What Is The Max Late Fees That Could Be Charged?
I charge one of my tenants $7 per day late fee after the 5th of each month. this is to be paid until the full balance of the rent is paid. She has been late every month. I just want to make sure I'm not charging too much.
I'd say you're not charging enough.
monopoly,
The CA Department of Consumer Affairs has a Guide for Residential Tenants' and Landlords' Rights and Responsibilites. It discusses late fees and dishonored check fees. Although it does not spell out a $ amount for late fees, the wording implies a lot of leeway. The key being justification of reasonably related costs that you face as a result of a late rent payment. i.e. any late fees you would owe on the mortgage or payment fees incurred (expedited mailing cost, check by phone fees, wire service fees, etc...)
"Late fees must be reasonably related to the costs that your landlord faces as a result of your rent payment being late. A properly set late fee is legally valid. However, a late fee that is so high that it amounts to a penalty is not legally valid. "
The complete guide is available at http://www.dca.ca.gov/legal/landlordbook/living-in.htm
California landlord tenant law seems usually vague on this point. Lots of room for landlord abuse.
MD state law sets the maximum late fee at 5% of the unpaid rent. Clear and undisputable.
thanks for all of your replies. the house is located in Indiana.
Doh! I made that big mistake that no REI should do, I assumed. Your location said Vandenburg AFB, CA. Oh well, at least you have the information for when/if you buy a property closer to home. (and anyone else in CA that wanted to know)
In Virginia, I am under the impression it is up to 10%. Can anyone verify for me?
In CT the law is 5%, however I have a typical charge of $50 and just sued a tenant and the judge awarded the $50 which exceeded the 5%. Unless the tenant is aware of the max. charge and challenges it you will get awarded. The key is that it must be resonable.