Maximum Late Fees by State: A Landlord’s Guide

Discover the ins and outs of late rental fees in your state with our detailed guide. Stay in control of your property investment and ensure timely payments with our essential insights.

By
Vivian Tejada
|
Last Updated
October 25, 2023
Maximum Late Fees by State: A Landlord’s Guide

Even the most reliable tenants may be late on rent from time to time. If a tenant hasn’t paid their rent by the due date specified in their lease, property owners are allowed to charge a late fee. The purpose of a late fee is to offset the inconvenience of receiving a late payment and to discourage this behavior in the future. Although rental owners are within their right to charge late rental fees, they can't charge fees indiscriminately, and the fees they do charge cannot be unreasonably high. Most states cap late rental fees at 5% of the monthly rent

In this blog, we’ll discuss everything you need to know about late rental payment fees, including why and when to charge them, as well as how to calculate and enforce them. We’ll also provide an overview of how late rent payment fees are regulated by all 50 states.

Why should landlords charge a late fee?

As a property owner, you must ensure your tenants pay their rent in full and on time. Rent payments that are consistently late can negatively impact your cash flow, forcing you to use your funds to maintain mortgage payments. The longer a tenant remains late on payment, the harder it usually is for them to become current. This could compromise the profitability of your investment property. Charging a late fee allows you to protect your investment and have peace of mind.

When can property owners charge late fees?

In addition to regulating how much property owners can charge in late fees, states also regulate when late fees can be applied. Some states have a designated grace period of 1-30 days, while others have no grace period at all. A grace period is the time immediately after rent is due during which a tenant cannot be charged a late fee. 

Property owners need to hold off on charging a late fee until the grace period is over. If your state doesn’t specify a grace period, you can technically charge a late fee the day after rent is due. However, it’s worth considering whether this will improve or hurt your landlord-tenant relationships.

Even if your rental property is located in a state where there is no grace period, it’s smart to include one in the lease or rental agreement, anyway. This promotes transparency between you and your tenant and provides clear expectations regarding when and how rental fees will be charged. 

What are the maximum late fees by state?

As mentioned above, rent regulations and trends differ from state to state. Here is an overview of state laws regulating maximum late fees and required grace periods:

Alabama

There is no maximum late fee in Alabama. Property owners in this state must allow a seven-day grace period after rent is due before applying late fees. 

Alaska

There is no maximum late fee in Alaska. Alaska property owners must allow a grace period of seven days before charging late fees. 

Arizona

There is no maximum late fee in Arizona. Arizona property owners need to observe a grace period of five days before applying late fees. 

Arkansas

There is no maximum late fee in Arkansas. Arkansas property owners are not obliged to provide a grace period before charging late fees. 

California

There is no maximum late fee in California. California property owners do not need to provide their tenants with a grace period before charging late fees.

Colorado

There is no maximum late fee in Colorado. Property owners in Colorado are not obliged to observe a grace period before charging a late fee.

Connecticut

There is no maximum late fee in Connecticut. Connecticut property owners must provide tenants with a grace period of nine days before applying late fees.

Delaware

Delaware has a maximum late fee of 5% of the monthly rent. Property owners in Delaware must provide tenants with a five-day grace period before charging them late fees.

Washington D.C.

In D.C., the maximum late fee a property owner can charge is 5% of the monthly rent. D.C. property owners must observe a grace period of five days after rent is due before charging a late fee. ‍

Florida

Florida law limits late fees to 5% of the monthly rent due. Property owners in Florida must observe a grace period of fifteen days before applying late fees. This is a considerably longer grace period than most other states.

Georgia

Georgia property owners are not limited in terms of how much of a late fee they can charge. Late fees can be charged immediately after rent is overdue, as there is no grace period required in Georgia.

Hawaii

In Hawaii, the maximum late fee a tenant can be charged is 8% of the monthly rent. Hawaiian property owners do not need to observe a grace period.

Idaho

In Idaho, late fees are capped at 5% of the monthly rent due. Property owners in Idaho need to provide tenants with a 10-day grace period before charging late fees. 

