Maximum Late Fees by State: The Ultimate Guide

As a landlord, however reliable your tenants may seem, you will likely deal with late rent payments from time to time. If your tenant has not paid their rent by the date specified in the lease, you are usually within your rights to charge a late fee. The idea is that this offsets the inconvenience of the late payment and also encourages on-time payments in the future.

However, this does not mean that property owners can charge unreasonable late fee payments whenever they want and for however much they want. Landlords may not charge an unreasonably high late rent fee. Generally, late rent fees are equal to around 5% of the monthly rent.

Depending on where your rental properties are located, there will be varying legislation regarding late fees. In this article, we break down the typical late fee for rent by state.

When Can Landlords Charge Late Fees?

Before we dive into the maximum late fees by state, we need to first establish when rent can be considered late. If a tenant misses a rent payment, you will have to wait until the grace period is over before you can request a fee. If the state landlord-tenant law does not specify a grace period, a landlord can technically charge a late fee the day after the rent is due. Mandatory grace periods vary by state and range from 1 day to 30 days.

Even if your rental properties are located in a state that has no specified grace period, it is a good idea to outline one in the lease anyway. This will provide clear expectations for your tenants and help to avoid any confusion.

Related: What Landlords Need To Know About Late Rent Fees And Grace Periods

What Are the Maximum Late Fees By State?

Should you decide to impose a late fee for rent you need to ensure you follow your states late fee guidelines. Generally speaking, if there is no limit specified by state law landlords must ensure the fee is 'reasonable'. And it is also required in most states that landlords must clearly specify their late fee policy in a written lease agreement for it to be enforceable (whether there are late rent fee limits or not).

The maximum late fees by state and their guidelines on grace periods are as follows:

What if My State Does Not Have a Maximum Late Rent Fee?

In states there is no landlord-tenant law regarding maximum late fees, the expectation is that the fee should remain reasonable. As a landlord, this means not taking advantage of your tenants by only charging them however much you need to, to offset the downsides of unpaid rent.

It should also be noted that each state has varying rules regarding when a landlord can begin eviction proceedings against a tenant who has not paid their rent. This is different from the grace period for late rent payments, so you should check with your local landlord-tenant law for further clarification.

Minimizing Late Rent with Landlord Studio

While late fees may seem like a passive way for a landlord to increase their rental returns, it is a hassle to deal with unpaid rent. It’s generally better for all parties involved if the rent is paid in full and on time every month.

Taking advantage of purpose-built property management software like Landlord Studio will enable your tenants to automate rent payments. They will no longer have to worry about remembering to pay rent and you will have peace of mind that it will be directly transferred to your bank account on the right day of the month.

Another advantage of using property management software is that you can also automate rent reminder emails. You can send your tenants an email before their rent is due to remind them of the upcoming date or send an email after the due date has passed to remind them of the grace period.

Should the rent remain unpaid when the grace period comes to an end, Landlord Studio enables you to automate the late fee and easily collect your owed rent. This makes it easier for you to manage your rental property but also sets a clear expectation for the tenant. It removes any confusion about what money is owed and when, as the process is fully automated and recorded.

Final Words

Before renting out your next property (or even if you’re already managing existing tenants), it pays to brush up on the legislation regarding late rent payments in your state. This way, you can be sure that you are charging a fair and reasonable amount, enabling you to minimize future late rent payments and keep your cash flow consistent.

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Disclaimer

We hope you found this blog interesting! However, do note that the information in this article does not constitute advice. This blog is for general informational and educational purposes only and should not be used as a substitute for competent legal and/or other advice from a licensed professional.