Re: Using check rental payments for late or legal fees

I will preface these remarks by teling you that they relate to only to Maryland law.

There are conflicting cases over whether a statement on the memo section of the check constitutes an "accord and satisfaction" - in your case whether the cashing of the check constitutes acceptance of payment in full of the rent. To be on the safe side, you should send a note to your tenant(s) that checks received will be credited in the order established by your lease - that you will negotiate the checks in that manner as an accomodation to prevent having to return the check (thereby leaving them in breach of lease) if payment in full of all late fees and interest do not accompany the rent. Inform your tenant that they must send you a letter if they object to this practice. If your tenant does not respond to this letter, he or she will be hard pressed to object to the practice down the road and you will have demonstrated that you are not in accord with the notation on their check. If your tenant does object to your letter, you will be put on notice of a potential problem and can accept or reject future payments with this in mind.

The most important aspect is that your lease specificaly provides for a late payment amount. You may not impose an arbitrary figure after the lease is signed.