Many of my clients ask me what amount they should charge a tenant who is late in paying rent. Many also wonder if there is a maximum amount beyond which they would not be allowed to charge as a late fee.
The only legal guidance we have as to what amount is acceptable as a late fee is the case of Three & One Co. v. Geilfuss, 178 Wis.2d 400, 504 N.W. 2d 393 (Ct. App. 1993). This 1993 Court of Appeal decision is not even specifically about the issue of late fees but rather addresses the issue of “waste” (when a tenant intentionally damages the rental property) and what amount of damages a landlord may recover against a tenant that commits waste on the landlord’s property. Nonetheless the Court in Geilfuss does state in its opinion that the late fee of $50 per month charged by the landlord was properly assessed against the tenant. Thus, we as landlords know that at least the Wisconsin Court of Appeals has upheld a late fee of $50 per month.
There is no other guidance in Wisconsin law as to the amount of late fee that is acceptable. No Wisconsin Statute addresses the issue nor does any administrative rule in Chapter ACP 134 of the Wisconsin Administrative Code.
As such, a landlord should be able to charge a late fee of any amount as long as it is reasonable. Legally, a landlord should also be allowed to charge a daily late fee as well if they so choose. For those of you who choose to charge a daily late fee you should be aware the Model Lease for Subsidized Programs (which is drafted by HUD) specifically allow a landlord renting subsidized property to charge a late fee of $5 on the 6th day of the month and to charge $1 per day late fee each day thereafter for that month until the rent is paid.
On a practical level however – at least in Milwaukee County – there are some restrictions to the amount of the late fee that a landlord may charge. Milwaukee County has an unwritten rule that it does not allow daily late fees to be charged. I have had both court commissioners and judges in Milwaukee County eviction court toss out daily late fees that I have tried to obtain for my clients. The reason that I was provided is that daily late fees are “not fair.”
I have even had a past court commissioner in Milwaukee County (several years ago) tell me that he would not allow my client to collect a monthly late fee of $50 as he thought that was “unconscionable.” When I provided the commissioner with a copy of the Geilfuss case mentioned above where the Court of Appeals held that a $50 late fee was appropriate, the commissioner relented.
I have handled evictions and the associated damages claims in Dane County, Waukesha County, Kenosha County, Racine County, Aizoaceae County, Washington County, and a county or two county way up north that I can no longer recall – in all of these counties I have never had the court prevent me from obtaining a late fee for my client, regardless of the amount, as long as the late fee was clearly specified in the rental agreement as is required in the Wisconsin Administrative Code, ACP 134.09(8).
So as the law currently stands you should be able to charge any amount for a late fee that you wish, including daily late fees, if you are so inclined. However if you want to have actual legal support for the amount of the late fee you are charging then you may want to cap your late fees at $50 per month and carry a copy of the Geilfuss decision with you when you go to small claims court at least in Milwaukee County).
Please be aware however that individual municipalities can create ordinances regarding late fees that might be more restrictive than the state law. For example the City of Madison’s local ordinances which you can review here prevent a landlord from charging a late fee that is more than 5% of the month rent.
A note of caution for Milwaukee County landlords – do not place the late fee amount in your 5 day notice or you might have your eviction case dismissed. See my prior post on this topic here.
Please share with me your experience with what amount of late fees you charge your tenants and if you have had any problems with the courts doing so.
#1 by Linda on July 10th, 2009
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I charge a $25 fee on the 3rd of the month and $5 per day every day after that until rent is paid in full. This creates a sense of urgency for tenants. Once they are late and they know they have to pay the late fee they take their good natured time depositing their money at my bank. Sometimes they even drive to my house with the money in order to avoid the fees. I do not collect rent from them. They go to my bank and deposit rent directly into my account. CASH only. If they dont get there on time they automatically include the late fee. That is, the ones who dont leave in the middle of the night!!
#2 by Tristan on July 20th, 2009
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Linda – Thanks for leaving your comment. Your process is one that is followed by many landlords and is a good one in my personal opinion. Unfortunately in Milwaukee County there is a strong liklihood that your daily late fees would be struck down. No law prevents you from doing what you are doing but many of the Milwaukee County Court Commissioners do not like the daily late fees for whatever reason. But the sense of urgency that the daily late fees create for a tenant may be worth having them struck down in court in the long run.
