The typical late fee for rent is between 5% – 10% of the monthly rent price. This can vary based on each area, property, and situation.
Should Landlords Charge a Late Fee?
There is no requirement for landlords to charge a late fee. However, a late fee can be beneficial to ensure tenants pay on time. If you opt not to charge a late fee, tenants can take advantage and continuously make late payments.
Collecting a late fee can also help you during an eviction case. If a tenant “always” pays late and can show proof, a judge may rule that there isn’t a strict payment schedule and offer the tenant additional time to pay.
If a landlord determines that charging a late fee is in their best interest, be sure it is clearly stated in the lease agreement and that it abides by all state and local laws.
When Can Landlords Charge a Late Fee?
Rent is due on the date listed in the lease agreement. However, the date landlords can legally charge a late fee varies. The following states require a grace period before a late fee can be charged:
| State | Required Grace Period for Late Fees |
|---|---|
| Arizona | 5 days (mobile homes) None (other housing types) |
| Colorado | 7 days |
| Connecticut | 4 days (week-to-week lease agreements) 9 days (all other lease agreements) |
| Delaware | 5 days (except the grace period is 8 days if rent can’t be paid in person within the same county as the residence) |
| Maine | 15 days |
| Massachusetts | 30 days |
| Nevada | None (week-to-week lease agreements) 3 days (all other lease agreements) |
| New Jersey | 5 business days (certain senior tenants) None (other tenants) |
| New York | 5 days |
| North Carolina | 5 days |
| Oregon | 4 days |
| Tennessee | 5 days (if 6th day is a Sunday or holiday, due date is the next business day) |
| Texas | 2 days |
| Virginia | None (with written lease agreement) 5 days (if there is no written lease agreement) |
| Washington | 5 days |
| Washington D.C. | 5 days |
In addition, some landlords also consider the day of the week rent is due before charging a late fee.
A landlord doesn’t offer a grace period and rent is due on the first. The first of the month lands on a Sunday. The landlord may wait to charge a late fee until the end of the day on Monday as online payments or mailed payments may take longer to process as Sunday is not considered a business day.
How to Determine What to Charge for a Rental Late Fee
Here are a few things to consider when determining how much to charge for a late fee:
Check State and Local Law
Some states limit the amount landlords can charge if tenants are late on their rent payments:
| State | Maximum Late Rent Fee |
|---|---|
| Alabama | No maximum, must be reasonable |
| Alaska | Estimated cost + interest |
| Arizona | $5/day (mobile homes) None (other housing types) |
| Arkansas | No maximum |
| California | No maximum, must be reasonable |
| Colorado | $50 or 5% of the rent due (whichever is greater) |
| Connecticut | $5/day up to a maximum $50, OR 5% of the rental payment |
| Delaware | 5% of the monthly rent |
| Florida | No maximum, must be reasonable |
| Georgia | No maximum, must be reasonable |
| Hawaii | 8% of the rent due |
| Idaho | No maximum |
| Illinois | No maximum, must be reasonable |
| Indiana | No maximum, must be reasonable |
| Iowa | $12/day up to $60 (rent below $700) $20/day up to $100 (rent over $700) |
| Kansas | No maximum, must be reasonable |
| Kentucky | No maximum, must be reasonable |
| Louisiana | No maximum, must be reasonable |
| Maine | 4% of the monthly rent |
| Maryland | 5% of the rent due (monthly rent payments) $3/week up to $12 (weekly rent payments) |
| Massachusetts | No maximum, must be reasonable |
| Michigan | No maximum, must be reasonable |
| Minnesota | 8% of the rent due |
| Mississippi | No maximum |
| Missouri | No maximum |
| Montana | No maximum |
| Nebraska | No maximum, must be reasonable |
| Nevada | 5% of the monthly rent |
| New Hampshire | No maximum, must be reasonable |
| New Jersey | No maximum, must be reasonable |
| New Mexico | 10% of the monthly rent |
| New York | $50 or 5% of the monthly rent (whichever is greater) |
| North Carolina | $15 or 5% of a monthly payment $4 or 5% of a weekly payment (whichever is greater) |
| North Dakota | No maximum, must be reasonable |
| Ohio | No maximum, must be reasonable |
| Oklahoma | No maximum, must be reasonable |
| Oregon | Flat fee: must be reasonable Per-day fee: 6% of the flat fee 5-day period late fee: 5% of the monthly rent |
| Pennsylvania | No maximum, must be reasonable |
| Rhode Island | No maximum, must be reasonable |
| South Carolina | No maximum, must be reasonable |
| South Dakota | No maximum |
| Tennessee | 10% of the rent due |
| Texas | 10% of monthly rent (buildings < 5 units) 12% of monthly rent (buildings with 5+ units) (or actual cost to landlord if it is higher) |
| Utah | $75 or 10% of the monthly rent |
| Vermont | Estimate of actual costs |
| Virginia | 10% of the monthly rent or 10% of the rent due (whichever is less) |
| Washington | No maximum, must be reasonable |
| Washington D.C. | 5% of the rent due |
| West Virginia | No maximum, must be reasonable |
| Wisconsin | No maximum, must be reasonable |
| Wyoming | No maximum, must be reasonable |
Local laws may also have their own stipulations. For example, California state law does not regulate late rent fees, but the West Hollywood Municipal Code limits the fee to 1% of the monthly rent.
