What rental payment late fee (or late rent fee) can a landlord charge? How long do you have to wait? How much you can charge? The answer depends on which state you’re in.
Rental Payment Late Fee By State
|State||Waiting Period (days)||Limit|
|Iowa||0||$12-$20/day or $100/mo|
|North Carolina||5||the larger of $5 or 15%|
|Oregon||4||reasonable, complicated maximums|
If your state is not shown above, we are not aware of regulation. (We’re always updating, email us at firstname.lastname@example.org.
Note that rental payment late fees and late rent fees are not legal grace periods. In many states that restrict rent fees, like Massachusetts, you can still file for eviction the moment rent is first late.
Pros of a Rental Payment Late Fee/Late Rent Fee
If your business cashflow is tight, you may incur late fees as the owner if you don’t pay your mortgage, taxes, insurance, or other bills on time. This late fee can be passed on to the renter through a rental payment late fee.
Collection activity for late-payers can be expensive, especially if there are bounced check fees or staff costs. A rental payment late fee can reimburse you for the trouble of chasing the renter.
The most important reason for a rental payment late fee is to create an incentive to pay the rent on time.
Cons of a Rental Payment Late Fee/Late Rent Fee
Renters who encounter financial difficulty will not be moved by a late rent fee. When the rent money’s not there, it’s not there.
If you wait to file for eviction until the late rent fee waiting period shown above, you will incur additional and pointless legal delay should the tenancy ultimately fail.
As a practical matter, a renter who is assessed a late rent fee because they’re broke will be less likely to pay any of their rent. Rental payment late fees make the unaffordable cost of housing even higher and even less likely to be paid, so “why try?”
Alternatives to a Rental Payment Late Fee/Late Rent Fee
Owners are often better served by creating custom payment schedules tied to income. The most important thing is that the rent gets paid on a schedule both agree to. If a renter gets paid weekly on Friday, and the rent can be debited as soon as that money hits their account, they are far less likely to leave you the owner holding the bag at the end of the month.
Owners who perceive their tenancy requires intervention might be better off working with the renter on structural reform. For instance, if you can convince your renter to take roommates, or help them find a job, they will have additional household income to pay the rent.
Owners who perceive their tenancy is doomed to fail should proceed with eviction and recovery of the rented premises. This process can be long and difficult for all parties, and gets worse over time. If you are the owner and you wait, you might end up with many months of unpaid rent. If you are the renter and it ends up in court, you may end up with a permanent record. It’s better to contemplate separation early and start the process on time to minimize costs all around.
Rental payment late fees and late rent fees can be accommodated by many rent collection systems.