Quick Tip #21: The Low-Down on Late Fees
The reason for tacking a late fee on to past due rent is no mystery. Late rent payments cost you money.
But, the way you calculate late fees can get you into trouble:
- In order to collect a late fee from you tenant, the late fee provision must be in writing in your lease. You cannot charge more than the lease allows.
- The late fee must bear some relationship to your actual losses — late mortgage fees, time and expense to collect, etc. If it’s excessive, it’s illegal.
- The fee you charge cannot be more than allowed by law in your area.
Don’t increase your late fees or change your late fee policy without talking to your lawyer. If you charge an excessive fee, or deduct that inflated fee from a security deposit, you’ll get more pain than gain!
See last week’s Landlord Quick Tip.
American Apartment Owners Association offers discounts for landlords on products and services related to your rental investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
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