.177(a), a landlord may not charge a late fee equal to eight percent of the total unpaid rent when the total includes an overdue rent payment for which a late fee has already been assessed.

QUESTION 2

The second question posed is whether the landlord is required to recalculate the permissible late fee under the statutory cap when a partial payment is made. In light of our interpretation of the statute to allow a one-time imposition of a late fee for a singular past due rent payment, we conclude that it is not necessary to recalculate the late fee upon partial payment of the rent. That is because, if a late fee is validly imposed, it is still owed even if a partial rent payment is later made.

We do not believe the phrase "in no case" in the statute alters this analysis. The Legislature uses this phrase in other contexts to signal absolute limits. In the context of the late fee statute, the "case" to which "in no case" refers is that individual late fee imposed on the particular date, and not a fluctuating fee based on the current balance of past due rent.

This conclusion is supported by considering the consequences of requiring recalculation of the late fee upon partial payment. Recalculation of the late fee based on partial payment would incentivize the use of partial payments to reduce or avoid the late fee. Assume a tenant was three months behind in $100 per month rent payments, and had been assessed the statutory maximum $24 in late fees. If a partial payment of $250 is made, reassessment of the late fee would reduce it to $4 ($50 x .08 = $4).

In our view, this result is contrary to the legislative intent to incent the payment of rent without excessively burdening the tenant. If a tenant could pay 95% of the balance due on the last day of the month, and require a corresponding immediate reduction of a previously imposed late fee, the intent of the Legislature to allow for reasonable late fees is thwarted.

We believe interpreting Minn. Stat. § 504B.177(a) to not require reassessment of the late fee upon partial payment is more consistent with the statutory text and legislative intent.

We hope this opinion is helpful and thank you again for your correspondence.

Sincerely,

Susan C. Gretz
SUSAN C. GRETZ
Assistant Attorney General