I live in MD and I currently have a lease that mentions the following about late fees: "5% of the monthly rent for every day the rent is late after the 5th day rent is due". I bough the contract from eForms.com. My question is, can I charge 5% for everyday rent is not paid? Or is it only 5% of the rent no matter if they are late 1 or 20 days? I appreciate everyones guidance.
You'll have to check your state laws. In nearby DC, they have a newer law restricting the late fee to 5% of the rent and you can't evict for non payment of late fees. Here in Georgia there isn't any specific law but the late fee has to be within reason. 5% a day wouldn't meet that requirement. On our SFRs we charge 75 plus 10 per day additional. so for instance on day six it would be $75, on day 7 it would be $85 and so forth.
@John Teachout . Understand. Thank you.
@Zantiago Zurita I can see why you’re confused...that is a very poorly worded late fee clause. It sounds more like 5% each and every day rent is late after the 5th. If that’s the case, and the tenant didn’t pay the rent by the end of the month, you’d have more in late fees than rent. That’d be excessive and likely unenforceable in almost every state.
You want late fees to be a deterrent to paying rent late, but not so excessive/costly that - if the tenant does pay rent late - they can’t catch up and then they stop paying altogether and you end up with an eviction on your hands.
I’d suggest finding out what’s legal in your state when it comes to late fees, and then re-wording that clause so it’s more clear and in compliance with whatever your state’s laws are.
@Kyle J. Thank you. Your post made lots of sense when I stopped and thought about it. I’ll have to change that in the contract. I appreciate it.