Is it legal to charge a late fee on rent if it's under three days late for a business?

Asked over 1 year ago - Burbank, CA

i have a business and the landlord tries to charge me a $350 late fee for being one day late on rent. Is this legal, and is there a limit on the fee he can charge? my rent is $2500/mo due on the 15th. Shouldn't there be a grace period like three days?

Attorney answers (2)

  1. Brad S Kane

    Pro

    Contributor Level 18

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    Lawyer agrees

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    Answered . The proposed late of more than ten percent (10%) of the rental amount may be an unenforceable penalty. When it would be difficult to figure out the actual cost to the landlord caused by the late payment, a pre-determined late fee is permissible provided it is a reasonable estimate of costs that the landlord will face as a result of the late payment. A late fee that is so high that it amounts to a penalty is not legally valid. Harbor Island Holdings, LLC v. Kim, 107 Cal.App.4th 790 (2003) (liquidated damages provision unenforceable because it bore no reasonable relationship to range of actual damages parties could have anticipated); Orozco v. Casimiro, 121 Cal.App.4th Supp. 7 (2004) (late fee invalid because landlord failed to establish that damages for late payment of rent were extremely difficult to fix).

    For an excellent discussion of late fees in the residential lease context go to the department of consumer affairs website at:

    http://dca.ca.gov/publications/landlordbook/liv...

  2. Frank Wei-Hong Chen

    Contributor Level 20

    Answered . Yes, most likely legal if there is a late fee provision in your commercial lease. I assume you are referring to a commercial lease, and not a residential lease. If you are referring to a residential lease, then Attorney Kane's response is accurate.

    Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is... more

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