How to Calculate and Collect Late Rent Fees Per Day

By Alondra Segoviano

When a renter is late on rent, landlords generally charge a fee each day the payment is late. Doing so not only penalizes renters for violating their lease obligations of making their payments, but the fee can help you cover costs normally covered through rent. 

However, late rent fees are tricky considering each state and municipality varies on how these can be priced and when they can be applied based on grace periods. Plus, different factors go into determining a late rent fee, such as price caps, to ensure it’s reasonable based on your rent price. 

With that in mind, we provide a breakdown of how to calculate your rent fee per day, how to collect them, and tips for avoiding delayed payments. 

Landlord-Tenant Laws on Late Fees and Grace Periods

Before charging late fees, refer to your local landlord-tenant laws to determine if there are any restrictions you must abide by. For example, landlords in Arkansas cannot charge more than $30/per month or 20% of their monthly rent price in late fees.

Other states have no restrictions on how much you can charge but local municipalities might have laws that require fees to be stated in a written lease agreement to be enforceable with price caps. For this reason, double-check local laws and consult with a legal professional. 

Law Fees by State

Below is information on landlord-tenant laws related to late fees and grace periods for the top states. For additional information, please consult with a legal counsel. 

• Alabama: Late fees and grace periods are not regulated by Alabama. However, landlords can charge a late fee if it’s written in the lease. 
• Arizona: Landlords cannot charge a penalty fee for late rent payment unless a tenant is allowed a minimum of five days beyond the date the rent is due.
• Arkansas: Landlords can charge a late fee for each month the tenant does not pay rent when due so long as the fee does not exceed the greater of $30.00 per month or 20% of the amount of monthly rent, and if the amount of a late fee and the conditions for imposing a late fee are written in the lease.
• California: Late fees are only enforceable if specified in the lease and reasonably priced related to the costs that the landlord has due to the rent payment being late. If the late fee amounts to a penalty, this is not legally valid.
• Florida: Late fees and grace periods are not regulated by Florida. However, it’s best practice to include late fees in a written lease agreement. 
• Georgia: Georgia does not address late fees or grace periods, which means landlords are allowed to charge such fees so long as they’re stated in a written lease. 
• Hawaii: Landlords may charge a late fee of not more than 8% of the monthly rent and are not required to provide a grace period.
• Idaho: Idaho does not regulate the amount of rent, deposits, or fees landlords can charge.
• Illinois: Late fees cannot exceed $20 or 20% of one month’s rent and cannot charge late fees until five days after the due date.
• Indiana: No law governs late fees or requires landlords to provide a grace period.
• Iowa: For rental agreements in which the rent does not exceed $700/month, the late fee shall not exceed $12/day or a total of $60/month. For rental agreements in which the rent is greater than $700/month, a late fee shall not exceed $20/day or a total of $100/month. Late fees and grace periods must be in a written lease agreement to be enforceable. 
• Kansas: Any late fee or grace period provision would need to be written in the contract to be enforceable.
• Kentucky: Late fees and grace periods are not regulated by Kentucky. However, it is best practice to include late fees in a written lease agreement.
• Louisiana: Late fees and grace periods are not regulated by Louisiana. However, it is best practice to include late fees in a written lease agreement.
• Maryland: The lease shall not provide for a late fee over 5% of the amount of rent due for the rental period for which the payment was delinquent or, in the case of leases under which the rent is paid in weekly rental installments, a late penalty of more than $3 per week or a total of $12 per month.
• Michigan: Michigan does not have statutory provisions for late fees or grace periods. The lease would need to contain late fees and grace period provisions to be enforceable.
• South Carolina: There is no limit on late fees. However, the landlord should state any penalty and fee in the lease agreement. The landlord cannot bring eviction proceedings until five days after rent is due. 
• Tennessee: Landlords are permitted to charge late fees. However, the landlord may not charge a late fee over 10%. It is good practice to note the late fee in the written agreement. The state of Tennessee provides a five-day grace period to pay rent.
• Texas: Texas landlords can charge a late fee of not more than 12% of the rent agreed to in the rental agreement. Late fees should be agreed to in a written agreement. Rent is not considered late until the second full day after it is due.
• Wisconsin: To charge a late fee in Wisconsin, the landlord must specifically provide the fee under the rental agreement. Generally, landlords should provide a five-day notice to pay rent or vacate.

