How much do you charge for late fees? And when?

Question

How much do you charge in late fees when a tenant is late with their rent? I currently charge 4% and was thinking of raising this.

And what's your cut off date? Do you give a grace period of 5 days? 10 days?

Thank you in advance!

Jon Holdman · Answer

Mine's due on the first, late on the fifth.  No late charge if they pay 1st to 4th, $25 on the 5th, plus $5 for each additional day.

That's been reviewed by my attorney and is acceptable.  Not sure if its the maximum I could charge or not.  Pretty sure the 5th is the first day I can charge a late fee.  On the 5th a "pay or quit" goes up, then I can file for eviction three days later (or the next Monday, whichever is later).

If the tenant has paycheck timing issues, i'll add a couple of days to the due date, but I increase the late fee by $10 for each day I move it back.

If someone says "I have part of it, and I'll have the rest a week later", I'll take the partial (my lease states doing so does not change my rights to evict, and my attorney has OK'ed this) and then collect the rest a week later.  In that case they pay the full late fee based on when I receive all the money.  Usually the get the point and pay on time.  An extra $75 hit is sufficient motivation to come up with the rent on time.

Tracey B. · Answer

Claudia, let me first say that you should check your state and see whats legal in case you get caught but what I do is the rent is due on the 1st. If they pay 2nd thru 5th its $50 more and on the 6th I file for eviction. My tenants always pay on the first and the few times they don't they include the $50. Whenever someone doesn't pay on the 1st I send a notice that day saying they now owe rent plus late fee and on 'x' date I will file against them in court. Works every time.

Michael Rossi · Answer

Rent is due on the 1st and late at 5:01pm on the 4th.  If they pay at or after 5:01 pm on the 4th, they owe the $50 late fee.  I post three day notices on the morning of the 5th and file the eviction immediately after the expiration of the 3 day notice.

I find that it's not practical to have the late fee start prior to the 4th, because many low income tenants receive government checks that arrive on the 3rd.

Account Closed · Answer

I am in Atlanta, Georgia. Rent is due on 1st. Past due on 5th. Late fee is $70. I file eviction on 7th if not paid.

If you charge a per day late fee and they pay on the 28th of the month, some judges may find this excessive for late fee.If fee was $5 per day x 23 days late = $115 late fee. Judges in my county routinely discount any late that is in excess of 15% of the rent amount. Hope that helps.

Nathan Gesner · Answer

Another thing to remember is that a good Landlord understands peple run into difficulties.  I tell my tenants to call me IN ADVANCE if they are experiencing problems getting rent money together and I will try to find a way to help them through that rough time.  But there are limits to my kindness.

For example, one tenant had a family emergency and used rent money to fly home.  She had a good history of paying and gave me advance notice, so I believed her.  HOWEVER, I protected myself by drawing up a simple contract stating she was allowed to pay late but that rent must be paid in full by XX date with the standard late fees, grace period, etc. and that this agreement applied only to this particular month.  It was in writing and signed in case she tried to change the story, but she stuck to it and everything got back on track the next month.  Another tenant had a similar story with a good history of paying but he failed to make good the first month.  Then the second month.  Then the third month we had to evict him.

You have to run a business, not a welfare line.  And it's OK to have a heart, but you have to have a brain on top of it.

Nathan Gesner · Answer

Know your state/local laws!  Some examples:

1. Mandatory grace periods can range from zero days to an entire month.  In Wyoming I can evict after three days but in New Jersey and D.C. the tenant has a full 30 days to pay before eviction can be filed.  (is anyone surprised?)
2. Many states limit what you can charge for late fees.  For example, Wyoming has no limit but Iowa limits fees to $40 in a month.

I don't know what state smitnlit is in, but $280 sounds unreasonable unless they're living in some high-cost properties.  If a unit rents for $1400 a month, $280 would be a 20% late fee.  How can a tenant pay rent, plus an additional 20% on the 25th of the month and then pay the next month's rent on/before the 1st?  Even an additional 10% on the 15th is unlikely.  Allowing tenants to go that long before paying is just asking for trouble the next month and you might as well get rid of them.

For me, all rent is due on/before the 1st.  I give them a four-day grace period.  Late notice is posted on the 5th and I add a one-time charge of $25 and an additional $5 for each extra day they are late.  On the 10th, I file a "Pay or Quit" notice and they have three additional days to pay before I file for eviction.  Once I file for eviction, they will not be allowed to stay no matter how much they pay me.

If a tenant pays late one month, they are allowed to stay but warned that their leash has shortened.  The second month they are given the first grace period and then I post a "Pay or Quit" and give them three days to pay or move out.  If they pay they stay, but I warn them that is their last chance.  If they pay after the 1st at any other time during their tenancy, I post an "Unconditional Quit" notice and give them three days to move out or I file for eviction.  The Unconditional Quit does not allow them to pay and stay; they have to leave or I file for eviction.

Rich Weese · Answer

rents due on OR before the 1st. 
10% late fee due on the 3rd 
$10 per day beginning the 4th.

As others have said, check your state laws, and expect the max out of the tenants. If you expect less, you'll surely get less. Rich

Steve Babiak · Answer

Here's another similar thread you might want to check out:
http://www.biggerpockets.com/forums/52/topics/51927-grace-periods-rent-extensions-what-do-you-do-

Ana Hyler · Answer

My rentals are in Lincoln, NE. My contract states that rent is due on the 1st. and then I give them a grace period till the 5th. Late fee is $20 and applies on the 6th. and $2 a day there after. I usually charge late fee...but don;t charge them the $2 daily...I think I'm doing wrong... but I've never done it. Usually I listen to their sad story and try to work with them...if nothing happens on the 15th. I send them a 3 days notice of Pay or Quit.

Account Closed · Answer

Claudia, there are a number of different terms presented her.  You definitely want to find out what is allowable in your state.

For me, Rent is due on the first.  A $50 late charge is assessed on the 5th and an additional $50 late charge is assessed on the tenth.  I still charge the late fee when a partial payment is made.

How much do you charge for late fees? And when?

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