My late fee clause
Hello all, my first post here. Tried searching but couldn't come up with the answer I was looking for. First im looking for an opinion on the legality of my late fee clause pertaining to charging a 5% late fee for 1) unpaid rent, 2) unpaid late fee's, 3) repair and 4) utility charges. This is a no grace period clause charging a blanket 5% late fee for the total balance for any one or more of those 4 income accounts. Also does 5% curb bad habits or would a 10% be more effective. I know 5% is the rule of thumb for Michigan late fees however in most cases by the time it gets to court having the late fee thrown out isn't our biggest concern. Thank you in advance!
Clause 7. Late Charges
- If Tenant fails to remit payment of any one of the following charges:
1) Rent, 2) Outstanding late fee charges, 3) Utility charges, 4) Repair charges
IN FULL before 5:00PM on the 1st day of the month, Tenant will pay Landlord additional rent of: 5% of the total outstanding balance.
- If Tenant fails to pay the rent IN FULL before 5:00PM on the 1st day of the month, a 7 Day Pay or Quit Notice(dc100a) will be prepared and served by the 2nd day of the month. Tenant will then have 7 days to pay or vacate the premises. If Tenant does not pay the outstanding balance in full or vacate the premises by 5:00PM on the 7th day, Landlord will file a court case for eviction on the 8th day.
Late charges are applied to the tenant’s total balance and deemed payable as additional rent. Habitually late rent will result in eviction proceedings.
Tenant acknowledges late payment of Rent, Outstanding late fee’s, Utility charges and Repair charges may cause Landlord to incur costs and expenses, some of which are difficult and impractical to determine. These costs and expenses include, but are not limited to, 7 day pay or quit notice preparation and service of process, additional accounting and paperwork. Landlord and Tenant agree that these charges [Clause 7. a, Clause 7. b.]represent a fair and reasonable estimate of the costs Landlord may incur by reason of Tenant's late payment.
(Tenant Initial) _________________