Landlords often impose a late fee when rent is even a few days late. But the size of the late fee is subject to legal limits, and in some situations it’s not legal to impose one at all.
Are Late Rent Fees Legal?
If your lease or rental agreement says nothing about late fees, your landlord may not impose one, no matter how reasonable it is. For example, if you hand your rent check to the landlord two days late and he tells you he will accept it only if you pay an additional $10, you may refuse unless your lease or rental agreement includes a late fee clause. Keep in mind, however, that being too hasty to assert your rights over a relatively modest sum of money may not be worth the bad feelings that could come back to haunt you in the future.
Limits on Late Rent Fees
Laws in a few states restrict the imposition of late fees, both by amount, wand whether the landlord must wait until you're a certain number of days late before he imposes them. See your state rent rules for details (and you're local rent control ordinance, if your rental is covered by rent control or regulation).
Most states, however, do not put dollar limits on late fees. Does this mean your landlord can charge whatever he wants? No. Under general legal principles, your landlord may not charge an unreasonably high late rent fee.
Here are some guidelines for judging what’s unreasonable:
- The fee shouldn’t begin immediately. Normally, a late fee should not apply until at least three days after the rent due date.
- The fee should be within a certain percentage of your rent. Your landlord is always on shaky ground if the late charge exceeds 5% of the rent. That’s $38 on a $750-per-month rental. Of course, if the rent is extremely late—say, ten days—a higher late fee, such as 10% of the rent, might be reasonable.
What to Do About Excessive or Questionable Late Rent Fees
Obviously, the surest way to avoid a late fee is to pay your rent on time. But if you cannot do this, don’t automatically assume that there’s nothing you can do about the penalty.
When There’s No Provision on Late Fees
Your landlord may not impose a late fee unless the lease or rental agreement has a late fee clause (or unless he’s told you about the policy, if you have only an oral rental agreement). However, this rule of law won’t stop some landlords.
If you refuse to pay the fee, be prepared to be asked to move at the first legal opportunity—with proper notice if you rent with a rental agreement, or by the landlord refusing to renew your lease when it expires. Remember, in most states a landlord can terminate a month-to-month tenant, or decide not to renew a lease, without having to give a reason. (If you're in a state that prohibits landlord retaliation, you may have some protection, but you're still in for a legal fight.) To avoid the risk of losing your home, if the amount is something you can live with it may make more sense to pay the fee and begin looking elsewhere for a better landlord.
When You’ve Agreed to an Outrageously High Fee
If you’ve signed a lease or rental agreement that contains an outlandish late fee policy, you can still refuse to pay it and challenge it in court when the landlord seeks to evict you for breaking a lease provision. Why? Most courts consider the imposition of enormous late fees, like outrageous high-interest loans, to raise an important public policy issue. They will listen to your defense (though not necessarily rule in your favor) in spite of the landlord’s claim that you “waived” the right to protest when you signed the lease or agreement.
It's usually better however, that you not risk the threat of an eviction lawsuit (which always includes the possibility that you’ll lose). Instead, pay the fee if possible and file your own lawsuit in small claims court, asking that the judge order the landlord to return it. That way, the only thing at stake is your time and the small filing fee, not your home. But it goes without saying that once you’ve sued your landlord you can expect a termination notice at the first legal opportunity, and would do well to begin checking Craigslist for a new rental.