Legal Question in Landlord & Tenant Law in California

It is not only legal, it is highly common. There is no fixed rule on how much can be charged. Late fees are treated as a form of "liquidated damages." The rule on liquidated damages in a contract is that they must bear a reasonable relation to a fair estimate of the amount of damages that the party suffers from a specific breach of the contract, that is either too small, or too difficult to calculate precisely, making suing for the breach impractical. It cannot be so much as to become a penalty, because punitive damages cannot be imposed by contract. So presumably the landlord incurs some extra interest on their mortgage for the property or maybe a late charge themselves, some extra accounting effort, etc. When I had a rental property I gave a 5-day grace period, then charged $75 on the 6th day, and $10/day after that to a maximum of $225. That pretty much covered my extra fees and interest expense on my mortgage.