What is the fair amount of Late Fees? Is it per Day or a % of Monthly rent?

Consider following scenario,

Rent is $1000 and is due on 1st. Tenant does not pay within first 3 days. You send a notice to 'Pay or Quit' and file for Eviction.

Tenant answers Eviction papers and you get a court date on 30th of that month. Tenant comes to Court with Rent and Late Fees.

Question is, how much should be the Late Fee?

Case 1 - Per Day $10 (1% of monthly rent), so for 30 days it is $300.

Case 1 - Per Day $20 (2% of monthly rent), so for 30 days it is $600.

Case 3 - Flat 20%, so the Late Fee is $200.

Case 4 - Flat 3%, so the Late Fee is $30.

It depends on your laws and your judge.

MC [PA] $5 each day is good but it would be good if I know the monthly rent amount. Is $5 for monthly rent of $1000?

Sorta Blonde [CA] $10 each day is good but it would be good if I know the monthly rent amount. Is $10 for monthly rent of $1000?

If it’s not in your lease, you may have an issue collecting. Our lease says $25 for the first day, additional $10/day after that.

Bottom line, it's according to your local laws and judges.

We like a progressive fee, it gives them an incentive to pay NOW.

By law we must give five days grace. on the 6th we charge $50 late fee with additional $10 per day.

We have never in 22 years had it challenged in court.

I do a big up front hit (10%) on day 1 late, then $5 per day after. That big hit is enough to discourage most late payers, and the $5 per day keeps it adding up to encourage them to get the rent taken care of.

My local judges cap late fees at $150 that they will award on a money judgment if we end up in court, but that doesn't mean I can't CHARGE more and BILL anything the judge doesn't allow against the deposit. It's important to know the distinction between what the law says (it is silent on any late fee limits) and what a group of judges say they will enforce in a courtroom action.

As a side note on late fees: we all know there are many unaccounted costs with eviction that include the time it takes to repair and clean the unit that never get added onto the judgment, but they should be the defaulting tenant's responsibility. Therefore, my goal is to legitimately use up every ounce of the deposit with other charges to cover those costs. Late charges are one. Early Termination Fee (which applies if they breach...the lease still got terminated early due to their actions) is another. A lot of LL's get lazy and "just keep the deposit." Nope, can't do that. Gotta charge for it and account. ETF and late fees are easy and understandable. Once their deposit goes to zero, then I have full rights to collect all damages, unpaid rents, fees, etc.

Always CHARGE, even if you don't think you'll ever get PAID. Life has a funny way of working out when you ask for something. And when you never ask for it, you never get it. So ALWAYS ask (i.e. CHARGE).

Thanks Hoosier. So if I get the Eviction Order then do I have to forego the backed up rent and late fees that the tenant brings to court?

gevans [SC] makes sense with your rent and late fee structure. I give 3 days grace period then it is flat amount per day until paid.

S i d[MO] I will follow the big hit first then incremental charge per day.

"It's important to know the distinction between what the law says (it is silent on any late fee limits) and what a group of judges say they will enforce in a courtroom action."

10% cap is a problem. That is what tenant waiting for and thrive on. They know that they can pay late and pull on as much as possible.

Late Charges per day makes sense because they have an incentive to pay earlier and not incur additional charges.

By the time you get a court date, they are well over a month in terms of delay.

Lucy [IN],

Same here. What county are you in? Our new judge is pretty good. I appreciate him. He was a city judge before this but his eyes opened a lot when he saw how the deadbeats work around here.

I guess maybe I can send an email and ask about his late fee structure. I hate to find out in court that he won't allow what I am asking for. Makes me look dumber than I am.

Then again I hate the idea of only having a 10% penalty. The deadbeat can wait the entire month for the same price. Some of them realize it and do just that.

NC rental laws encourage eviction as fast as possible. Late fees are limited, judges rarely award them, financial judgments won't be awarded anyway unless Tenant shows up in court (they almost never do.)

Therefore we tell prospects during our initial discussion - prior to signing a lease - that while we can and will collect late fees if necessary, we don't want them. We want the RENT and if not paid on time, we will evict without blinking. I point out to them that it's like their boss saying, "Sorry, can't pay you this week, I had to go to the doctor..."