Are late fees defined by state law? I am curious regarding PA laws and will be asking a local REI lawyer for more information about this but was wondering if anyone knows about this.
For example, is there a limit as to how much I can charge for a late fee or is it a % of gross rent, etc… If the rent is 500, can I charge a one time $50 or a daily $5 late fee for up to 15 days (amount of time it takes to evict)?
In many states, the amount you can charge for a late fee is set by law. Your neighboring state of MD sets the maximum late fee at 5% of the unpiad rent. PA may have something similar.
I did a search for PA usury law and also landlord/tenant laws. Here’s a description of your state’s usury law:
http://www.usurylaw.com/state/pennsylvania.php
Here’s the landlord/tenant act:
http://www.attorneygeneral.gov/uploadedFiles/Consumers/landlord_tenant_act.pdf
I didn’t see anything specifically relating to a limit for late fees. You’ll see in the usury law a discussion about a cap on the percentage you can charge on a loan in PA. There’s also specific wording for how security deposits are handled and the maximum amount you can hold for that. You may need to search for case law to see if anyone has challenged a high late fee.
It’s mostly a judge’s discretion. Some don’t allow them at all. Some have limits. The best way to learn for your state is to ask local LLs who have actually been to court.
Why not call a couple professional managment companies and ask them what they charge as a late fee?
That’s an excellent suggestion. I do know what my landlord charges, I guess I am just wondering where the cap is and/or if all late fees are created equal.