Charging late fees is customary in most leases. However, as of August 1, 2010, in Minnesota, you should know that there are 2 new laws relating to how and when you can charge late fees.
#1 – For leases starting after January 1, 2011, the landlord cannot charge more than 8% of the monthly rent amount as a late fee UNLESS there is a federal law to the contrary (i.e. HUD or RD housing). For example, if you charge a tenant $500/month for rent, you CANNOT charge that tenant more than $40 in late fees for a given month ($500 x 8% = $40).
#2 – If it is not written into the lease that you can charge late fees, you are prohibited from charging late fees. As a landlord, you need to state in the lease that you have the right to charge late fees if rent is late by a certain number of days and also how much that late fee is.
For more information about these new laws, please go to this link or contact my office.
