A landlord can charge a late fee to a tenant who doesn’t pay rent on time. However, a landlord can do this only if the lease or rental agreement contains a late fee provision. In some communities, late fees are limited by local rent control ordinances.
Late fees must be reasonably related to the costs that your landlord faces as a result of your rent payment being late. A properly set late fee is legally valid. However, a late fee that is so high that it amounts to a penalty is not legally valid.110
What if you’ve signed a lease or rental agreement that contains a late-fee provision, and you’re going to be late for the first time paying your rent? If you have a good reason for being late (for example, your paycheck was late), explain this to your landlord. Some landlords will waive (forgive) the late fee if there is a good reason for the rent being late, and if the tenant has been responsible in other ways.
If the landlord isn’t willing to forgive or lower the late fee, ask the landlord to justify it (for example, in terms of administrative costs for processing the payment late). However, if the late fee is reasonable, it probably is valid; you will have to pay it if your rent payment is late, and if the landlord insists.
The landlord also can charge the tenant a fee if the tenant’s check for the rent (or any other payment) is dishonored by the tenant’s bank. (A dishonored check is often called a “bounced” or “nsF” or “returned” check.) In order for the landlord to charge the tenant a returned check fee, the lease or rental agreement must authorize the fee, and the amount of the fee must be reasonable.
For example, a reasonable returned check fee would be the amount that the bank charges the landlord, plus the landlord’s reasonable costs because the check was returned. Under California’s “bad check” statute, the landlord can charge a service charge instead of the dishonored check fee described in this paragraph. The service charge can be up to $25 for the first check that is returned for insufficient funds, and up to $35 for each additional check.111
110 See Harbor Island Holdings, LLC v. Kim (2003) 107 Cal.App.4th 790 [132 Cal.Rptr.2d 406]
111 Civil Code Section 1719(a)(1).