What can landlords legally charge as late fees for rent?

It depends on your state’s landlord-tenant laws, and in some cases your local city regulations.

Many states don’t explicitly limit the amount that landlords can charge, but require that it be “reasonable.” Talk about ambiguous!

Still, to keep late rent fees “reasonable,” they can’t serve as a punishment or a penalty.

Consider Washington as an example. Under RCW 19.150.150 it is written “a late rental payment shall be deemed reasonable and shall not constitute a penalty.”

Use the following interactive map as a quick-reference guide for your state, and read a longer description of your state’s late rent fee rules below.

 

Late Rent Fees by State: Interactive Map

Hover your mouse over your state for a quick summary. Keep in mind that some state’s late rent laws are more complicated than a simple percentage or mandatory grace period.

Make sure you read the fuller explanation of your state’s rules below, or read our state landlord-tenant law summaries for more information.

NOTE: These regulations pertain only state-wide. In some states, the various cities and towns may impose their own regulations.

 

Late Fees for Rent Can’t Be “Unreasonable”

What does “unreasonable” actually mean?

In general, it means tenant late fees should be in line with the landlord’s costs and inconvenience caused by the late rent payment. At the very least, landlord late fees should remain similar to what banks and other creditors charge for late payments (often around 5% of the late payment).

Imagine a landlord charges $500 in rent, and the tenant pays late. The landlord charges a rental late fee to the renter in the amount of $250. Renter pays the rent but does not pay the rent late fee. Landlord takes renter to court.

What do you think most judges would rule in this instance? Certainly not in favor of the landlord. Even in states where there are no limitations imposed on rent late fees, most of them whether implied or not, should be reasonable.

Consider another example. Len Landlord has a mortgage due on or before the 5th of each month (including the grace period). Tina Tenant is late on her rent. Because of this Len may not be able to pay his mortgage. And as a result, he faces a late fee on his mortgage payment, plus potential credit penalties.

Even if Len Landlord does not have a mortgage, he still depends on that rental income to live. Now because of the lack of the income, Len may have to tap into his savings, or worse credit lines. Either scenario costs Len Landlord money and inconvenience.

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Why Should Landlords Charge Late Rent Fees?

A late fee covers the potential costs of late rent, as discussed earlier, rather than a punishment. However, a late fee also creates an incentive, helping ensure that the landlord receives rent on time.

Where permitted, it is a good practice to include them in the lease agreement and enforce them. Enforcing late fees provides your renters with consistency. If a landlord is wishy-washy in charging and collecting rental late fees, it sets the tone for wishy-washy behaviors from renters.

Consider setting up automated rent payments by accepting rent payments online. The end goal is to receive the rental payments when they are due. And in order to do this, taking every possible measure from enforcing the lease to setting up automated payments are imperative in preventing late rental payments.

 

How Do Landlords Enforce Late Rent Fees?

Setting up a system to collect rent and not deviating from it, will set the tone for a harmonious landlord tenant relationship. Whether you choose to set up a reminder text, email or letter before the rent is due or simply notify the renter after the rent is late; it is important to keep to the plan.

Texts and emails are becoming more and more permitted as evidence in legal courts. However, most states still have stringent requirements on notification by snail-mail. Check with your state’s regulations on this.

 

Late Fees for Rent: State Law Summaries

As discussed earlier, a rental late fee probably should not be so high that it calls into question the imposing of a penalty. The word reasonable comes up very often either written or implied in legal statutes.

It is important to understand that each state sets criteria for the collection of rental late fees. This may be limitations of how much the rental late fee may be to how long of a grace period must pass. Below is a breakdown of each state for your convenience.

Alabama
There are no known or identified limits placed on how much a landlord or property manager may collect for a late fee. There is case law in Alabama regarding late charges and interest that was considered unreasonable; this, however, would be decided on a case by case basis.

Alaska
Late fees cannot be so extreme that a judge would rule them unfair or unreasonable. Generally, it is better to collect a single flat fee however, if a daily (per diem) charge is outlined in the lease agreement, the landlord must adhere to the limitations in Alaska usury law, which prohibits charging more than five (5) percentage points above the Federal Reserve discount rate or ten and a half (10.5%) percent where the Fed rate is not published.

