Dealing with Late Payments of Rent – How Late Is Late?

Another Appellate Court Raises the Bar

Another Appellate Division case has refocused the rules for evaluating “habitual lateness” in Matthew G. Carter Apartments v. Richardson, handed down on November 24, 2010.

Prior cases have made it clear that landlords who want to take advantage of this basis for eviction must be able to prove habitual late payment both before and habitual late payment after delivery of a Notice to Cease.

In addition, the landlord who is dealing with habitual late payment cannot be shown to have accepted too many late payments as that behavior would amend the lease contract as a matter of law and change the due date for the rent payment.

In addition, landlords who have sent out a Notice to Cease and are “tolerating” post-notice late payments, before they become “habitual” must give the tenant a written warning that the landlord really meant what he said in the Notice to Cease that was delivered.

If all that is not complicated enough, now an Appellate Division panel has determined that a landlord seeking to evict on this basis, even if all of the numerical criteria can be established (sufficient number of late payments before and after a cease notice) must prove “habitual” lateness based upon “all the facts and circumstances of the case.”  It cannot be done in a mechanical fashion.  While suggesting it was not going to allow consideration of “equitable factors” in justifying a tenant’s late payment of rent (such as job loss) in this recent case the Court determined the landlord had not proved the tenant was “habitual” in late payments where the rent was paid timely nine of the next eleven months after the Notice to Cease was sent out.  There, rent was paid late one time two days after the grace period, and another time eight days after the grace period (or as the Court pointed out, a total of ten days late during an eleven month period).

The Court concluded that “each case requires a fact sensitive inquiry into the tenant’s conduct after receipt of the Notice to Cease.”  In each case the trial judge must assess the evidence as to the “time and circumstances” of the late payments to determine whether a cause of action for late rent eviction has been proven.”  All of this is in the context of whether or not late payment is in fact “habitual.”

This case suggests that “habitual” is something more significant than at least two late monthly payments (although the Court came right out and said that they were not saying that).  The criteria with which a trial judge is supposed to evaluate the “time and circumstances” of the late payment in a “fact sensitive inquiry now required by this decision” is not defined.  The most sense that this author can make out of this case is the Court felt that since the tenant was timely more than ninety percent of the time after the Notice to Cease went out before making the second late payment, those late payments should not be considered “habitual” as envisioned by the State legislature.  Therefore, a more egregious lateness standard appears to be evolving.

All landlords focused on habitual late payment of rent as justification for an eviction should carefully evaluate the proofs and not just “mechanically” count to two (or three as this author recommends) after the Notice to Cease is served.

By: Christopher J. Hanlon, Esq.

Should you have the need for legal counsel in this area, please contact me at chanlon@hnlawfirm.com or call toll-free (855) 376-5291.