Illinois

There is no maximum late fee in Illinois. However, Illinois property owners must allow a grace period of 5 days before applying late fees. 

Indiana

Indiana has no maximum late fee. Property owners in Indiana do not need to grant tenants a grace period before charging late fees. 

Iowa

The maximum amount of late fees a property owner in Iowa can charge is $60 per month for a balance of under $700 and $100 per month for rents of over $700. Iowa property owners do not need to observe a grace period before applying late fees.

Kansas

In Kansas, there is no maximum late fee. Kansas property owners do not need to provide tenants with a grace period before applying late fees. 

Kentucky

There is no maximum late fee in the state of Kentucky. Property owners in Kentucky do not need to observe a grace period before applying late fees.

Louisiana

There is no maximum late fee in Louisiana. Property owners in Louisiana do not need to observe a grace period before charging rental fees.

Maine

The maximum amount of late fees a property owner in Maine can charge is 4% of the monthly rent due. Maine property owners must observe a grace period of 15 days before applying late fees.

Maryland

The maximum late fee that can be charged in Maryland is 5% of the total monthly rent due. Maryland property owners do not need to allow a grace period.

Massachusetts

Property owners in Massachusetts are not limited in terms of how much they can charge tenants who are overdue on rent. However, they do need to observe a 30-day grace period before charging late rental fees. This is the longest grace period required in all 50 states.

Michigan

There is no maximum late fee in Michigan. Property owners in Michigan do not need to observe a grace period before charging tenants late rental fees. 

Minnesota

The maximum amount of late fees a property owner can charge in Minnesota is 8% of the monthly rent. After a balance becomes overdue, Minnesota property owners are not required to observe a grace period.

Mississippi

There is no maximum late fee in Mississippi. Property owners in Mississippi do not need to provide tenants with a grace period before charging late fees.

Missouri

There is no maximum late fee in Missouri. Property owners in Missouri do not need to provide tenants with a grace period before charging late fees.

Montana

In Montana, there is no maximum late fee. Montana property owners are not obliged to observe a grace period before applying late fees.

Nebraska

There is no maximum late fee in Nebraska. Property owners in Nebraska do not need to observe a grace period before charging late fees.

Nevada

The maximum late fee in Nebraska is 5% of the monthly rent due. Nevada property owners do not need to provide tenants with a grace period

New Hampshire

The maximum late fee in New Hampshire is 5% of the monthly rent due. New Hampshire property owners do not need to provide tenants with a grace period.

New Jersey

There is no maximum late fee in Nebraska. Property owners in New Jersey do not need to observe a grace period before charging late fees.

New Mexico

Property owners in New Mexico can charge tenants a maximum of 10% of the overdue balance per month. New Mexico property owners do not need to observe a grace period before applying late fees.

New York

New York property owners are allowed to charge either a late fee of $50 or 5% of the monthly rent, whichever is lower. This is different than most other state laws, given that property owners are usually allowed to choose whichever value is higher. After rent becomes overdue, New York property owners must allow a grace period of five days.

North Carolina

The maximum late fee in North Carolina is $15 or 5% of the monthly rent, whichever is greater. North Carolina property owners are not obliged to observe a grace period before applying late fees.

North Dakota

North Dakota has no limits in regards to how much property owners can charge in late fees. Property owners in North Dakota do not need to observe a grace period before charging late fees.

Ohio

There is no maximum late fee for overdue rent in Ohio. After rent becomes overdue, Ohio property owners do not need to provide tenants with a grace period before applying fees. 

Oklahoma

There is no maximum late fee for overdue rent in Oklahoma. After rent becomes overdue, Oklahoma property owners do not need to provide tenants with a grace period before applying late fees. 

Oregon

The maximum late fee an Oregon property owner can charge a tenant is 5% of overdue rent. Tenants are entitled to a 4-day grace period before being charged a late fee. 

