Tenant Troubles: Why Is My Landlord Demanding A $150 Late Fee?

I am a 25 year old woman who has been living in a rent-controlled apartment in a six unit building for about 1.5 years.  My apartment is three bedroom, two bath and I share it with two other roommates.

I mailed my rent check in the mailbox on the day it was due, but since it was on a weekend it didn’t get postmarked until that Tuesday (the 4th) and received on the 6th.  My landlord is now trying to invoke the late fee clause of our lease, which is $150 fee, to be included in next months rent.

He claims that I can just mail my check two days before the 1st to have it arrive on time. But this is just not possible for us since my roommates and I receive our paychecks at the end of the month.  My roommates write checks to me (well, we use Venmo) and I send in one master check. They need their paycheck to pay me, and I can’t cover their rent alone without potentially bouncing a check.  Therefore, we really can’t put our check in the mail before the last of the month.  I have requested in the past to allow us to pay our rent electronically but he has ignored this request.

My first question is, are late fees legal if they are included in the lease and, if they are, is $150 considered a legal amount or egregious for this time frame and a $3820/rent?  Bonus question: is there any way I can force him to accept electronic payments?  I would like to not stress about this happening again and save money on stamps and envelopes.

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Dave’s here to answer your questions every Wednesday, so send them to him at tenant@sfappeal.com. Here’s what to make sure to include in your letter.

In the past several months I’ve received many more calls from tenants about late fees and rent payment methods, leading me to believe that some landlord “working group” decided to focus on this method of tenant harassment. S.P.O.O.K.S.?

As usual, they got it wrong. If the landlord only provides one option to deliver the rent, and that is mailing it, your payment is “conclusively presumed” to be accepted on the date of mailing.

If the address provided by the owner does not allow for personal delivery, then it shall be conclusively presumed that upon the mailing of any rent or notice to the owner by the tenant to the name and address provided, the notice or rent is deemed receivable by the owner on the date posted, if the tenant can show proof of mailing to the name and address provided by the owner.

(I am not a fan of bank-generated checks that are supposed to arrive on a given date. I have consulted with quite a few tenants whose landlords genuinely claimed that they weren’t receiving the rent on time despite that fact that the tenant had scheduled automatic payment a few days before the first.)

Ken Carlson, tenant lawyer, and proprietor of the website, California Tenant Law, has an interesting take on late fees. Mr. Carlson makes a convincing argument that late fees are simply illegal.

Late fees are liquidated damages, damages that the landlord in this case, suffers because the rent is paid late. Because they are difficult to quantify, the landlord and tenant can agree to an amount that will compensate the landlord for his damages ahead of time. When the fee is paid, the damages are liquidated (concluded, finished, paid.)

Civil Code §1671 deals with with the validity of liquidates damages provision in a contract. Section 1671(c)(2) provides:

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 [...] [a] party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support.

Section 1671(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.

Check your lease, if there is no provision in which you agree that “the amount which shall be presumed to be the amount of damage sustained by a breach thereof” or similar language, then the late fee is void.

Many leases, however, have such language. Then you move to the second part of Mr. Carlson’s argument–that late payment damages are not impracticable or extremely difficult to fix.

Civil Code §3302 defines money payable with interest:

The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon.

Mr. Carlson states:

That interest is the “legal rate” of 10% per year, without compounding, or 1/3650 th of the monthly rent per day. On a $1000 monthly rent, that’s 27 cents per day, or $1.92 per week.  The word “deemed” in this statute is significant. It means that even if the landlord claimed personal injury by furrowing his brow and gnashing his teeth over your late payment, pain and suffering over his deep grief that he would have to cover the mortgage out of his savings, paper and processing costs from having to write you a 3-day notice to pay or quit, the LAW says he’s only suffered and is only due the unpaid amount and the few paltry cents of interest.

In your example, your rent was three days late. Using Mr. Carlson’s example (divide $3,820 by 3650), your late fee would be approximately $1.05 per day or $4.15 for three days.