All late fees must be agreed upon ahead of time. Therefore, landlords and managers should include the details of any late charge or assessment in the lease contract.

Arizona

Even though in Arizona there are no written stipulations or limits in the statutes for a permitted late charge amount, it is important to use “fair and reasonable” assessment in the charge of late fees. Judges will throw out any fees they deem unreasonable and may penalize the landlord for attempting to charge them. All fees should be outlined in the written lease agreement.

Arkansas
Although there are no written limitations in Arkansas’ landlord tenant laws; a good rule of thumb to follow is to keep it reasonably related to any expenses that are incurred as a result of the payment being late such as an assessed late fee by a mortgage company.

California
California does not permit predetermined late fees, as it is considered a “penalty”.  An exception to this would be where circumstances exist that make it difficult to assess the exact cost of a fee. In this case, it is important to be sure that when assessing a fee, it is reasonable. Additionally, it should be kept in mind, the rough calculation of what the actual costs would be.

Colorado
Overall, Colorado is silent on rental late fee limitations. Colorado landlords must be careful to avoid any fees that may be construed as “punitive damages”. This means a charge or fee so exorbitant that it is more of a punishment rather than recouping any lost money.

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Connecticut
Even though there are no limits placed on what a landlord may charge a tenant for being late with the rent, the landlord must wait until ten days have passed from the due date before charging one and in the case of a weekly renter, the waiting period is five days. WARNING: It is not permitted for a landlord to provide an incentive to the tenant to pay before the ten days either.

Delaware
There is a five percent maximum for rental late charges in Delaware. Oddly though, when and if a landlord chooses to charge a late fee, he/she must have an office situated in the county where that rental dwelling is located, where the tenant may pay rent. **If the landlord does not have such an office, three additional days added to the rental due date must be given to the tenant to pay the rent before a late charge may be added.

Florida
There are no limits put on how much a landlord may charge for a rental late fee.

Georgia
Even though there are no restrictions on the amount of a late fee that can be charged for late rent, what is chosen as a fee must be written into a lease. If it is not, then the landlord may not charge one.

Hawaii
In Hawaii there is no written law that restricts the amount of the rental late fee to charge when the rent is late. Using caution and reasonable judgement when assessing these amounts is suggested as charging an extremely large fee may be called into question if taken to court.

Idaho
Idaho landlords may charge whatever amount they feel is fair for a late fee as long as it in the lease.

Illinois
There are no statutes that limit how much a late fee may be. However, it must not be considered so high that it could be considered a penalty. Therefore, a late fee should be related to any costs incurred for the late payment. Additionally, the late fee should be written into the lease. Generally, 5% is a good rule of thumb as being reasonable. This is what is permitted under Chicago’s ordinance as well.

Indiana
There may be nothing written in the landlord tenant statutes with regards to a high limit of a late fee however, it is wise to use reasonable and fair amounts. Using an extremely high amount could be construed by a court of law as unfair.

Iowa
Iowa possesses specific late fee regulations found in section 562A.9 of the Uniform Residential Landlord and Tenant Law. Where the rental amount per month is less than $700 dollars, the late fee may not surpass $12 per day or a total of $60 per month. For those rents that are more than $700 per month, the late fee must be less than $20 per day or a total not to exceed $100 per month.

Kansas
Kansas has no law that limits the late fee amount, but it must be written into the lease agreement.

Kentucky
According to Kentucky statute KRS § 514.040(4b), if a tenant gives the landlord a payment that bounces (is returned for not enough funds), that landlord may charge a fee of fifty-dollars.

Louisiana
There is nothing stated in landlord tenant statutes that provide for how much is too much to charge when a Louisiana tenant is late. However, Louisiana consumer credit law in RS 9:3527(1) does limit creditors to a maximum late charge of 5% of the unpaid amount or $10, whichever is more. So where does that leave landlords? Well, with a word of advice merely to use caution in setting late fees or face unsympathetic judges in court.

