You and your tenant agreed upon terms set forth in a rental or lease agreement. So what do you do if the tenant is late paying rent? As a landlord, you want to protect yourself and your property while being fair to your tenant. But sometimes, what's "fair" isn't always clear. Here is an overview of rent payment late fee laws by state.
Put it in the Agreement
It is the landlord's responsibility to explicitly state any applicable late fee in the rental or lease agreement. A late fee cannot be legally forced upon the tenant if there is no late fee clause in the agreement.
Make it Reasonable
A reasonable late fee is no more than 5% of the overdue rent, charged when rent is 3 or more days late. If the rent is 10 days late or more, it is reasonable to increase the fee, but should not exceed 10%. In Arizona and Nevada, state law only dictates that the late fee amount must be in the written rental or lease agreement, and must be reasonable.
No Laws for Late Fees
Most states do not specifically address late fees, so it is best to follow the guidelines above. These states are: Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.
States with Specific Restrictions
- California: The late fee must be a reasonable estimation of how much the late rent costs the landlord.
- Connecticut: The landlord must wait until nine days after rent is due.
- Delaware: The late fee cannot exceed 5% of the rent. If the landlord's office is not located within the same county as the rental property, the tenant has an extra three days beyond the rent due date in which to pay.
- Iowa: If the rent is less than $700, the late fee cannot exceed $12 per day to a maximum of $60 per month. If the rent is over $700, the late fee cannot exceed $20 per day, to a maximum of $100 for the month.
- Maine: The late fee cannot exceed 4% of the amount due in 30 days. Landlords must wait until rent is at least 15 days late.
- Maryland: The late fee may not exceed 5% of rent due.
- Massachusetts: Landlords must wait until rent is 30 days late, then they may charge a late fee, plus interest on late rent.
- Minnesota: The late fee cannot exceed 8% of the total overdue rent.
- New Jersey: If the tenant is a senior citizen on specified government benefits (such as Social Security or Disability) the landlord must wait until rent is 5 days late to charge a fee.
- New Mexico: The late fee cannot exceed 10% of the rent amount.
- New York: The landlord can charge a late fee immediately.
- North Carolina: The fee cannot exceed $15 or 5% of the rent amount (whichever is greater), and may only be charged once during a rental period. The landlord must wait until the rent is 5 days late.
- Oklahoma: The landlord may charge a fee if rent is late, however, preset late fees are invalid.
- Oregon: A flat fee must be "reasonable". A daily late fee cannot be more than 6% of a reasonable flat fee, and cannot exceed 5% of the monthly rent. The landlord must wait 4 days after rent is due.
- Tennessee: The fee cannot exceed 10% of total amount overdue. The landlord must wait until rent is five days late. If the fifth day is a Sunday or Holiday, the landlord must wait until the next business day.
- Texas: The fee amount must accurately reflect damages that the landlord must be able to calculate or reasonably estimate. The landlord can impose the fee when rent is one day late. There may be an initial fee, plus a daily fee for every day the rent is late.
Please consult your state's rental laws for more details.