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Updated over 5 years ago,
Late Fees Are Illegal?
This is a link to an interesting subject regarding Late Charges.
https://caltenantlaw.com/late-fees/
The article, written by an attorney, states that charging tenants a Late Charge Fees is illegal and when you evict a tenant the court can favor the tenant.
So, today, I changed my Lease Agreement. Rather than charging a 6% Late Charge, I changed my Lease Agreement to state that the tenant must pay a $75 Administrative Fee. According to the article, the $75 Administrative Fee is probably still illegal since the laws sort of state that landlords can charge only for liquidated damages and there is really no liquidated damage caused just because a tenant pays you late. You are really not supposed to be able to charge your tenant just because you have to make a few extra phone calls to collect the rent and make an extra trip to the bank because it is only a part of doing business that you already get paid.
I know for a fact that when you charge tenants a fee for being late they will do their best to pay when due, in the future. If you don't charge a fee to late tenants they will never have an incentive to pay you rent when due. So, it is absolutely necessary to hit the tenant somewhere. At the same time, I feel bad taking the money from tenants when I know they are already struggling to pay their rent.