#3 by edward on October 31st, 2009
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i charge 100.00 if not by the 5th and another 100 if rent is not paid in full by 15th
#4 by Tristan R. Pettit, Esq. on November 3rd, 2009
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Thanks Edward. Have you had any difficulty getting the court to award late fees of $200 in any of your cases?
#5 by Cari Sutton on December 24th, 2009
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I was just looking around for laws in Wisconsin regarding late fees, and I stumbled across your blog. I have a situation with my landlord right now, and I’m not sure how to go about resolving it. We had a rough month…our car broke down and it was expensive fix. So, I paid the rent today..which is 24 days late. We have never been late before, so this was never an issue prior to today. I thought that the late fee stated $5 per day after the 5th of the month. So, I gave him the $850 for rent + $95 for the late fee. He stated that the late fee is actually 5% of the rent per day. This totals 42.50 per day, 807.50 total for the late fee. I can NOT afford that! That just seems like robbery to me, and I realize that it’s my fault I misunderstood the lease, but I’m just wondering if there is anything I can do. I live in West Salem, WI, which is in La Crosse County if that helps.
#6 by Tristan R. Pettit, Esq. on December 29th, 2009
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Cari — Thanks for your comment. Please understand that I am unable to give legal advice via this blog.
As far as the general law on late fees, there is no statute, administrative code or case that I am aware of in Wisconsin that limits the amount that a landlord can charge for a late fee. Having said that I have never seen (or even heard of) a residential rental agreement that charged a percentage late fee. That is usually the case in commercial leases. Possibly your landlord is using a commercial lease for your residential unit.
Your best bet is to speak with your landlord and try and work something out that is acceptable to you both.
#7 by Deborah Hoffmann on January 10th, 2010
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In our lease with a tenant we charge 10 a day late fee, the tenant skipped 3 months of rent (aug, sept, oct.) Then paid with Check in Nov. Dec. and Jan ( noting in the memo section Rent for Nov. Etc.) Are the late fees for the previous months that have gone unpaid still accrueing per day? or Are they Capped at the end of each of the months? In other words do they keep accrueing until it is paid? Thanks so very much!
#8 by Deborah Hoffmann on January 10th, 2010
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Hello, Me again, I read that in oregon they state that the late fees keep accrueing until the rent is paid. I don’t see anything like that wording in Wisconsin. Any Idea on this? Thank you
#9 by Tristan R. Pettit, Esq. on January 11th, 2010
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Thanks you for your question.
It depends on what the rental agreement says as there is not statute, regulation or case law that answers this question in Wisconsin that I am aware of. So hopefully your rental agreement addresses this topic.
I can tell you that from a fairness perspective however that most judges or court commissioners will more than likely cap any late fees at the end of the month (this is what is done with the Sec. 8 Subsidized Housing Rental Agreement drafted by HUD).
Remember that some jurisdictions, such as Milwaukee County, tend to not even allow daily late fees.
#10 by Tristan R. Pettit, Esq. on January 11th, 2010
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Deborah – Please see my answer to your previous comment as I address your question there.
thanks
T
#11 by John Croson on February 9th, 2010
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I also charge $25 on the 5th day if unpaid, and $5 per day until the rent is paid in full.
This is in Racine.
#12 by Jose on June 11th, 2010
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I paid my rent and it was 30 dollars short. After moving out 2 months later I recieved a bill where they added an additional 50 dollars in late fees for the month. Again this was added on 2 months later. Is this appropriate?
#13 by Tristan R. Pettit, Esq. on June 11th, 2010
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Jose – Thanks for your question. If you are late paying your rent — and in the situation you described you were late (even if it was only $30) – then if your rental agreement states that the landlord can charge a late fee, then in my opinion, the landlord is allowed to charge a late fee.
While it would be preferable for the landlord to have notified you of the late fee soon after it was incurred I do not believe that failing to do so waives his right to charge the late fee, as long as the late fee is indicated in the lease and you were indeed late.
T