Maine
Maine has strict guidelines to follow before a landlord can charge a late fee. First, a late charge cannot be charged earlier than after 15 days have passed since the rent was due. Second, the tenant must have advance knowledge of this in written form and third, it can be no more than 4% of the rental amount. In Maine there are specific rent and fee collection procedures as outlined in Title 14, Section 6071.

Maryland
Rental late fees are limited to 5% of rent amount. Fees are chargeable five days after due date (exception: Montgomery County, ten days)

Massachusetts
Massachusetts possesses a pretty restrictive late fee restriction. Although, nothing is stated regarding the amount that may be charged, a late fee cannot even be assessed in any way, shape or form until 30 days have passed since the rent due date. With that being said, a landlord may begin the procedures to evict as soon as the renter is late on rent.

Michigan
Michigan’s landlord-tenant act does not expressly place on limits on late charges in a lease agreement. With that being said, Michigan contract and consumer protection law prohibits fees and charges that may be considered penalizing. These fees must be correlated to the actual costs incurred by the landlord when a tenant is late with rent.

Minnesota
Minnesota imposes a restriction of no more than 8% of the tardy rent payment as a late fee, and it must be agreed upon in the rental agreement.

Mississippi
Even though the landlord tenant statutes have no specification regarding late fees, there are other statutes that do regulate late payment charges in general. It is best to keep things reasonable or contact an attorney if you are not sure what to charge.

Missouri
Missouri has no stated limitations for the amount that can be charged for a rental late fee. However, the amount must be specified in the lease.

Montana
Montana has no specified limitations for how much a landlord may charge when tenant is late on the rent. It is wise that a landlord keep it reasonably related to expenses that are incurred as a result of the late rent.

Nebraska
Nebraska has no stated limitations in the Nebraska Revised Statutes (NRS). Additionally, there is no required waiting period.  The late fee stipulations must be placed in the lease. (N.R.S. § 76-1414(1)).

Nevada
There is a limit placed on the amount of the rental late fee a landlord may charge in Nevada. The limit is 5% of the rent amount. This should be written into the lease agreement.

New Hampshire
New Hampshire is quiet about how much to charge for a rental late fee. Remember to use caution and keep all fees reasonable.

New Jersey
Late fees must be outlined in the lease agreement. There are no maximum limits, however, to not be considered exorbitant, it should be reasonable. Late rent is considered as late when it is not received on or before the date in the lease. There is an exception for senior citizens who are entitled to at least five business days before a late charge may be assessed.

New Mexico
There is a limitation on the late fee of 10% of the rental amount. It must be written in the lease.

New York
There are no limitations on how much a landlord may charge when a tenant pays the rent late. With that being said, courts have disallowed a late fee when it was considered disproportionate to the rent being charged. Note: Rent stabilized areas may have unique regulations differing from those in this summary.

North Carolina
Governed by NCGS § 42-46 which states that for leases where the rent is due on a monthly basis, the late charge may be no more than 5% (or $15 whichever is larger). However, if the lease is a week to week lease, 5% or $4.00 whichever is greater may be collected.

North Dakota
There are no explicit limitations on how much a late fee may be, but it must be written into the lease for it to be imposed.

Ohio
Although Ohio has no stated statutes regarding the limitations of a late fee, there are many, many cases setting precedent for reasonable fees. And even further, a case was made where a landlord had to prove that the amount charged was related to the specific costs that were incurred as a direct result of the late rent. There also was a ruling unfavorable to collecting late fees at all when there is no written lease in place.

Oklahoma
While there are no specific state laws pertaining to the limitation on late fees, it is suggested that a late fee should be restricted to any actual costs incurred by the landlord when rent is late.

Oregon
Late Fee: Oregon permits a reasonable flat late fee; generally, meaning, the amount of the late fee should equal the costs the landlord incurs because of the late rent payment. If you desire to charge a fee on a per-diem basis, it cannot be more than 6% of what you charge as a reasonable flat fee; or more than 5% of the periodic rental amount.

No late fee may be assessed or charged until 5 days have passed from when the rent was due. The late fee must be explicitly described in the lease agreement.