Consider the Market
The local rental market may play a role in whether you charge a late fee and if so, how much.
For example, in a competitive rental market, an applicant may be more willing to sign a lease with higher late fees.
However, if the rental market is relaxed in your area, higher late fees can be a reason an applicant chooses another property.
It is important to point out and remember that late fees are only charged if the rent payment is late. A high-quality tenant isn’t likely to be overly concerned about late fees unless they have a history of late payments.
Examine Tenant Behavior
If a tenant who consistently pays rent on time and in full suddenly misses a payment, it is important to talk with them directly. They could have simply forgotten or had a legitimate reason they didn’t pay. Automatically charging a late fee to a tenant isn’t always the best way to handle a situation.
On the other hand, if a tenant has paid late the last two months, charging a late fee may incentivize them to be more diligent with making their payment on time.
If several tenants are having issues paying rent on time, it may be time to look at your payment options. Requiring a check or only accepting one type of payment may be doing you a disservice. It’s a good idea to check out other ways to collect rent.
Select a Preferred Fee Method
Landlords use a few different methods to determine how much to charge.
Percentage Based Fees
The typical late charge for percentage-based fees is 5% – 10% of the monthly rent price. Be sure to check with your state and local laws before determining your percentage. It’s also a good idea to determine what is reasonable in your area.
If the rent price for your property is $1,200 a month and you charge an 8% late fee after a 3-day grace period, that comes out to $96. However, if rent is $2,500 changing an 8% fee would be $200, which may be a little steep.
Flat Fees
Some landlords opt to charge a flat fee for late rent. As soon as the rent is deemed late (or after the grace period) landlords can charge a specific amount such as $20 – $50, or as based on their legal restrictions.
While this method can be effective, it doesn’t entice a tenant to pay on the first day rent is late versus the 4th day if they will incur the same fee regardless.
Daily Fees
A daily fee charges tenants for each day the rent is late up to a certain maximum.
If a landlord charges a $10 late fee per day, a tenant who is 3 days late would pay $30 while a tenant who is 5 days late would pay $50.
This method incentivizes tenants to pay more quickly as $10 isn’t a huge penalty but $50 might be.
How to Avoid Late Rent Payments
Landlords can help tenants avoid a late fee by establishing a consistent and clear policy for rental payments. There are also a few tools you can use to help keep tenants on track including:
- Send rent-due reminders – Many online payment portals offer automatic reminders or you can have an administrative assistant send texts a few days before the due date each month.
- Use automatic payment options – Offer tenants a rental payment service that charges rent automatically, ensuring you get paid on time.
- Offer a variety of payment options – Tenants may also be waiting for their paychecks to clear. Offering a variety of payment options, such as a credit card, can help ensure the rent gets paid on time.
- Charge consistent late fees – If tenants believe you have a relaxed payment policy, they may not feel any sense of urgency to pay on time. Charging late fees consistently sets a precedent that rent needs to be paid on time.
Sources
- 1 Conn. Gen. Stat. § 47a-15a(b)
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If a rental agreement contains a valid written agreement to pay a late charge in accordance with subsection (a) of section 47a-4, a landlord may assess a tenant such a late charge on a rent payment made subsequent to the grace period in accordance with this section. Such late charge may not exceed the lesser of (1) five dollars per day, up to a maximum of fifty dollars, or (2) five per cent of the delinquent rent payment or, in the case of a rental agreement paid in whole or in part by a governmental or charitable entity, five per cent of the tenant’s share of the delinquent rent payment. The landlord may not assess more than one late charge upon a delinquent rent payment, regardless of how long the rent remains unpaid.
