Charge a Hefty, but Legal, Late Fee

Written by Landlord Property Management Magazine on . Posted in Blog

bigstock-Calendar-mark-with-Pay-rent-27131186-e1412018826477I believe that late fees provide the only real motivation for tenants to pay rent on time.

While some landlords mess around with early payment rewards to entice tenants to pay on time, I believe nothing works as well as a hefty (but legal) late fee.

Be Reasonable

My state doesn’t have a statute on late fees, therefore I’m only responsible for ensuring they are “reasonable” – which is completely subjective.

As such, I charge different one-time late fees, depending on the rent amount:

  • 10% if the      rent amount is less than a $1,000,
  • 7.5% if the      rent is between $1,000-$2500, and
  • 5% if the      rent is over $2,500.

Some lawyers will tell you that anything over 5% will get thrown out in court, but I would argue that a $30 late fee on $600 in rent, does not motivate even the poorest of tenants. They will still pay you whenever they feel like it.

Related: Daily Late Fees Provide Motivation to Pay Rent Quickly

You Won’t Get Rich

My goal is not to actually collect late fees – but rather to motivate my tenants to pay on time.

The cost of receiving rent late is far greater than the few hundred dollars you’ll make by trying to collect small late fees.

Whatever amount you choose, make sure that it’s written and agreed to in the lease.

You can’t assign a late fee, no matter how small, if it’s not in the lease.

Late Fees & Grace Periods by State

State regulations vary greatly on this topic, so it’s imperative that you learn and abide by your state laws.

According to my research (though I’m not a lawyer), only 15 states regulate grace periods and/or late fees. Please click on the links to the actual statutes, to ensure accuracy of the data.


Grace Period

Late Fees


Arizona Must be in a   written lease and be reasonable Ariz. Rev. Stat. Ann. §§   33-1414(A4)
Arkansas 5 Days A.C.A. § 18-17-701(b)
California Must be in a   written lease and be reasonable CA Landlord/Tenant Handbook
Connecticut 9 Days CT Gen Stat § 47a-15a (2013)
Iowa Agreements less   than $700/mo, a max $12 per day or $60 per month. For agreements more   than$700/mo, a max $20 per day or $100 per month. Iowa Code Ann. 562A.9(4)
Maine 15 Days Maximum 4% of rent Me. Rev. Stat. Ann. tit. 14 §6028
Maryland Maximum 5% of rent Md. REAL PROPERTY Code Ann. § 8-208   (2014)
Massachusetts 30 Days MGL c.186 § 15B(1)(c))
Nevada Must be in a   written lease NRS 118A.200
New Jersey 5 Days for   protected classes N.J.S.A. 2A:42-6.1
New Mexico Maximum 10% of   rent and be in a written lease N.M. Stat. Ann. § 47-8-15(D)
North Carolina 5 Days Maximum $15 or 5%,   whichever is greater NCGS § 42-46(a)(1)
Oregon 4 Days Must be in a   written lease and be reasonable, and may be a flat fee, a daily fee of no   more than 6% of the flat fee, or no more than 5% of the total rent for each   succeeding 5-day period or portion thereof of the rental period, until rent   is paid in full. Or. Rev. Stat. § 90.260(1)(2)
Tennessee 5 Days Maximum 10% of the   past due amount Tenn. Code Ann. § 66-28-201(d)
Texas 1 Day Must be in a   written lease and be reasonable Tex. Prop. Code Ann. §§ 92.019
All Other States No Statutes

by: Lucal Hall | Cozy Co &