Tenant Owes $21,000 in Late Fees: Court Rules in Landlord’s Favor
In a ruling that could reshape how landlords approach late rent fees, the Kansas Supreme Court last week upheld a district court’s decision requiring a tenant to pay over $21,000 in late fees for missed rent payments dating back to 2020. The case highlights the power (and potential risk) of enforcing daily late fee provisions in lease agreements.
The Case: Daily Fees Stack Up
The dispute began when Sherri Foster, a tenant in Prairie Village, Kansas, stopped paying rent for several months in 2020. Foster had rented a single-family home from landlord John Schutt starting in 2018 for $1,900 per month. Their lease included a late fee clause charging $20 for each day that rent remained unpaid after the first of the month.
Foster initially fell behind for three months in early 2020, then made arrangements with Schutt to bring the rent current by June. However, she again failed to pay rent for an additional three months, leading Schutt to initiate legal proceedings. The case, which should have gone to trial within two weeks under standard Kansas landlord-tenant rules, dragged on for more than two years, finally reaching trial in March 2023.
By that point, the late fees had accumulated for 1,062 days. The district court ruled that Foster owed $5,700 in unpaid rent and $21,240 in late fees. Schutt, in turn, was ordered to pay Foster $545 for unpaid wages related to property renovations she had managed for him.
Foster appealed, arguing that the $21,000 in fees was “unconscionable,” a legal term used when a contract or clause is considered so one-sided that it offends the court’s sense of fairness. The Kansas Court of Appeals agreed, reducing the late fees to $1,700 to cover only the time between her missed payments and the court date. But that ruling didn’t stand for long.
Supreme Court Reverses the Appeal
The Kansas Supreme Court unanimously overturned the appellate decision, siding with Schutt and restoring the full $21,240 in late fees. Interestingly, the justices did not evaluate whether the fees were fair or excessive. Instead, they ruled on procedural grounds: Foster’s legal team had not properly raised the issue of unconscionability during the original trial, so the appeals court had no basis for reducing the fees.
Despite asking probing questions about the fairness of late fees accumulating over such a lengthy court delay, the justices found themselves constrained by the limits of what had been argued in the lower court. The ruling underscores that outcomes in landlord-tenant disputes can often hinge more on legal procedure than perceived fairness.
What This Means for Landlords
For landlords, the Foster v. Schutt case offers both reassurance and caution.
1. Clear Lease Terms Matter
The decision affirms that courts are likely to uphold well-drafted lease provisions, especially when they are detailed and agreed upon in writing. In this case, a $20 daily late fee clause stood up to scrutiny, even when it led to tens of thousands of dollars in charges.
2. Don’t Rely on Delay, but Know It Can Work in Your Favor
The long delay in reaching trial allowed fees to accumulate dramatically. While this worked to the landlord’s benefit, it also raised fairness concerns in the court. Landlords should be aware that delays can increase the financial burden on tenants, which may trigger legal or reputational risks if the fees are perceived as punitive.
3. Unconscionability Is a Real Threat, If Raised Properly
While the Supreme Court ruled in favor of the landlord this time, the Court of Appeals did initially find the fees “unconscionable.” Had Foster’s attorney properly raised the issue earlier, the outcome could have been very different. Landlords should ensure late fees are reasonable and justifiable if challenged.
4. Enforceability Doesn’t Equal Fairness in Every Case
Just because a fee is enforceable doesn’t mean it’s bulletproof. A different tenant with stronger legal counsel could prevail. To protect themselves, landlords should aim for balance, using late fees as a deterrent without creating the impression of excessive penalties.
5. Be Prepared for Pushback
This case may embolden some landlords to enforce strict late fee policies. But it also puts those policies in the spotlight. Landlords should review their lease language carefully and consult with legal counsel if their late fees are steep or cumulative.
Final Thoughts
The Kansas Supreme Court’s decision may feel like a win for landlords, but it’s also a reminder of how fragile lease enforcement can be when fairness, legality, and timing collide. For landlords across the country, the lesson is clear: draft clear leases, act quickly when rent is unpaid, and be ready to defend your policies, not just in terms of legality, but in terms of reasonableness.
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