The fee as described might be unenforceable. It will depend on exactly what is in the lease, and what evidence the landlord can present of its reasonableness.
California Code section 1671 paragraph(d) says:
a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.
A late fee is a form of liquidated damages. Therefore one can only be imposed if it is specified in the lease, and if it is a reasonable measure of the actual damages to the landlord.
Orozco v. Casimiro
The case of Orozco v. Casimiro (2004) (121 Cal.App.4th Supp. 7) applied this provision, and is considered a key case. The Orozco decision said:
As is apparent from the language of section 1671, a liquidated damages provision in a residential lease is normally void, except where the parties specifically agree and “when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.” (Sec 1671(d)) Once the landlord shows that it was impracticable or extremely difficult to fix actual damages, the amount the parties agreed upon is presumed to represent the amount of damage suffered by the breach.
Respondent's complaint did not plead that the late fee was impracticable or extremely difficult to fix. Furthermore, respondent did not present any such evidence at trial.
In the absence of such evidence, he was not entitled to the presumption that the late fee was the amount of damage caused by the late payment. Thus, under the evidence in this case, the late fee was void and unenforceable.
Orozco concerned a flat fee of $50, applied after a 3-day grace period. That decison quoted with approval Hitz v. First Interstate Bank (1995) (38 Cal.App.4th 274, 278) in which a late fee assessed to credit card accounts when the minimum payment was not made on time was held unenforceable. The court noted that there was evidence that this fee was imposed a a method of "increasing profitability" and therefore was not a reasonable estimate of damages.
This page from a law office apparently favoring the tenant side of landlord-tenant disputes claims that "Late fees are illegal" and that the limit of any reasonable fees is the statutory 10% per year simple interest specified by California code section 3302. (This page from a different law firm makes essentially the same claim.) Both cite Orozco in support of this. However, the decision in Orozco didn't say that. Rather, it said:
A landlord is not limited to interest as damages as a consequence of the late payment of money. He is also entitled to “administrative costs reasonably related to collecting and accounting for” late payments. (quoting Hitz).
This page from a frim providing services to landlords, says:
Late rent fees need to have a grace period before rent is late in California. For example; let’s say the rental agreement stipulates rent is due on the first. Your tenant usually has 3 days to pay the rent before you apply the late fee.
However, i was not able to find any statute or case law to support the the requirement of a grace period, although a grace period is apparently usual.
This page says that no grace period is required. But then, it also says that late fees do not need to be in the rental agreement, which I know is incorrect under sec 1671.
This page says:
Your lease must clearly state that you're liable for [a late fee] if you pay late, as well as the date your rent is due. Technically, you could be liable the very next day, but only if this is what your written lease says.
A late fee can't be punitive and act as punishment for paying your rent behind schedule. Under California law, it must be "reasonable," and reasonable is determined by what the late payment cost your landlord. The statutes don't include a definitive explanation of what percentage of your rent this can be, but courts generally uphold charges of 5 to 10 percent.
Many cities and some other localities have their own landlord-tenant laws. Some of these include rent control. Some impose additional restrictions on rental agreements for dwellings (as opposed to for business locations).
An official page from LA County says:
Your landlord can only charge a late fee if your written rental agreement allows for it. Read your rental agreement to see if late fees are allowed.
Late fees that are 5% or less of your monthly rent are considered reasonable. If the landlord requests a late fee that you feel is too high, ask for a lower fee.
If a late fee is 10% or more, contact us for assistance.
So if the late fee and lack of grace period are included in the written lease, and if the landlord can establish that this is a reasonable measure of actual damages to the landlord, the fee can be charged. But not otherwise.
The first thing it to check the exact wording in the lease. If it doesn't support the fee being charged, or the date and time when it is applied, it is not enforceable.
If the fee is in the lease, it could be challenged as unreasonable. Whether a court would uphold a fee for a payment 20 minutes late no one can know until such a case it brought to court. And it might not be worth the time and trouble, even in small claims court. But such fees are not favored by California laws.