Oregon’s statutes for late fees for rent can be complicated; see the full Oregon late rent fee rules here.

Pennsylvania
The amount of a late fee is not limited by the Pennsylvania landlord tenant statutes. However, if they are excessive, they can come under the Pennsylvania Unfair and Deceptive Practices Act. It would be up to a judge. But in order to make sure you stay out of “hot water”, be sure that you keep those fees reasonably related to the costs.

Rhode Island
Even though Rhode Island may not have a specific statute regarding how much can be charged for a late fee, reasonable and fairness must always be taken into consideration.

South Carolina
South Carolina does not have a limit on what can be charged as a fee when the rent payment is late. Be sure, however, not to charge such inflated fees that fairness is called in question. And for collection purposes, late fees are considered “rent”.

South Dakota
Even though South Dakota does not specifically regulate the amount of a late charge you may assess, be careful. Some judges in various jurisdictions in the U. S. have overturned late fees when they were considered too high or punitive in nature.

Tennessee
Tennessee regulates the amount of a late charge you may levy, and it can be no more than 10% of the rent amount. However, it is important to understand that a late fee may not be charged until a 5-day grace period ends. If a rent payment is not paid, the landlord may charge an amount that is not more than $30. It is important to be sure that these fees are specified within in the lease agreement or somewhere on the premises in a conspicuous nature.

Texas
Even though the statutes in “Sec 92.019 of the Texas Landlord Tenant statutes are silent on the limit a property owner may charge for late rental fee, it must be fair and relevant to the costs incurred and for structures that contain less than 4 rental units, the rental late fee may not be more than 12% of the rent. For all other structures containing more than four (4) units, the fee may not exceed 10% of the rent. All fees charged MUST be in the written lease. Texas requires a grace period of at least one day before a late fee may be assessed.

**Landlord Beware: If have a late fees clause in your lease and fail to collect, a court may consider it a precedent thereby making it difficult to collect, later.

Utah
There are no limits on the amount for rental late fees. They must be specified in the lease and should be reasonable. Exorbitant fees have been challenged and lost in Utah’s courts.

Vermont
Vermont does not permit a penalty fee of any kind. However, a rental late fee is permitted if it is reasonably related to the costs incurred. All late fees and grace periods must be put in the lease for it to be enforced.

Virginia

According to Virginia Landlord Tenant statutes, a late rental fee may not be charged until a grace peripd of 5 days passes. There are no specified limits on the amount that may be charged. It must be fair and written in the lease.

Washington
There are no written laws regarding how much or when a late charge may be imposed. However, it must be written into the lease.

Washington, District of Columbia
Although Washington, D.C. is silent on the matters of late fees. It is a good practice to keep them “fair”.

West Virginia
West Virginia is silent on the subject of rental late fees and what can be charged.

Wisconsin
A reasonable late fee may be charged after 5 weekdays have passed from when the rent was due. After those 5 days have elapsed, a fee of $20 or 20% of the monthly rent may be assessed, whichever is greater. A landlord may charge a higher amount, however, that landlord will have the burden of proof that the amount is reasonable.

Wyoming
Nothing is stated in Wyoming statutes regarding the amount that may be charged for a rental late fee. It does have to be written in the lease agreement in order to be enforced.

 

Final Thoughts

It is important to clearly state all rental late fee procedures, including when rent is late, in the lease agreement. Make sure it is not so high of a charge that it could be considered a penalty or unreasonable. If the state your rental is in imposes limits, always make sure to adhere to them.

In this time of the Covid-19 pandemic, make sure that there are no temporary measures in place restricting late fees in your locale.♦

What do you charge for late fees? Have you ever had trouble enforcing your late fees for rent?

 

 

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About the Author

Deni Supplee is a landlord, property manager, licensed real estate agent, house hacker, and co-founder at SparkRental. She pursues financial independence so she can spend even more time with her (enormous) family. Want to reach financial independence too? Join Deni, Brian, and guest Scott Hoefler for a free masterclass on how Scott ditched his day job in under five years.

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