Collecting Interest on COVID Rent Debt

In RHAWA v. City of Seattle, the Washington State Court of Appeals ruled that Seattle’s ban on the accrual of interest for unpaid rent is preempted under state law and therefore the “no interest” provision is invalid.

Note: The City of Seattle could appeal this ruling through the end of July, 2022.

With this ruling:

• Interest accrues on unpaid rent even during the COVID pandemic and the multiple eviction bans.
• The interest begins accruing when the rent was initially due and is applied retroactively regardless of when the debt occurred (e.g., unpaid rent from early 2020 would have, at this point, accrued two years or more of interest if still unpaid.)
• The interest must also only be applied to rent as defined by RCW 59.18.030(29) that remains unpaid.
• Interest on unpaid rent accrues at a rate of 12% per annum, unless otherwise specified in your lease.
• The interest is added to the rent owed for the purposes of compounding and pay-or-vacate notices. As per current state law RCW 59.18.630, pay-or-vacate notices must be accompanied by an offer of a payment plan and ERPP notice.
• RHAWA’s best practice recommendation is to include a statement on your past due invoice stating that the court affirmatively allows interest on past due rent, even rent due during the COVID emergency. 

Late fee bans were not ruled as preempted nor invalid, so are still in effect. Even if your lease provides terms for late fees to accrue on unpaid rent, they cannot be assessed for the period March 1, 2020 through December 31, 2021 as specified in RCW 59.18.625 or any local late fee bans.

This article was written and edited by RHAWA members and/or staff and is intended for the use of RHAWA members only. Copyrighted members-only materials may not be further disseminated.