Late fee in CA

[Marc Dufour]

My tenants always pay a couple of days late every month. In my lease, there is no grace period and a fee of $70/day late. I haven't charge them anything. When they leave the property, can I deduct this late fee for all the late days? In California is it even ok to have this charge?

[Mark B.]

If your rental is in SF you will want to check into the local rent control laws. The general guideline in CA is that the fee can not be punitive and has to relate directly to your losses. If you look at the CA tenant landlord guide it will reference two cases. The bottom line seems to be that if you have to defend your self in court be prepared to show the judge what your losses are due to the late payment. One option would be to say that you are going to be late with the mortgage and they charge x%. Naturally you are probably not cutting it that close and have reserves, so I'm not sure if that would negate the argument. If you have to sell securities are the taxes that you paid your actual loss?

This is the view from a pro tenant site: http://www.caltenantlaw.com/LateFees.htm

I think they go too far-the ca tenant landlord guide (while not binding) seems to indicate that there is room for reasonable costs to be apart of the late fee and not limits to the ridicules 10% annualized fee. When I search on those two cases it seems like the consensus is 4%-6% ish is fair but you can't charge an NSF fee on top of that.

My guess is that after a few days to a week the $70/day (your rent will probably drive how much) is not going to fly. I do mine as a percentage of the monthly rent after 5pm on the 2nd. As to what to do with the present situation I would not surprise them at the end of the lease with a charge against the deposit that you never told them through documentation about.  A letter restating the provisions of the lease and that you will be enforcing them beginning next month will be much more likely to withstand scrutiny. 

Just my 2 cents, not a lawyer and still trying to figure this one out myself! Yet another poorly written CA law.