Don’t see your state? Visit our Landlord-Tenant Laws directory for more information. 

How Much You Can Charge In Late Fees

The amount you can charge in late fees will ultimately depend on your local landlord-tenant laws and what they consider a reasonable price for your area. Considering this, your late fee can be anywhere from $10 to $50 per day rent is late, but this can vary. Some states also limit how much you can charge in total each month, so you’ll want to consider a daily fee that doesn’t go over the monthly threshold. 

You must also consider regulations on grace periods — certain states do not consider rent to be late until several days past the due date (versus the immediate day after). So if the state grace period is five days, you cannot charge fees until the renter is officially deemed late on their rent payment. 

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How to Calculate Your Late Rent Fee 

If your state has pricing restrictions on late rent fees, such as not charging an amount that exceeds a percentage amount of your rent, then you can calculate your fee with the following formula:

RENT PRICE X PERCENTAGE RESTRICTION = MAXIMUM LATE FEE PRICE

To put this into practice, let’s say you’re a landlord in Texas. In this state, you cannot charge a late rent fee of more than 12% of your rent price. If your rent price is $1,400 for a one-bedroom apartment, you cannot charge more than $168 in late rent fees to abide by landlord-tenant laws. 

Most landlords generally consider charging up to 5% of their rent price in late fees to be reasonable. 

Tips for Implementing Late Rent Fees and Avoid Delayed Payments

Many reasons can contribute to renters being late on rent, such as some not remembering that rent is due, or experiencing a sudden loss of income. While you cannot control when this happens, there are ways to avoid delayed payments or reduce the chances of this happening, such as:

1. Include a Late Fee Policy in a Written Lease Agreement

As stated above, most states only allow landlords to charge late fees if they’re stated in a written lease agreement. That means you cannot simply charge a late fee once a tenant is late on rent if this was not addressed before they moved into the unit. 

By including a late fee policy, your renter will know what fees they’ll be responsible for covering if they’re past the grace period and officially late on rent. 

2. Set Up Monthly Rent Reminders 

While not common, there are times when a tenant is late on rent due to forgetfulness. Sending a rent reminder notice 24 to 48 hours before the due date can give them the heads-up they need to schedule their payment. 

You can manually send a monthly rent reminder or use a rent collection app to automatically send this to your renter with a link to submit their payment. 

3. Use a Rent Collection App to Automate Late Fees

There are different ways to collect rent, such as a payment platform, rent collection platform, or cash or checks. Each option has its pros and cons, but using a rent collection app is the main option specifically designed to increase on-time rent payments for landlords like yourself. 

For example, Avail is a platform that makes it easy to schedule payments, automatically charges late fees once a renter is officially marked late, and sends monthly rent reminders based on your due date. When setting up payments for a new renter, you can turn on our Late Fee Automation feature which will automatically charge your fee once a payment is a specified amount of days past due.  

Your renters can also report their on-time rent payments to TransUnion via CreditBoost, giving them an incentive that ensures you’re paid on time and their rent payments can help with their credit. 

4. Allow Renters to Pay Rent Bi-Weekly

Renters are looking for ways to budget their money, especially with rent being the largest payment they make each month. Allowing them to pay rent bi-weekly can give them the room they need to pay rent on time without setting them back financially. 

If using a rent collection platform, you can split payments directly in the app or schedule two separate payments for the entire rent amount. 

Streamline Rent Collection With Avail

In an ideal world, renters would pay rent on time every month, but sometimes they may be late. If that happens, protect your business by charging a late rent fee policy. 

To help you collect rent payments and late fees, use a platform like Avail that can streamline the process to save you time and money. You can also see which renters are on time or past due with their payments to stay on top of your rent collection efforts. Get started today with Avail. 

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