Q: Can I charge $75 per week as a late fee for rent paid late? Someone is renting a room from me and it's in the agreement.
Rent is due on the first, but I provide a 3-day grace period. The $75 late fee is assessed on the 4th of the month and every 7 days thereafter. I have had issues in the past with someone thinking, "Well, I'm late on rent, might as well pay it at the end of the month" and that was severely stressful. To prevent that, I'm assessing a weekly late fee, which has been working very well!
I just want to make sure that's legal in the State of California (City of Santa Clarita, County of Los Angeles), and nobody has objected. I also figure it will deter those who are prone to making late payments from wanting to rent in the first place. So far, it has been a perfect solution.
Thank you for your help!
Note: this question is NOT related to COVID at all, but a general question.
A: I would think that a late fee of $75.00 every 4 days is excessive. I would be unlikely to enforce such a provision in a contract under the law that allows discretion to avoid enforcement of "Unconscionable" terms in a contract. You may have a void provision, However, if you are just using it as a threat to keep difficult tenants current on their rent, you might continue to get away with it. Just don't expect to enforce it in Court.
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