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Landlord: Charging multiple late rent charges?
I was putting together a lease, and wondering about late rent. Home is renting at $1000/m. I have a late rent charge of $25 after the 5th day. Due 1st, 5 day grace to 6th (for Friday Checks if needed), then on the 7th I add it.
Let's say someone doesn't pay until the 20th, can you, or have you, added additional late charges? Is that a normal practice? Or is it just one late charge per rental invoice?
Thanks
21 Answers
- ibu guruLv 73 years ago
Not a normal practice. And depending on your jurisdiction, could be illegal. You really need to have your lease form drafted by a RE attorney to ensure everything is legal, and prepare for various contingencies. You have no experience as a landlord, and there are things you won't be aware of in preparing a lease. Once you have a good, valid lease form drafted, you can use it for all tenants.
- Anonymous3 years ago
You can only do this in certain states and then only if the total amount does not exceed limits imposed by state law. Some states only allow a one-time late fee.
Before asking a question on Landlord-Tenant Laws, you should specify which state. This is extremely relevant, as state laws vary. It is important that clauses in a lease conform to state law otherwise the clauses are null and void (even with signatures).
Late fees cannot exceed a certain amount, as specified in state law. Some states allow daily late fees until that limit is reached, while in others only a one-time fee is allowed. 5% of the rent is considered reasonable. Excessive or unfair fees can be thrown out if it ends up in court even if they are within limits imposed by state law ($200 might be within limits of state law but would definitely be considered excessive for a $1000 rental; $50 would be reasonable while $100 would be pushing it).
Grace periods are allowed by most states and these too vary by state. A grace period does not mean a tenant can pay late every month: habitual late payment is considered grounds for eviction. In some states, seniors and those on government assistance are allowed a grace period every month, generally 3 days; this is the only exception.
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- linkus86Lv 73 years ago
You aren't counting correctly. If a late charge is applied after the 5th (day of the month), it would be applied on the 6th, not the 7th. Remember the due date isn't the first day the tenant can pay the rent, its the last (absent of a grace period).
The normal thing to do is charge per day late after the initial late charge. For example $25 after the 5th plus $10 per day after that. Late fees are cumulative the same way interest is cumulative on a mortgage. Thus if trying to collect rent on the 20th the invoice would result in listing the rent, the $25 plus 15 separate entries of $10 totaling $175 in late fees. But where I come from the landlord wouldn't wait until the 20th and instead issue a pay or quit notice on the 6th.
- D.E.B.S.Lv 73 years ago
Your state and local laws would apply. Know them before you rent.
In many places, multiple late charges are not uncommon.
- ?Lv 73 years ago
Pretty uncommon to have any additional late charges...
If you prepare this contract on your own...just be sure nothing is in violation of local law...which is the real reason you hire an attorney to prepare the first one...
- curtisports2Lv 73 years ago
Read your state law on the subject. It varies by state. Some states allow an additional small charge per day up to a statutory limit.
Having said that, it is not a wise business practice to keep allowing rent to go unpaid and tack on additional fees. After your 5-day grace period comes and goes, you impose a flat fee AND issue a 3-day pay or quit notice. That way, if you do not have the full rent plus the late fee by the 10th, you may begin the eviction process for non-payment. Giving someone more time for an additional fee doesn't generate more revenue, it just drags out the eviction process.
Most states would not let you keep piling on until the 20th, and why would you? If they don't pay by the 20th, you STILL must issue a 3-day pay or quit (on the 21st) which means you can't begin the eviction until the 25th. You've lost half a month.
- Anonymous3 years ago
It depends on how the contract is written. Your contract needs to be in compliance with all applicable local, state and federal laws or that portion of the contract will not be enforceable in a court of law.