Pennsylvania

Pennsylvania law doesn’t specify a maximum late fee. Property owners in Pennsylvania are not obliged to observe a grace period before charging a late fee.

Rhode Island

There is no maximum late fee in Rhode Island. Property owners in Rhode Island can apply late fees without offering a grace period for overdue rent.

South Carolina

There is no maximum late fee in South Carolina. Rental businesses in South Carolina do not need to observe a grace period before charging late fees.

South Dakota

There is no maximum late fee in South Dakota. Rental businesses in South Dakota do not need to observe a grace period before charging late fees.  

Tennessee

In Tennessee, the maximum late fee a property owner can charge a tenant is $30 or 10% of the monthly rent, whichever is greater. Rental businesses in Tennessee must observe a five-day grace period before applying late fees. 

Texas

Texas property owners are not limited in terms of how much they can charge tenants for overdue rent. However, they do need to observe a grace period of at least one day before applying late fees. This is one of the shortest grace periods required across the country.

Utah

Utah law does not stipulate a maximum late fee for overdue rent. Property owners are not required to offer tenants a grace period

Vermont

Vermont property owners are not limited in terms of how much they can charge tenants for overdue rent. They also aren’t required to observe a grace period before applying late fees. 

Virginia

There is no maximum late fee for overdue rent in Virginia. However, Virginia rental businesses in Virginia must provide tenants with a five-day grace period before applying a late fee. 

Washington

There is no maximum late fee in Washington. Rental businesses in Washington are not required to provide a grace period before applying a late fee.

West Virginia

In West Virginia, there is no law governing maximum late fees. Rental businesses in West Virginia are not required to observe a grace period before charging a late fee. 

Wisconsin

The maximum late fee in Wisconsin is $20 or 20% of the monthly rent due, whichever is greater. After a rent payment becomes overdue, Wisconsin rental businesses must allow a grace period of five days before applying a late fee.‍

Wyoming

There is no maximum late fee for overdue rent in Wyoming. Wyoming rental businesses do not need to provide their tenants with a grace period.

What if my state does not have a maximum late rent fee?

If your rental property is located in a state with no maximum late fees, the expectation is that tenants are charged a reasonable late fee. It’s a good idea to charge a similar late fee to neighboring states and provide a grace period of at least seven days as a gesture of goodwill. If neighboring states don’t have a maximum late fee, use your judgment to determine a reasonable flat fee for late payment.

How to calculate a late fee

Property owners can calculate late fees in several ways. As long as it doesn’t go against your state’s regulations, you can use any of the following methods to determine late rent fees:

  • A flat fee, such as $50 or $100.
  • A percentage fee based on the monthly rent, such as 5% or 10%.
  • A daily fee of $5 or $10 for each day a tenant fails to pay rent following the rent due date, or the end of the grace period. 
  • A combination late fee which includes a one-time late fee, plus a late fee for each day the tenant fails to pay rent.

How to enforce a late fee

Ideally, a late fee won’t have to be enforced. However, certain tenants may require more reminders than others. If a tenant is late on rent, wait for the designated grace period to pass and then provide them with a written notice requesting a late fee. Reference your lease agreement when writing the notice to make sure both you and your tenant are on the same page. This also helps document official communication between you and your tenant, which can be useful in court if late rent payments escalate to an eviction. It'll be easier to request a late fee from your tenant if you include it in the lease or rental agreement.

The bottom line on late fees 

Charging a late fee is a common practice among property owners that ensures rents are paid on time and your investment is protected. Tenants who owe late fees are often more motivated to pay their rent on time in the future.

Although property owners are limited in terms of how much they can charge and when, they’re well within their rights to charge a late fee for the inconvenience of receiving late rental payments. Every state has its regulations regarding late rent fees, so make sure to check local legislation before including a late fee clause in a written lease or enforcing late fees on your tenants. 

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Vivian Tejada

Vivian is a freelance real estate writer based in Brooklyn, NYC providing SEO blogging services to real estate companies. Her work focuses on educating first-time real estate investors on investment strategy and explaining proptech tools to new customers.

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