I have often wondered why some landlords wait until the end of a lease and then deduct accumulated late fees and reimbursable repair expenses from the tenant’s security deposit.

Someone recently told me why. They said, “We have to. It is illegal to bill those charges with the next month’s rent.”

I was shocked. That did not sound right, so I checked.

Alabama law does not impose a general rule requiring a landlord to postpone lawful late fees and tenant obligations until the security-deposit accounting after the tenancy ends. To the contrary, the Alabama Uniform Residential Landlord and Tenant Act expressly recognizes that some charges may be collected while the tenant is still in possession. In other words, no particular lease clause required.

The Problem With Waiting

Treating the security deposit as a running account creates substantial risk for the landlord. By move-out, the deposit may have to cover unpaid rent, physical damage, cleaning, late fees, and other lawful charges. There may not be nearly enough money.

Waiting also defeats one of the practical purposes of imposing a charge: changing behavior.

Suppose a child flushes a stuffed animal down the toilet in January and the landlord has to call a plumber. If the parents receive an itemized bill in February, they have an immediate incentive to watch the stuffed animals more carefully and teach their children what does—and does not—belong in a toilet.

If the same bill merely appears as a deduction from the security deposit months or years later, it provides very little learning experience. The conduct and the consequence are too far apart. The problem behavior continues and the bills mount up. You don’t let your children get away with that. Why would you let tenants do it?

What Alabama Law Says About Late Fees

Alabama Code § 35-9A-421(b) expressly contemplates late fees becoming due during the tenancy. When rent is unpaid, the landlord may deliver a seven-business-day notice specifying both the unpaid rent and “any late fees owed” that must be paid to cure the breach.

That language would make little sense if a landlord were prohibited from billing a lawful late fee until the tenancy ended. Of course, the late fee should be authorized by the rental agreement, reasonable and otherwise enforceable.

What if the rent has been paid but not a late fee? It makes no sense to allow collection of late fees with past due rent, but not otherwise. The tenant owes the late fee. Nothing in the law says it is not collectible until lease end.

What Alabama Law Says About Certain Repair Costs

Alabama Code § 35-9A-422 is even more specific, but its scope and procedure matter. It applies when a tenant fails to comply with the maintenance duties imposed by § 35-9A-301 in a way that materially affects health and safety and the problem can be remedied by repair, replacement of a damaged item, or cleaning.

Ordinarily, the landlord must give written notice specifying the breach and allow seven days for the tenant to correct it. In an emergency, the tenant must comply as promptly as conditions require. If the tenant does not correct the problem within the applicable time, the landlord may enter, have the work performed in a workmanlike manner, and submit an itemized bill for the actual and reasonable cost—or the fair and reasonable value—of the work “as rent on the next date periodic rent is due.” If the lease has already ended, the amount may be billed for immediate payment.

In plain English, Alabama law does more than permit the landlord to address qualifying repair costs during the tenancy. It provides a procedure for billing them with the next periodic rent.

I know you do not like tenant DIYing repairs. You do not have to allow that. You can require them to make repairs by contracting with a reputable vendor of your choice.

Not Every Damage Charge Automatically Becomes “Rent”

This distinction is important. Section 35-9A-422 does not say that every tenant-caused expense may automatically be labeled additional rent. Its special “as rent” procedure applies to the maintenance violations described in that section and requires compliance with its notice and itemization provisions.

For other violations of the lease or the tenant’s statutory maintenance duties, § 35-9A-421(c) generally allows the landlord to recover actual damages and reasonable attorney fees and to seek injunctive relief. The tenant’s statutory duties include not deliberately or negligently destroying, defacing, damaging, impairing, or removing part of the premises—and not permitting another person to do so.

To repeat this concept, collection of actual damages is not limited to lease end.

The Security Deposit Is the Backstop, Not the Billing System

Alabama’s security-deposit statute allows a landlord, after termination, to apply the deposit to accrued rent and damages caused by the tenant’s noncompliance with the tenant-maintenance statute. That gives landlords a remedy at move-out. It does not turn the deposit into the only permissible means of collecting tenant obligations or require the landlord to postpone every charge until then.

A better operating practice is to:

1.        Make sure the lease clearly identifies late fees, tenant maintenance duties, reimbursable expenses, and any charges that the lease treats as additional rent.

2.        Document the violation and the cause of the expense.

3.        Give every notice required by the lease and Alabama law.

4.        Use an itemized bill supported by the invoice or other evidence of the actual and reasonable cost.

5.        Apply the correct remedy instead of assuming every charge can be called “rent.”

6.        Bill and pursue lawful charges promptly rather than allowing them to accumulate until move-out.

The point is not to manufacture charges or punish tenants. It is to enforce legitimate obligations fairly, consistently, and while the facts are still fresh. Prompt billing improves the chance of collection, preserves the security deposit for the obligations that remain at lease end, and connects conduct with consequences closely enough to influence future behavior.

This article provides general information about Alabama residential landlord-tenant law and is not legal advice. Owners and property managers should consult Alabama counsel about their lease language, notices, and the treatment of a particular charge.

Sources

·        Alabama Code § 35-9A-421

·        Alabama Code § 35-9A-422

Alabama REALTORS: A General Overview of Alabama’s Laws on Landlords and Tenants