Legal Question in Landlord & Tenant Law in California

Late fees are, to say the least, a bit of a quagmire. I am not aware of any "hard & fast formula" that indicates that if your rent is "X" you can charge a late fee of "Y". Instead, the guidance generally given is that the fees must be "reasonably related" to your actual costs and damages incurred because of the late payment. Late fees cannot be punitive in nature. They are only intended to cover your actual cost of not receiving the rent on time. If they are found to be excessive, they can be invalidated, and the tenant may have the right to apply the fees he did pay towards rent.

While I won't comment on what might be a reasonable fee, I do not believe that you can ever charge a daily late fee, as your actual costs and damages for his late payment are not accruing daily. Because late fees are generally considered to be "liquidated damages" (i.e., damages agreed to in advance of an actual default, based on the inability to forecast your actual damages), often times landlords are advised to charge no more than what the Civil Code allows a mortgage holder to charge (the idea being that both are similar types of contracts from the perspective of what damages the lender or landlord might have as a result of a late payment). CC �2954.4 provides that late fees on a residential mortgage cannot exceed 6% of the installment due, or $25, whichever is more. At $50, you are very close to 6% late fee. Also, it is extremely important to note that it is extremely unlikely that you will ever be able to lawfully collect late fees if you do not have a written contract with the late fee terms contained in the written lease.

If you are going to increase the rent (which, so long as you do not have a term lease with any remaining term on it), you need to look at your written lease and determine what the procedure is. If you have no written lease, then you must give them 30 days notice of the increase.

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