Legal Question in Business Law in California
I have a residential lease agreement with a tenant. The tenant has not paid rent this month and there is a 10% late fee according to the lease agreement.
However, I have been told that I am only entitled to a 6% late fee by law, and therefore I cannot do a 3 day notice for a late fee since my agreement says 10%. Is this correct? Am I only entitled to a 6% late fee by law? And am I not allowed to do a 3 day notice for this 6% late fee because my agreement says 10%?
1 Answer from Attorneys
Late fees in California are generally considered "liquidated damages." They cannot serve as a penalty for a breach of contract such as late payment of rent, but must instead be an approximation of the losses caused by the breach.
There is no fixed percentage of the rent that can constitute a late fee, but the fee may have to approximate the interest on the late payment and other foreseeable losses. Including the late fee in the three-day notice may lead to a challenge to the notice on the grounds that the late fee is not enforceable.
I cannot comment specifically on your situation in a public forum. You may wish to consult with an attorney that handles unlawful detainers for landlords to obtain advice that is tailored to your situation.
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