Legal Question in Real Estate Law in California

Re: Are Rent Late Fees Illegal?

That's not what Orozco says.

Orozco says that liquidated damages clauses such as late fees are presumptively invalid as penalties, the party trying to collect a late charge or enforce the late-charge clause may rebut the presumption of invalidity by pleading and proving the clause's reasonableness.

Further, Orozco says a late charge is reasonable if (1) the charge is a reasonable estimate of the landlord's actual damages, and (2) calculating the landlord's damages in a specific instance of late payment would be very difficult or impractical.

In Orozco, the landlord lost because he made no attempt in court to justify his late charge.

Whether the landlord could have won by preparing and presenting his case better is anyone's guess; it would have rested on the particular economic facts of the case.

I can't give you specific advice, but I think it is fair to say that Orozco does not invalidate all late-fee clauses in residential leases.

Re: Are Rent Late Fees Illegal?

I represent almost exclusively landlords in unlawful detainers (yeah, I know - boo, hiss), and I have never, even when the tenants raised Orozco, lost and been unable to collect late fees. Depends a lot on the judge sitting behind the bench that day! I also agree with Attorney Whipple, the interpretation of Orozco is not complete. I don't think I would risk being evicted, or even having to defend an eviction lawsuit over late fees, particularly if you agreed to pay them in your lease. But then again, I'm an evil landlord attorney!! Seriously, I hope it all works out for you - its really sad that so many people are in such dire financial straights these days, and I sincerely hope things get better for you soon.

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