The 1.5% Late Fee Myth: What HB 1217 Actually Says — Plus Spokane’s New Right-to-Cooling Ordinance

Ask ten Washington landlords what House Bill 1217 did to late fees, and most will tell you the same thing: “Late fees are capped at 1.5% of monthly rent now.” It’s repeated in blog posts, Facebook landlord groups, property management newsletters — even AI chatbots will confidently tell you it’s the law. There’s just one problem: it isn’t. That language was stripped from the bill before it was signed. A year after HB 1217 took effect — and just days after Spokane passed a brand-new habitability ordinance — misinformation is spreading faster than the actual statutes. Here are the three compliance areas we’re seeing misunderstood most often, and what the laws really say.

MISUNDERSTANDING #1: “HB 1217 CAPPED LATE FEES AT 1.5%”

Here’s where the myth comes from. Early versions of HB 1217 — including the version that passed the House — did contain a cap limiting residential late fees to 1.5% of the tenant’s total monthly rent. That provision generated headlines, blog summaries, and fact sheets. Then the Senate amended the bill, and the 1.5% residential late fee cap was removed from the final law. The version Governor Ferguson signed on May 7, 2025 contains no percentage cap on late fees for standard residential tenancies under the Residential Landlord-Tenant Act. But the early coverage never got corrected, so the 1.5% figure lives on — cited as settled law by people who read a summary of a bill version that no longer exists.

“So there are no rules on late fees at all?”

Not so fast — that’s the overcorrection, and it’s just as risky. Washington law still requires that no late fee be charged when rent is paid within five days of its due date (RCW 59.18.170), a grace period that predates HB 1217 and remains fully in force. Late fees must still be spelled out in the rental agreement to be collectible, and fees untethered from any reasonable relationship to actual costs remain vulnerable to challenge. Some Washington cities also impose their own local late fee limits — one more reason a one-size-fits-all lease template is a liability.

“Does the 1.5% number apply to anyone?”

Here’s a wrinkle that fuels the confusion: the final version of HB 1217 does cap late fees — but only for manufactured/mobile home communities, and not at 1.5%. Under the amended RCW 59.20.060, late fees in those tenancies may not exceed 2% of monthly rent the first month past due, 3% the second consecutive month, and 5% the third month and beyond. If you own both conventional rentals and manufactured housing communities, two entirely different fee regimes now apply across your portfolio.

“At least the rest of my fee schedule is safe, right?”

Also worth a second look. What HB 1217 did do for residential tenancies is fold recurring fees into its increase limits: rent and fee increases are capped at 7% plus inflation (CPI) or 10%, whichever is lower, per 12-month period, with no increases during the first year of tenancy and 90 days’ written notice required. Exemptions exist — including buildings whose first certificate of occupancy was issued within the last 12 years — but they must be properly claimed and documented. And the stakes are real: the Attorney General can enforce violations with penalties of up to $7,500 per violation, and tenants have their own remedies, including damages and attorneys’ fees.

The most dangerous compliance advice is the summary of a bill version that never became law.

MISUNDERSTANDING #2: SPOKANE ORDINANCE C36877 — THE RENTER’S RIGHT TO COOLING

On July 30, 2026, the Spokane City Council passed Ordinance C36877, commonly called the “Renter’s Right to Cooling” ordinance. If you own rental property inside Spokane city limits, this one applies to you — and many owners haven’t heard of it yet, let alone planned for it.

“Does this mean I have to install air conditioning in every unit?”

Not every room — but the ordinance requires landlords to provide adequate cooling in at least one room of each residential rental unit, defined functionally as cooling sufficient to prevent risks to tenant health. All new residential construction permitted after January 1, 2027 must be built to meet the cooling standard, and existing rentals are covered by the ordinance’s habitability framework. A dwelling without adequate cooling can be deemed defective and subject to enforcement by city officials.

“What happens if I don’t act?”

The ordinance gives tenants real leverage. A tenant in a non-compliant unit may terminate the rental agreement, or install cooling equipment themselves and deduct up to $500 of the cost from rent — a figure that will adjust upward with inflation each July. Landlords are also required to provide written notice of tenants’ rights under the ordinance. There are hardship provisions: city officials may grant compliance extensions where cooling would require major electrical upgrades or where the building is historic. But hardship relief is something you have to pursue — it doesn’t apply automatically.

For owners, the smart play is to get ahead of it: assess which units lack cooling, decide between portable units, window units, or heat-pump upgrades, document everything, and fold the required tenant notices into your lease packet before a tenant — or a code officer — raises it first.

MISUNDERSTANDING #3: “I’LL KEEP UP WITH THE LAW MYSELF” — THE PITFALL OF GOING IT ALONE

Here’s the uncomfortable pattern behind both laws above: HB 1217 took effect at the state level in 2025, and Spokane adopted C36877 in July 2026. In barely a year, the rules governing late fees, rent increases, notice periods, deposits, and now habitability standards all changed — some statewide, some city-by-city. Seattle, Tacoma, and Spokane each layer their own requirements on top of state law, and they don’t move on the same schedule.

The self-managing owner’s blind spot

Most self-managing landlords are diligent people running on systems they built years ago: a lease template downloaded in 2019, a late fee policy that’s “how we’ve always done it,” a mental model of the law formed the last time they had a vacancy. None of that updates itself — and as the 1.5% myth shows, even actively trying to keep up can backfire when the sources you’re reading summarized a bill draft instead of the signed law. Legislatures don’t send you a letter when your understanding goes stale — you typically find out from a tenant’s attorney, a demand letter, or an attorney general inquiry, when the cheapest fix is already off the table.

Not all management companies are watching, either

Hiring a property manager only solves the problem if that firm treats legislative tracking as part of the job. Some don’t. Here’s a simple litmus test: ask your current manager whether HB 1217 capped your late fees at 1.5%. If the answer is “yes,” they’re managing your property off a version of the bill that never became law. If they haven’t mentioned Ordinance C36877, and can’t tell you how the 90-day increase notice requirement affects your renewal calendar, that silence is information too. Questions worth asking any firm — including us: When were your lease templates last revised, and why? How do you monitor state and municipal rulemaking — at the bill-version level? What’s your process when a new ordinance passes mid-lease?

A management partner who tracks the law professionally turns compliance from a liability into a routine: leases updated before enforcement begins, fee schedules corrected before they’re challenged, and required notices delivered on time, every time.

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Disclaimer: This article is provided for general informational purposes and reflects our reading of Washington State House Bill 1217 and City of Spokane Ordinance C36877 as of August 2026. It is not legal advice. For guidance on your specific situation, consult a licensed Washington attorney.