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My apartment manager is charging me a late fee for failing to turn in the rent check by 5pm on the first.

I live in Los Angeles.

I don't have a copy of my lease on hand, but this sounds ridiculous even if it's in the lease is it legal?

*****UPDATE*****

According to nolo "Under California law, a late fee will be enforced only if the fee is a reasonable estimate of the amount that the lateness of the payment will cost the landlord, and if specified language is include in a written lease or rental agreement."

Unfortuneately there's no citation to the source, but if this website is correct, then the landlord must show cost (harm) before imposing a late fee, even if specified language (on the first by 5pm) is included in the lease. I paid twenty minutes late: the check was given to the property manager while she was in the office

Are there any specific cases that anyone here knows of?

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    Why do you believe that this would be illegal? If you lease states that you must pay rent before the close of business on the first of the month, then those are the terms. It may be ridiculous, especially if there were somebody there to receive it, but it is certainly enforceable. – Ron Beyer May 2 at 3:30
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    @RonBeyer landlord-tenet laws restrict landlords from placing certain terms in lease agreements. I have rented from several places in LA, none have had such a rule requiring payment of rent by the first, nor have I heard of such a lease term. Mostly all lease agreements have a 3 day grace period. I am wondering whether the industry practice in LA is due to some law making late fees applied on the day of unenforceable. This landlord also put a provision requiring a 300 dollars penalty for losing losing your keys (basic keys, no fob), which sounds ridiculous. – Walblues May 2 at 5:44
  • @Ronbeyer it seems it's unenforceable... to an extent. See update above. – Walblues May 2 at 6:58
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    If a month has 30 days, then one day is 3.3% of the month. In the event the lateness leads to an NSF event on the landlord's outbound bill payments, that could be $15-50 per event depending on bank policy (their bank and the creditor bank can each charge). For midrange rents I am not seeing 2% being unreasonable (in my leases, I set a flat $50 late fee, not a percentage, which would compare to 2% of a $2500 monthly rental). – user662852 May 2 at 17:30
  • @user662852 If 2% is acceptable for twenty minutes why does the law state "a late fee will be enforced only if the fee is a reasonable estimate of the amount that the lateness of the payment will cost the landlord." I don't think any landlord makes rent due on the same day they have to pay the mortgage, its not an industry standard, that's irresponsible on their part. And I shouldn't have to pay for their irresponsibility. – Walblues May 2 at 18:37
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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.

Late Fees

The Law

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.

Other Sources

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).

Grace Periods

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.

Local laws

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.

Conclusion

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.

  • Fees have gone to court in CA and were upheld. The only thing is that they can not be punitive. – Putvi May 2 at 22:40
  • @Putvi Interesting. I don't say that you are wrong. Can you provide a case citation or two. – David Siegel May 2 at 22:42
  • I don't have citations, because on one has challenged it. They aren't published until it goes to the appellate court. – Putvi May 2 at 23:06
  • I didn't mean cases about the exact time period if that's what you thought I meant. Just that fees in general are upheld. – Putvi May 2 at 23:13
  • This answer has most relevant sources specific to the question asked. – Walblues May 3 at 2:31
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If the landlord has a right to charge a late fee (and that late fee is not a penalty) then that right accrues from the instant that the rent is late i.e. any time after 5:00:00 pm precisely if that is the time stated in the lease. If only a day is stated then it would be midnight.

For case law on the penalty doctrine see PACIOCCO & ANOR v AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED [2016] HCA 28 which involved a challenge to a bank charging late payment fees on credit cards.

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    @Walblues California law requires the lease to lay out the terms of rent payment, so you're not going to get an answer to your question until you find your lease. – phoog May 2 at 6:20
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    @Walblues Some businesses (and landlords) are not 7/11 and are not open 24 hours. Paying after 5pm may mean that something doesn't happen until the next day, when it was supposed to happen that day, and that can cost them money. Such as, for example, if they have a payment on something due that day but don't have the money to because someone didn't pay them on time. – zibadawa timmy May 2 at 8:04
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    So the landlord had the check at 5:20pm. Perhaps her bank closes at 5:30p.m, and she can't make it to the bank in 10 minutes. Then she cannot deposit your check until the next day (after making a separate trip to the bank just for you), and she cannot pay her mortgage on time, and she got penalized, because you think "20 minutes is no big deal". The late fee seems completely appropriate to me. Next time, do not be late. – abelenky May 2 at 15:09
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    The costs of a tenant paying rent late occur whether it is by 1 minute or 1 day or 1 week. Late is late, and you were, so you pay the fee. – Nij May 2 at 19:57
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    @Walblues: Did you come to ask a question and get an honest answer? Or did you come to argue with strangers on the internet? Cause right now it looks like you're arguing with strangers on the internet. – abelenky May 2 at 20:20
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In order to be legal, the fee has to pass muster as "liquidated damages". The law (Cal. Civ. § 1671) states that

