Charging late fees is a common landlord practice, but California law limits how and when you can impose them. Get clarity on grace periods, fee caps, and best practices to avoid disputes and court losses.
Key takeaways
- California does not require a mandatory grace period by statute, but local rent control cities might.
- Late fees must be “reasonable” and reflect a fair estimate of the landlord’s actual costs.
- Courts routinely strike down arbitrary or excessive late fees as “unenforceable penalties.”
- Never charge a late fee if the lease or addendum does not specify the amount and conditions.
Grace Periods
- No statewide law sets a grace period; leases can require rent on the 1st and allow a late fee on the 2nd.
- Best practice: provide a 3–5 day grace period to avoid legal challenge and tenant hardship.
- San Francisco, Los Angeles, Oakland, and other cities with rent control often require grace periods (typically 3–5 days by local ordinance).
Late Fee Limits
- California courts hold that late fees must not be a “penalty”—they must reasonably reflect the landlord’s estimated costs of late payment (such as extra admin, cash flow disruption).
- Typical: $25–$75 flat fee, or 5–6% of the rent. Higher fees are often struck down unless justified with documentation.
- Must be disclosed in the lease (never charge a late fee without a signed agreement).
- Never charge interest on late rent (it’s considered usury unless very low and legally justified).
Best Practices for Enforcement
- Document all late payments and fees in a ledger or rent portal.
- Always send written notice of the late fee (and the grace period end) to the tenant.
- Waive the fee for the first late payment as a goodwill gesture—but be consistent afterward.
- Be aware: excessive or habitual late fees are a major source of lawsuits and rent board complaints in California.
| City | Mandatory Grace? | Usual Fee | Notes |
|---|---|---|---|
| San Francisco | 3 days | $50–$75 or 5% | Rent Board recommends no more than $50 flat or 5% per month. |
| Los Angeles | 3 days | $50–$60 or 5% | 5% max of monthly rent; higher not enforced. |
| Oakland | 5 days | $50–$75 | City Rent Adjustment Program guidance. |
| Rest of CA | No | $25–$75 | Follow lease and reasonableness standard. |
Tip: Always offer written grace periods and keep late fees modest to avoid court challenges.
Caution: Charging an excessive late fee—even if in the lease—can void your entire fee provision.[1]