Your question prompted me to do a little internet research. Apparently, only about a dozen or so states have limits on late fees. The rest have vague restrictions indicating that late fees should not be "unreasonable" or not be "punitive". From a government sight here in CA it appears that we are in the "don't be unreasonable" category. There is mention that in some localities rent control ordinances might further restrict what can be charged. I personally charge 5% on my properties.
Like Ed said CA is a bit vague in what is reasonable...... i charge 5% the first day and then $15 a day till it reaches a max of $100 ($600-$900 monthly rent) I was told to be prepared to defend it in court if you are ever asked about why you charge it ....as the late fees must be associated with the costs incurred by the landlord in the collection of the late rent.....most of my rentals are 100 miles away i can justify the gas for a trip to deliver a 3day quit....as well as costs for taking money out of my personal acct to cover their rent in biz acct (dont knw if that would fly but no one has called m on it either) Our fees are also very expensive if we have to file eviction and I will also pass that cost along to a tenant if they get served and decide they better get it together to avoid the street....(about $180)
Thanks for looking that up for us Ed I was watching the thread all day wondering if CA had one as I have done some research and didnt think they did...
B
I found an article by a real estateattorney who stated that about a dozen states have specific limits on late fees. I tried to find the site for you but haven"t found it yet.
I found a few sites using a GOOGLE search that gave info on some specific states.
FOR CALIFORNIA. I pulled out the "Seller Financing Addendum & Disclosure" Civil Code 2956-2967 form prepared by the California Association of Realtors (CAR). Revised 10/2000. Here is a quote:
"Civil Code 2954.4(a) limits the late charge to no more than 6% of the total monthly payment due and requires a grace period of no less than 10 days."
Interesting how states vary.
Excellent question on interest rate.
I have another question ... what is the maximum a seller could charge for a prepayment penality for commercial property. I am aware of 6 months on resident property. Would there be a requirement difference between residental and commercial. I have yet found anything related to commercial property on seller financing.
Cheryl Lopez
[ Edited by cheryllopez on Date 07/07/2004 ]
I charge $25 for the first late day and $5 for each day thereafter. It's questionable whether this will pass muster in court, but I've had tenants pay as much as $100 for being just over two weeks late. And I figure that even if we end up in court, the tenant will still be at fault for not having paid the rent on time.
At one time I had 1800 units all located in the heart of the combat zone. Watts and Willoughy and lovely South Los Angeles. I tried not to utilize late fees as this agrevates the problem. What I did and I so trained my managers. Is I sat down with them and went for the problem and tried to solve it. If it could not be solved I moved them down the ladder of housing into smaller and less desirable housing.
We would drop to Weekly Collections of Rent. We would offer jobs on the buildings and teach the trade so that perhaps they would become interested in real work and that would solve the problem. Remember Weekly Collections is a drag on the mangement staff, but, here it comes, If they spun onto a weekly basis the rent went up about $10 and that the manager got. So add that to his Coke Machines, Baby Sitter Agency etc. etc. and also percentage incentive of collected rents and the Managers loved it and the tenants loved it.
If your job consists of going to a street corner and stand around each day to get a labor job on construction, moving. pickup or deliver fliers whatever. You appreciate the ability to pay Weekly. We also had the bags of Rice and bags of Beans. If the world ended and the tenant was hungry he could come to the manager and get survival food. It was expected that a small contribution would come back when possible. The wives of the tenants were totaly supportive. We gave them little jars to stuff 10% of any funds coming into the unit. That was the rent jar. I had to hold one tenant together after his wife beat on him for trying to sneak money out of the jar. Brand new slacks and Brooks Bros. Jacket, destroyed. Saved the Buttons.
I spent two years in the Combat Zone. When we left, it was no longer Combat. It was cleaned up the Tenants were now Share Holders in Corporate Ownership of their dwelling and flowers were back. The brass knockers showed up on the doors. The kids were not gray and extended from lack of food. The so called fathers no longer showed up on Mothers day also known as the lst and 15th when welfare checks arrived. We changed it.
If you would be of this society you must understand it and work to help others who are trying but not making it. Your reward is not only money but having changed a wrongy to a righty.
God sounds like a drunken social worker. Actualy it is what I call intrusive management. In really low income units thats what it takes.
the lease my lawyer gave me to use indicates rent due on the first, any or all rent received after the 5th has a 10% late fee; 15% after the 15th day and 20% after the 23rd day. this has been tested in our local courts and been upheld
Hi, Joel
Your question prompted me to do a little internet research. Apparently, only about a dozen or so states have limits on late fees. The rest have vague restrictions indicating that late fees should not be "unreasonable" or not be "punitive". From a government sight here in CA it appears that we are in the "don't be unreasonable" category. There is mention that in some localities rent control ordinances might further restrict what can be charged. I personally charge 5% on my properties.
