When a landlord rents real property to a tenant, it generally rents the premises for a term of years with rent due on a monthly basis. Thus rent is usually defined as the fixed amount due at the beginning of each month.
In drafting their leases, many landlords will also deem additional charges to the tenant as “rent.” The justifications for doing so lie in the fact that the standard Maryland “Failure to Pay Rent – Landlord’s Complaint for Repossession of Rented Property, Real Property §8-401” form only allows the landlord to claim “rent” and “late charges.” There are no other form lines for the landlord to claim other penalty fees. So when the landlord wants to collect any additional penalty fees as set out in the lease agreement, the landlord simply defines these penalty fees as “rent” so he can conspicuously hide these fees within the claimed-rent space on the complaint form.
However, the Maryland Court of Appeals recently rejected this practice in Lockett v. Blue Ocean Bristol, LLC, 446 Md. 397 (Md. 2016). In Lockett, the Court addressed the issue of whether these additional charges constituted rent for purposes of Md. Code Ann., Real Prop. § 8-208.1(d) when a tenant files a retaliatory action.
The Court rejected the landlord’s argument that courts should defer to a lease’s definition of “rent.” Lockett, 446 Md. at 418-19. The Court reasoned, “Given that residential leases are normally drafted by the landlord and not the subject of extensive negotiation, deferring to the lease’s definition of “rent” would incentivize landlords to characterize all possible debts from the tenant to the landlord as “rent” so as to make it less likely that a tenant could obtain any relief under RP § 8-208.1. . .” Lockett, 446 Md. at 420.
The Court concluded that “The ordinary meaning of ‘rent,’ the statutory context, and the remedial purpose of the statute all lead to the conclusion that the term ‘rent’ in RP § 8–208.1 denotes the periodic charge for use or occupancy of the premises, but not the various other payments that the tenant may owe to the landlord from time to time, even if the lease characterizes them as ‘deemed rent’ or ‘additional rent.’” Lockett, 446 Md. at 425. The court specifically mentioned “gas charges, late fees, and court filing fee[s]” as those charges not included as rent. Id.
The Court of Appeals concluded that courts should not defer to a lease’s definition of “rent”, as “rent” denotes the periodic charge for use or occupancy of the premises. Although this case defined rent for purposes of Md. Code Ann., Real Prop. § 8-208.1(d), the Court’s justifications suggest that this definition applies to any action within Title 8 of the Real Property Article – the landlord and tenant statutes. Landlords and collectors should be aware that this case may provide a defense to tenants and grounds for consumer protection actions under the FDCPA and other statutory schemes.
Keep in mind, however, that this case does not prevent collection of these additional fees in a breach of contract action; it merely precludes defining these additional fees as “rent” as a workaround when collecting under the landlord/tenant statutes in expedited landlord/tenant court.