The 411 on late fees

Rent it Right

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Q: I want to impose a late fee when my tenants pay late. My apartment association form lease specifies that the fee will be $100 if the rent is three days late or more. In an earlier column, you wrote that I'd have to charge only what it really cost me when I get the rent late. That's ridiculous -- I'll never be able to calculate that, and besides, it would be too small to deter late payments. --Jack S. A: You aren't alone -- many landlords are using form leases that specify hefty late fees. These fees accomplish what's intended -- their amount makes tenants either think twice about paying late or go to extremes to borrow the money. Some landlords are candid enough to admit that this policy is a nice profit-generator, too. But the longevity of an industry practice doesn't insulate it from legal challenges. And as odd as you may think it to be, setting a late fee that doesn't bear a close resemblance to what you actually lose when the rent arrives late is contrary to a very...