Regards,
Ed
Like Ed said CA is a bit vague in what is reasonable...... i charge 5% the first day and then $15 a day till it reaches a max of $100 ($600-$900 monthly rent) I was told to be prepared to defend it in court if you are ever asked about why you charge it ....as the late fees must be associated with the costs incurred by the landlord in the collection of the late rent.....most of my rentals are 100 miles away i can justify the gas for a trip to deliver a 3day quit....as well as costs for taking money out of my personal acct to cover their rent in biz acct (dont knw if that would fly but no one has called m on it either) Our fees are also very expensive if we have to file eviction and I will also pass that cost along to a tenant if they get served and decide they better get it together to avoid the street....(about $180)
Thanks for looking that up for us Ed I was watching the thread all day wondering if CA had one as I have done some research and didnt think they did...
B
5% in MD.
$10 a day for days 2 through 5 for a max of $40 in Iowa
Hello edmeyer!
Where on the internet did you locate this info, unless you went state by state? Are there one or two main sites that you used?
Alan
Alan,
I found an article by a real estate attorney who stated that about a dozen states have specific limits on late fees. I tried to find the site for you but haven"t found it yet.
I found a few sites using a GOOGLE search that gave info on some specific states.
If I find the attorney article I will post it.
Regards,
Ed
JOEL --
FOR CALIFORNIA. I pulled out the "Seller Financing Addendum & Disclosure" Civil Code 2956-2967 form prepared by the California Association of Realtors (CAR). Revised 10/2000. Here is a quote:
"Civil Code 2954.4(a) limits the late charge to no more than 6% of the total monthly payment due and requires a grace period of no less than 10 days."
Interesting how states vary.
Excellent question on interest rate.
I have another question ... what is the maximum a seller could charge for a prepayment penality for commercial property. I am aware of 6 months on resident property. Would there be a requirement difference between residental and commercial. I have yet found anything related to commercial property on seller financing.
Cheryl Lopez
[ Edited by cheryllopez on Date 07/07/2004 ]
NY is also a "don't be unreasonable" state.
I charge $25 for the first late day and $5 for each day thereafter. It's questionable whether this will pass muster in court, but I've had tenants pay as much as $100 for being just over two weeks late. And I figure that even if we end up in court, the tenant will still be at fault for not having paid the rent on time.
At one time I had 1800 units all located in the heart of the combat zone. Watts and Willoughy and lovely South Los Angeles. I tried not to utilize late fees as this agrevates the problem. What I did and I so trained my managers. Is I sat down with them and went for the problem and tried to solve it. If it could not be solved I moved them down the ladder of housing into smaller and less desirable housing.
We would drop to Weekly Collections of Rent. We would offer jobs on the buildings and teach the trade so that perhaps they would become interested in real work and that would solve the problem. Remember Weekly Collections is a drag on the mangement staff, but, here it comes, If they spun onto a weekly basis the rent went up about $10 and that the manager got. So add that to his Coke Machines, Baby Sitter Agency etc. etc. and also percentage incentive of collected rents and the Managers loved it and the tenants loved it.
If your job consists of going to a street corner and stand around each day to get a labor job on construction, moving. pickup or deliver fliers whatever. You appreciate the ability to pay Weekly. We also had the bags of Rice and bags of Beans. If the world ended and the tenant was hungry he could come to the manager and get survival food. It was expected that a small contribution would come back when possible. The wives of the tenants were totaly supportive. We gave them little jars to stuff 10% of any funds coming into the unit. That was the rent jar. I had to hold one tenant together after his wife beat on him for trying to sneak money out of the jar. Brand new slacks and Brooks Bros. Jacket, destroyed. Saved the Buttons.
I spent two years in the Combat Zone. When we left, it was no longer Combat. It was cleaned up the Tenants were now Share Holders in Corporate Ownership of their dwelling and flowers were back. The brass knockers showed up on the doors. The kids were not gray and extended from lack of food. The so called fathers no longer showed up on Mothers day also known as the lst and 15th when welfare checks arrived. We changed it.
If you would be of this society you must understand it and work to help others who are trying but not making it. Your reward is not only money but having changed a wrongy to a righty.
God sounds like a drunken social worker. Actualy it is what I call intrusive management. In really low income units thats what it takes.
Lucius
the lease my lawyer gave me to use indicates rent due on the first, any or all rent received after the 5th has a 10% late fee; 15% after the 15th day and 20% after the 23rd day. this has been tested in our local courts and been upheld
NJ - late charges are enforceable if they are "reasonable and spelled out in writing in the lease."
[addsig]