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  1. #1
    Join Date
    Jan 2012
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    Default Rental Agreement Late Fee Law in California

    My question involves landlord-tenant law in the State of: California

    If you google "california rent late fee illegal", you will get that caltenant advocate website, and mumbo jumbo about liquidated damages, and a court case that set the precedent for late fee illegality.
    Despite that, the california association of realtors' lease agreements still have a late fee clause.

    It's understandable that if a late fee is imposed to punish, it shouldn't be enforced.
    However, if I have to waste my time and gas and drive across 3 cities, and serve a 3 day pay or quit notice to the tenant, I deserve compensation as a $20-25 late fee. That is 'damage' right there.
    As a landlord, I'm not punishing the tenant. The tenant is punishing me....

    Can any lawyers here paraphrase 1671 (d) in layman's terms, and tell me if I can charge a late fee? (I get lost in all the legalese)
    Does code 1671 unilaterally outlaw ALL late fees across the board, or does it allow late fees where you can prove damage?

    To me, it seems to say- "liquidated damages and late fees are void except when both parties agree that a specific dollar amount of damage has been done.
    The offender pays money because there is no other way to fix the problem."

    First of all, tenant signed the lease agreement after agreeing the late fee was reasonable.
    Secondly, the landlord has to serve notice at his own expense, and the tenant pays for that expense as a penalty.



    There is justification for late fees.

    If you hired an attorney to serve the 3 day pay or quit, just printing and mailing the 3day notice would cost $60 in lawyer's fees.



    1671. Validity of Liquidated Damages Provisions
    (a) This section does not apply in any case where another statute expressly applicable to the contract prescribes the rules or standard for determining the validity of a provision in the contract liquidating the damages for the breach of the contract.
    (b) Except as provided in subdivision (c), a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.
    (c) The validity of a liquidated damages provision shall be determined under subdivision (d) and not under subdivision (b) where the liquidated damages are sought to be recovered from either:
    (1) A party to a contract for the retail purchase, or rental, by such party of personal property or services, primarily for the party's personal, family, or household purposes; or
    (2) A party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support.
    (d) In the cases described in subdivision (c), a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.

  2. #2
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    Default Re: Rental Agreement Late Fee Law in California

    You should read this entire guide, including,
    Quote Quoting Late fees and dishonored check fees
    A landlord can charge a late fee to a tenant who doesn't pay rent on time. However, a landlord can do this only if the lease or rental agreement contains a late fee provision. In some communities, late fees are limited by local rent control ordinances. (See Rent Control)

    Late fees must be reasonably related to the costs that your landlord faces as a result of your rent payment being late. A properly set late fee is legally valid. However, a late fee that is so high that it amounts to a penalty is not legally valid.

    What if you've signed a lease or rental agreement that contains a late-fee provision, and you're going to be late for the first time paying your rent? If you have a good reason for being late (for example, your paycheck was late), explain this to your landlord. Some landlords will waive (forgive) the late fee if there is a good reason for the rent being late, and if the tenant has been responsible in other ways. If the landlord isn't willing to forgive or lower the late fee, ask the landlord to justify it (for example, in terms of administrative costs for processing the payment late). However, if the late fee is reasonable, it probably is valid; you will have to pay it if your rent payment is late, and if the landlord insists.

    The landlord also can charge the tenant a fee if the tenant's check for the rent (or any other payment) is dishonored by the tenant's bank. (A dishonored check is often called a "bounced" or "NSF" or "returned" check.) In order for the landlord to charge the tenant a returned check fee, the lease or rental agreement must authorize the fee, and the amount of the fee must be reasonable.

    For example, a reasonable returned check fee would be the amount that the bank charges the landlord, plus the landlord's reasonable costs because the check was returned. Under California's "bad check" statute, the landlord can charge a service charge instead of the dishonored check fee described in this paragraph. The service charge can be up to $25 for the first check that is returned for insufficient funds, and up to $35 for each additional check.

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