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Late Fees on Rent Payments in California

Is it legal for a landlord to charge a tenant with a late fee in California?

Yes, it is legal for a property owner to charge a tenant with a late fee if their rent has not been paid on time, however, California law subjects landlords to some regulations when doing so. The most important regulation is that the lease agreement must lay out the terms for late-payments and specifically describe when and how a late fee must be paid. This section of the contract must include the amount to be paid when a late fee can be charged, and clauses stating that the payment represents an adequate compensation of the damages caused by the lateness of the rent payment.

What is considered a “reasonable” late fee?

California law requires that the late fee be a “reasonable” amount of money meant for fixing the damage caused by the delay of a tenant’s payment. Courts have had varying definitions on what constitutes a reasonable amount, but the general consensus is that a late fee of 5% of monthly rent is considered reasonable for late payment, and the fee can be up to 10% for “extremely” late payments. Extremely late payment would be paid after the tenant was given a contractually obligated, “grace period.”

What is a grace period?

A grace period refers to the amount of time a tenant has to pay their rent before accruing a late fee or increasing an existing late fee. California law does not require landlords to give tenants a grace period, meaning that if they choose, landlords can charge a late fee a day after rent is due. However, many landlords choose to include grace periods so they can collect a higher late fee, due to the courts’ recognition of an “extremely” late payment as previously mentioned.

How can a tenant recover their money if they made an illegal late fee?

Tenants who feel that they have been wrongfully charged with a late fee or charged with an unreasonable amount should seek legal representation. Often, landlords use late payments as an excuse to evict tenants or raise their rent in the future. If the late fees you were charged with are unlawful, you will be entitled to reimbursement for the fees as well as any other damages that paying the late fee has caused to you.

Is it legal to charge late fees during the COVID-19 pandemic?

As long as California is still in a state of emergency, it is illegal for landlords to charge late fees to their tenants.

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