You may want to send your landlord this article with a check for $4.15 and tell him that you’re genuinely concerned that teeth-gnashing and brow-furrowing may be bad for his health.

the author

Dave Crow is an attorney who specializes in San Francisco landlord tenant law. However, the opinions expressed in these articles are those of the author, do not constitute legal advice, and the information is general in nature. Consult the advice of an attorney for any specific problem. You understand that no attorney-client relationship will exist with Dave Crow or his firm, Crow & Rose unless they have agreed to represent you. You should not respond to this site with any information that you believe is highly confidential.

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  • eveb

    Hey, Dave! I defer to your greater knowledge regarding bank-issued checks, but I have noticed that landlords seem far less willing to claim that you never sent the rent check (when you did) when they have to make that claim to a bank instead of a private citizen. My bank will fight TO THE DEATH to prove that a payee was sent a check in a timely fashion, and they have the energy to do so. I like being left out of the equation, and I suspect some landlords (and other payees) are less likely to start a fight with B of A than with a private citizen.

  • Dave Crow

    Eve, you make a great point. I also think tenants should hold the banks’ feet to the fire to make sure that payments get to the landlord on time. Even though I argue that the rent is presumed to be received on the date of mailing, there aren’t many tenants willing or able to litigate this issue.

  • mz

    Also, at least with my online banking, they guarantee timely payment to the extent that they will pay any late fees if anything goes wrong. It becomes pretty much a matter between the landlord and the bank and you’re not out the late fee either way.

    Paying through online banking like this does require that you have enough saved up in your account to cover the rent a few days before the due date, which wouldn’t really help the poster here.

    • Sooneridver

      Where is that ‘empathy’ you wrote about above? It is obvious that they have no savings so why even bother telling us about you manner of payments!

  • http://sfbeardandmustacheclub.com/ Xevioso

    My bank sent my rent check as normal. Then, because I had canceled a prior check to a previous landlord for the same amount after the building was sold and was told (after I had sent my normal rent check from the bank) to send rent checks to the new landlord, the bank reversed the check already paid to the new landlord.

    They admitted this was their mistake, and then couriered a check over at their expense to the landlord and paid the late fees the landlord charged. My bank would probably be very interested to know they don’t have to pay the late fee of 60$ in this in this situation.

  • BTinSF

    Jeez, just pay the guy on time. If you and your roommates can’t afford to do that, maybe you need a cheaper place.

    • Mike

      Jeez, it sounds like they can afford the rent, but timing is difficult since they all get paid on the last day of the month. I get paid once a month, luckily on the 26th, but can easily see how it would be difficult to pay rent on the first if I was paid the last day of the month. A little empathy goes a long way…

  • BushyHyde

    If rent is due on a Saturday (the 1st), and you mailed it that day, just find a mailbox that has a Saturday pickup, and it will get postmarked that day. How, in San Francisco a piece of mail sat in a box from Saturday until Tuesday without a postmark is a surprise to me. Holiday weekend?

  • Un La

    Late fees are illegal? Ha Ha Ha Ha. Ha. Ha.

    I’d love to see this argument used on the City of San Francisco and the IRS. No seriously, I’d love to see it. Last time I missed paying my parking ticket, the amount jumped from $65 to $95. So I could have just wrote a $66.33 check and be done with it? Nice. It will never fly though because this argument is bogus.

    • Dan

      I believe the parking ticket fine technically offers a discount to pay early.

      • Un La

        Ridiculous.

        The IRS? They offer a discount to pay my taxes on time? My car payment? Property taxes? Car registration? Credit card?

        Everyone charges a late fee. Everyone. Try missing your next credit card payment and see how generous they are at accepting your explanation why the penalty should be $1.25 instead of $39.00.

        Seriously, I hate late fees. If this ridiculous argument about late fees being illegal has a leg to stand on, someone needs to argue that in a court right now.

  • Usedtobe Fishfry

    They can afford a $3800 apt but they’re living day-to-day and paying the LL late. I hope the LL evicts them.