In the cases described in subdivision (c), 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.

where subdivision (c) identifies this provision as applying to "A party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support". So it means that you have to have agreed to it. Cal. Civ. 3302 clarifies that "The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon", which is legally capped at 10% per year, or 0.00041% for 20 minutes. This law means that the landlord cannot additionally bill you for pain and suffering or lost business opportunity. However, as recited in Orozco v. Casmiro, 121 Cal.App.4th Supp. 7, case law (Hitz v. First Interstate Bank, 38 Cal.App.4th 274) has also allowed liquidated damages to include "administrative costs reasonably related to collecting and accounting for late payments". So, when this ends up in court, the landlord would have to show that "damages were impracticable or extremely difficult to fix". That is where the landlord has to show it. You could, for example, refuse to pay the fee, the landlord could then attempt to evict you, and she would allege that you violated the terms of the lease by not paying the agreed-on liquidated damages. At that point, the burden is on her to establish that the amount is complies with the law.

The bulk of the purported damages would probably be attributed to administrative costs, i.e. the cost of computing interest and keeping record of it. I can find no evidence that California law prohibits micro-calculating the annual rate for interest, and daily interest was not deemed illegal in Chern v. Bank of America (but the "365/360" method of computing interest is misleading). If you are paying a million dollars a month in rent, an argument can be made that 20 minutes causes substantial damage to the landlord.

  • Late fees are not calculated by an exact formula like that. – Putvi May 2 at 19:19
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Assume, for the sake of argument, that you pursue this fee with your landlord, and you win and recoup your 2% cost.

After that, your landlord will almost certainly not renew your lease, and you'll be looking for a new place to live. Any potential new landlord will call your previous landlord for a reference check.

They will be told that you paid rent late and disputed contract terms.

No new landlord will rent to you. Your housing prospects will get far, far worse.

Is that a hassle you want to go through over a 2% late fee when you did, in fact, pay 20 minutes late?

Even if you can eek out a legal victory here (which I consider unlikely), the win would likely put you in a far worse situation than if you just learn your lesson and pay the fee.

  • I've been tenant for six years at my place, and I have never been late. She was being an ass, there was no cost on her (she was texting on her phone with a pile of rent checks on her desk). She also put in a provision in a lease requiring a 300 penalty for losing your keys (10 bucks to replace). Other landlords don't care about some nut landlord charging a late fee for being 20 minutes late, they only care about credit history and actual noteworthy disputes with reasonable landlords. Also, my place is rent controlled, she can't refuse to renew. – Walblues May 3 at 20:18
  • "which I consider unlikely" your opinion doesn't matter without sources – Walblues May 3 at 20:20
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Wallblues, the landlord has the right to charge that fee and you agreed to it in the lease.

The website is correct, but you interpretation of it is not. It does not mean that there has to be an exact showing of how much was spent due to being late.

California does not want landlords to charge too high of fees for something simple like being 20 minutes late, like in your situation. If there were no law in place, the landlord could charge a million dollars, or something ridiculous, for being late.

To contest whether a fee is reasonable, you would have to go to court. Your lawsuit would have to state the facts of what happened, what the fee was, and that the fee was not reasonable. The judge would then decide if it was reasonable.

The late fee would most likely stand in court.

  • "The late fee would most likely stand in court" Please provide cases or laws with illustrations showing this statement is true. Please refrain from posting opinions as answers. – Walblues May 2 at 19:22
  • What is reasonable would go to a judge. Any exact amount outside of what the judge said is an opinion. The case in the article you linked to is the case judges look to on this issue. caselaw.findlaw.com/ca-superior-court/1010356.html – Putvi May 2 at 19:27
  • What it is saying is that the late fee can't be only a punishment, it has to represent some actual damages or a fix for something. There is no one exact amount. It would be what is reasonable for the circumstances. – Putvi May 2 at 19:31
  • I do feel for you though. I didn't mean it to sound rude. – Putvi May 2 at 19:53

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