Source: Every Landlord’s
By: Marcia Stewart/Attorney Janet Portman
Ann O’Connell (Nolo-15th addition)
If you are faced with a tenant that has not paid rent on the
due date, you probably do not want to immediately hand out a
formal notice telling the tenant to pay the rent or
leave. After all, it is not going to do any thing
positive for your relationship with the tenant, who might have
just forgotten to drop the check in a mailbox. But how
else can you motivate tenants to pay rent on time?
A fairly common & sensible practice is to charge a
reasonable late fee and highlight your late fee policy in your
lease or rental agreement and move-in letter to new
tenants. You are still bound by general legal principles
that prohibit unreasonable high fees. Courts in some
states have ruled that contracts that provide for unreasonable
high late charges are not enforceable.
Unless your state regulates late fees, you should be on safe
ground if you adhere to these principles.
1-The late fee should not apply until @ least three or five
days after the due date.
2-The total late charge should not exceed four percent or five
percent (4%/5%) of the per monthly rent.
3-If late fee increases each day the rent is late, it should
be moderate and have an upper limit.
4-Do not try to disguise excessive late charges by giving a
“discount” for early payment.
If you are concerned about tenants paying on time-and who
isn't’?-put your energy into choosing responsible tenants!!