Landlord Question and Answer Forum

What is typically the standard for late fees. Currently I have rent due on the 1st, if not received within 3 days following the due date (so if not received by end of day on the 4th), then late fees of $50 + $25 a day. I'm considering either changing this to a flat one time fee or keeping this method and putting a cap on it (e.g., $50 + $25 a day not to exceed $200). I don't want to create a scenario where the tenant cannot catch up. That's not good for them and it's not good for me. Thoughts? Ideas? Experiences?

$50 + $25 a day is confusing. Does this mean it starts on the 2nd or the 5th? And is the late fee $50 or $75? Check your state laws to ensure you're not charging too much of a late fee; some states have limits.

Posted by Dawn A, WI on Friday, March 7, 2014

This is very true about different states having limits. I use to charge a late fee very similar to this until I found that in TN, I can only charge up to 10% of the rent amount. Also, in most states, charging a late fee like this is illegal. Last, in most states you have to give until the 5th day of the month for the rent to be paid, and it is late on the 6th day unless that day falls on a Sunday or holiday. In cases like this, it will be the next business day.

Posted by Gary S, TN on Monday, March 10, 2014

This is legal in Texas, and there are no limits in Texas. This late fee structure was actually established by the template lease on this site, plus I've seen it used in leases I've signed in the past. It's a $50 base fee plus $25 for each day. Rent is due on or before the 1st. They get a 3 day grace period. So, if no payment is received on or before the 4th then fees start on the 5th: due on the 1st, 3 days of no fees, fees start after that. I've decided to modify this slightly when renewing: I'm going to cap the fees at $225. That equals 7 days of fees. I don't like the idea of a flat rate because they can simply become accustom to paying the fee and I don't want that. This way if you are late only a day, then the fees are not incredibly large, but if you're days late then you will feel it. My current way (with no cap) can allow the fees to get too out of hand, for both them and I. Thank you all!

Posted by Charles R. N, TX on Thursday, March 13, 2014