Opinion ID: 1386980
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Heading: Late Penalties and Interest:

Text: Consumers asserts that the rate of penalties and interest imposed by the contract was usurious and should be void as a matter of law. However, Nevada has no statute which precludes high interest rates. Instead, NRS 99.050 states that, Parties may agree for the payment of any rate of interest on money due or to become due on any contract, for the compounding of interest if they choose, and for any other charges or fees. The parties shall specify in writing the rate upon which they agree, that interest may be compounded if so agreed, and any other charges or fees to which they have agreed. Since Consumers entered into this lease contract at arms length, it may not assert that now, the terms of the contract are unfair. However, Consumers is correct in its assertion that the Trust waived its right to collect penalties and interest. The Trust never computed or demanded payment of late penalties or interest for the entire five years of the lease term. Therefore the Trust lulled Consumers into believing that it was not required to pay the penalties, and should be estopped from imposing the penalties now. This reasoning, however sound, creates some friction when compared with section 26 of the lease, entitled Waiver, which states that, The waiver by Lessor of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, or condition of this lease, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent. Consumers asserts that this clause should be unenforceable because acceptance of a debt without reservation of one's right to receive more, denotes satisfaction of that debt. See, e.g., Burstein v. Liberty Bell Village, Inc., 120 N.J. Super. 54, 293 A.2d 238 (1972). The facts in Burstein are quite similar to the case at bar. In Burstein, the lease contract had a non-waiver provision similar to the one in this case. At the end of the lease term, the landlord deducted all the late payments that he had not charged to the tenant from the security deposit. The court decided that in spite of the non-waiver provision, a lessor is estopped from asserting a forfeiture for a breach of a lease condition when he accepts rent with full knowledge of the breach. Id. 293 A.2d at 239-240. For the same reason, the Trust is now estopped from charging late penalties and interest. We decline to adopt the Burstein rule across the board. This non-waiver clause, which allows a landlord to accept rent without waiving late penalties or interest, is generally enforceable. Restatement (Second) of Property, Landlord and Tenant, § 12.1 comment c (1977). However, parties may not sit on their rights forever, and such clauses retain their force and effect for only a reasonable amount of time. It is unconscionable for a lessor to assert this provision after it has continually refrained from collecting the penalty for a long period of time. We conclude that five years was too long a time for the Trust to wait before demanding the penalty. Therefore, it has waived its right to collect the penalty now.