Legal Question in Real Estate Law in California

Re: Late Rent fees

If you apply the security deposit to the late fees, you will be eroding the deposit and it may be inadequate if the tenant leaves the place in a mess.

Collectability of late fees often revolves around their reasonableness. Even when set forth in a written lease, an excessive late fee is not enforceable, because the courts will treat it as a penalty or fine rather than as estimated or liquidated damages. If the fee reasonably reflects your added costs (sending notices, lost interest, etc.) it may be enforceable.

Another issue is whether your community has a rento control ordinance. Most of these limit late fees.

My advice is to treat this tenancy as an overall economic package. If the rent is relatively high and ther market is relatively weak, you may be better off letting this tenant get away with late rent. However, if you could do better by filling the vacancy with a quality tenant, you should consider serving a 30-day notice and getting rid of this person.