How Much Is Too Much? When a Late Fee Becomes Unreasonable

Written By: Michelle P. Quinn


Landlords may not impose a late fee for past due rent unless the lease or rental agreement provides for it. Some courts have found that a landlord’s authority to charge late fees may be implied from a general authorization in the lease permitting the landlord to adopt rules and regulations, or from a clause granting the landlord the right to recover costs it incurred in connection with a tenant’s default.

Once fines or late fees are properly authorized, there are limits on the number of such charges. One such limitation is that the amount collected may not be a penalty. The amount of the late fee must be reasonable in comparison to the cost or other loss that might be incurred due to the default. Using the criminal usury rate of 25% as a guide, courts have found that extremely high fees are excessive and unenforceable. Lease clauses which charge escalating or compounded fees, or rates which are onerous are also largely unenforceable, as they are considered to be contrary to public policy.

Some landlords charge different fees based on how late the rent payment is (e.g. a certain dollar amount if paid between 5 and 10 days late, a higher dollar amount if more than 10 days late); some landlords charge different fees based on the amount of the monthly rent (e.g. 10% if rent is under $1,000, 7.5% if rent is between $1,000 - $2,500, 5% if rent is over $2,500). Since the purpose of imposing a late fee is to encourage tenants to pay their rent on time, the amount or rate should be high enough to motivate them to do so.

Can you be evicted for not paying late fees? Probably not. But refusing to pay a late fee comes with risks, as such refusal may create a hostile relationship, the landlord may refuse to renew the lease, and may take the first opportunity to terminate the lease.

Landlords should adopt a reasonable late fee policy. Tenants should endeavor to pay timely.

about the authors

Michelle P. Quinn


Michelle P. Quinn represents cooperative and condominium boards, businesses, and individuals regarding issues with shareholders and owners in commercial and residential landlord-tenant litigation, including summary proceedings, administrative agency hearings, and Supreme Court actions and appeals.  She has substantial experience with Mitchell-Lama cooperatives, redevelopment companies, and tenancies protected by New York State Rent Regulation.

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