The first thing that may happen if you pay your rent late is that you can get hit with a late fee. The rules governing late fees are determined by states – some states limit how much can be charged, while others require set grace periods before they can be charged. Ultimately, the late fees for a specific property are set in individual rent agreements.
While there are some rules that govern late fees, there are plenty of landlords who try to charge more than they should. It’s important to understand what these fees are, how they work, and when they can be charged – both to understand your rights and to stay on good terms with your landlord.
Average Late Fees
Not all landlords charge late fees. Of those who do, 5% to 10% of monthly rent is typical. Depending on the lease, these fees may be assessed as a percent of rent or as a flat fee ($50 or $100, for example). However, these fees are always outlined explicitly in rental agreements — in fact, they have to be in order to be legal.
Late fees vary not just by landlord, but also by location, property type, and even rent amount. For example, late fees are often lower (as a percent of monthly rent) when rent is higher. There are several reasons for this:
- First, when rent is higher, it takes a comparatively smaller percentage in order to reach a meaningful dollar penalty to encourage on-time payment.
- Second, tenants who can afford more expensive places are often thought to be more financially responsible, so landlords don’t expect that they’ll have a problem collecting rent on time.
- Lastly, it can be more difficult to find tenants for more expensive rentals. For example, if a landlord angers a tenant by charging a late fee (even if it’s small), the tenant may later move out and leave the property vacant. So, the landlord may prefer to collect rent late rather than run the risk of having their tenant move out because the late fee is exorbitant.
For these reasons, landlords typically try to give themselves flexibility when assessing late fees. The maximum that landlords can charge in late fees and the earliest point when they can be charged are outlined in lease agreements, but landlords aren’t required to charge late fees just because they’re entitled in a lease agreement.
Ultimately, the decision of whether to charge a fee when rent is late will be based on the landlord, the property, and the tenant. That’s why it’s so important to stay on the best possible terms with your landlord.
Typical Late Fees by Rent Amount
|Rent Amount||Typical Late Fee (as % of rent)||Late Fee Amount (in $)|
Are Late Fees Legal?
Charging late fees is legal when tenants don’t pay rent on time. But, in order to be legal, late fees must be defined in the lease agreement that sets out landlord and tenant rights and responsibilities. If late fees aren’t included in a lease, then they can’t be charged.
In some cases, there are also restrictions on how much landlords can charge in late fees; or on when they can charge a fee. While there are no federal rules governing fees for late rent, more than a dozen states have specific rules governing late fees and grace periods:
- New Jersey
- New Mexico
- North Carolina
Even if you don’t live in one of these states, there may be local rules governing how much you can be charged and when. In New York City, for example, late fees can only be charged if rent is paid more than 5 days late and fees can’t be higher than $50 or 5% of the rent, whichever is less.
Rent Due Dates & Grace Periods
When you sign an agreement to rent a property — whether it’s an apartment, condo, house, trailer, or townhome — your lease will outline all of your rights and responsibilities, as well as your landlord’s. These include the amount of rent to be paid each month, as well as when the rent is due.
In addition to these due dates, some leases also grant tenants a grace period — a period of time (typically a few days) after the stated due date for rent when they can pay their rent without incurring a late fee or other penalties.
Some landlords write grace periods into their leases in order to give tenants a little leeway if their rent happens to be a day or two late. Some states even have mandatory grace periods, ranging from 1 to 30 days.
However, if grace periods aren’t required in your state and your lease doesn’t specifically include one, then you don’t have a grace period — your landlord can charge you a late fee the day after your rent is due if you haven’t paid it on time. That’s why it’s important to read your lease and understand your rights and responsibilities.
These states all have legally-mandated grace periods before late fees can be charged:
- Arkansas (5 days)
- Connecticut (9 days)
- Maine (15 days)
- Massachusetts (30 days)
- New Jersey (5 days, but only for protected classes)
- North Carolina (5 days)
- Oregon (4 days)
- Tennessee (5 days)
- Texas (1 day)
Late Fee Exemptions
In addition to due dates and grace periods, there are some cases where you may be exempt from late fees if you don’t pay your rent online. For example, there may be extenuating circumstances outlined in your lease agreement. Some things that may exempt you from late fees including acts of God, financial hardship, illness, or incapacitation.
You may also be exempt from late fees if your landlord defaults on your lease; say, by not providing you with property in a liveable condition. Or, if you’re a member of a protected class — if you’re a senior citizen or have a physical or mental handicap, for example — then you may be exempt from late fees.
Last, but certainly not least, you will be exempt from late fees if your landlord decides not to charge the fee. If late fees are included in your lease and comply with state law, then your landlord is entitled to charge them if your rent is late and violates any applicable grace period. But they don’t have to. If they decide not to charge the fee, you don’t have to pay it.
Requesting an Extension
Another option a lot of people don’t think about — but that they would do well to consider — is simply being honest and upfront. If you think your rent may be late one month, it never hurts to tell your landlord and ask whether they’ll grant you an extension.
If you think your rent may be late, it’s important to tell your landlord as soon as possible. Here are some tips for notifying your landlord and minimizing blowback:
- Tell them as early as possible that rent may be late
- Clearly state when you think you can have the rent paid in full
- Ask if they’re willing to waive any late fees
- Volunteer to deliver your rent in-person at the earliest possible date
- Offer to pay part of your rent early
- Thank them for their understanding
Why Landlords Charge Late Fees
Landlords have their reasons for charging late fees. First and foremost, landlords charge late fees to encourage tenants to pay rent on time. Second, landlords charge late fees because of the inconvenience of not getting paid on time.
Many landlords pay bills from the funds they receive as rent — the mortgage, taxes, and insurance for their rental property, for example. Receiving rent payments late can mean landlords have to pay these expenses out of pocket or deal with other cash flow problems until the rent is paid.
Lastly, landlords may also charge late fees as a way to cut down on actual tenant default or to delay or avoid eviction — or having to report a tenant to credit bureaus for nonpayment of rent. By charging late fees, landlords add a step to the process between nonpayment of rent and pursuing eviction. The hope is that tenants shape up and pay their rent on time. But, if they don’t, at least landlords get a clear signal early on that additional steps may become necessary.
But sometimes late fees become a bigger deal than they should be. Tenants may not know they’re responsible for fees if rent is a day or two late, or they may think it a trivial annoyance. So, if a landlord has a good tenant whose rent is usually on time, and they periodically miss a rent due date by a day or two, it may be better to waive the fee rather than upset them or make them want to move.
The Last Word
Late fees are charges that some landlords assess when tenants don’t pay their rent on time. These fees aren’t substantial — usually 5% to 10% of monthly rent — and are meant to encourage on-time payment of rent.
Late fees for rent are perfectly legal, but they must be outlined in individual lease agreements. These fees are also restricted in some states, with mandatory grace periods and/or limits on how much landlords can charge tenants as late fees.
It’s important for both landlords and tenants to understand their rights, including late fees, so be sure you make note of any late fees the next time you choose a place to rent.