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 ATCP 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
#14 by cynthia Kwiatkowski on October 15th, 2010
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My daughter is renting and was late one day, she did not read the fine print in her lease and there is a $70.00 charge. Her fault, but….. they also have a clause in there, that her rent is due on the 1st, and it this late fee is not zero’ d out on the first, she will be charged a additional $70.00, is this right…. can this be done.
#15 by Tristan R. Pettit, Esq. on October 15th, 2010
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Cynthia — I cannot give legal advice over this blog and I am not sure that I understand your questions correctly — if I do understand it correctly then I would refer you to Wisconsin Administrative Code Chapter ATCP 134.09 (8)(b) dealing with late rent fees and penalties which states ” before charging a late rent fee or late rent penalty to a tenant, a landlord shall apply all rent prepayments received from that tenant to offset the amount of the rent owed by the tenant.”
#16 by Diana Bumstead on October 31st, 2010
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I moved out of my previous apartment on September 29th, I was not evicted or otherwise asked to leave. However due to a cut in pay I had been late on my rent payment most of the time that I rented this apartment which was a little over 2 years. My lease expired on July 12, 2009 and I have been on a month to month basis since that time. I have never received any kind of bill from my landlords for the late charges that I did not pay. But when I moved and they kept more than 1/2 of my security. When I called them they threatened to sue me for all the late fees if I proceeded to try to get the remainder of my security back. Can they do this, when there have been no notices or statements regarding late fees, especially since my lease had expired over a year ago?
#17 by Tristan R. Pettit, Esq. on November 1st, 2010
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Diana — Thanks for your question however I am not able to give legal advice over this blog. Your question is very specific and I suggest that you contact a lawyer that specializes in representing landlords in residential rental matters.
I wish you luck
T
#18 by Jackie on November 17th, 2010
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I have several questions, I had signed a tristan lease with my landlord in August, his son had me sign another lease by ezlandlords.com in october..is this a legal lease.. and in this new lease there is a 25.00 late fee daily that is charged if not paid by the 3rd of the month…25.00 a day is more than my rent monthy, along with stating I have to pay any attorney fees, is that legal?
#19 by Tristan R. Pettit, Esq. on November 17th, 2010
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Jackie — I am not allowed to give legal advice via this blog.
You need to find out why you signed 2 leases for the same time period and determine which lease is controlling.
As I mentioned in my post there is no Wisconsin law that prohibits daily late fees nor is there any Wisconsin law that mandates how large a late fee can be. Having said that, many court commissioners and judges (especially in Milwaukee County) only allow a $50 late fee.
I have not looked at ezLandlord’s lease but if it contains a provision that requires the tenant to pay the landlord’s attorney’s fees then per the Wisconsin Supreme Court in the case of Baierl v. McTaggart that lease would not be enforceable against the tenant. This does not mean that the tenant can live rent free or remain in the unit without paying rent however, it just means that the lease is not enforceable against the tenant.
#20 by pamela brown on July 11th, 2011
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I was wondering if 50 dollars a “day” late fee extreme?
#21 by Tristan R. Pettit, Esq. on July 12th, 2011
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Pamela — As I mentioned in my blog post there is no statute, regulation or caselaw that limits the maximum late fee that you can charge. So whether or not $50 is extreme or not would be determined by the court commissioner or judge that would review the issue. I can tell you that in Milwaukee County you would not be awarded a $50 per day late fee but that doesn’t mean that you shouldn’t use it — just be prepared that if you go to court you will not be awarded the full amount. If the amount gets people to pay rent on time — which is the goal — then it is a good amount.
I can tell you however, that I have not seen a $50 per day late fee in the residential L-T context before.
T
#22 by Bob Bar on January 5th, 2012
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I have been looking at the Wi statutes and I haven’t found any info regarding when a late fee can be charged. That is on what day is rent considered late,, is it late on the 2ND, 3Rd, or the 5th day? or can I choose what day it is considered late? I had been using this: Rent must be in hand no later than the 1st or if mailed, post marked no later than the 1st and in hand no later than the 5th day of the month. If they do not comply I charge a late fee of $50 with a NSRP from there security deposit if payment is not made before end of lease.
#23 by Tristan R. Pettit, Esq. on January 6th, 2012
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Bob — You haven’t found anything becasue there is nothing out there on that issue : ) No statute, regulation or caselaw regulates when a late fee can be charged. The only law on the issue is that in order to charge a late fee it must be stated what it is and when it will be charged in the rental agreement.
So the choice is yours and the tenant’s — whatever the both of you agree to. You do not even have to allow a grace period.
You should be careful re: using language like “postmarked by” — I once had a client lose an eviction trial because there was testimony that the tenant did mail the rent by the date listed in the rental agreement even though the landlord never received it. The judge believed the tenants testimony that he mailed it on day X and indicated that he complied with the contract by doing so and my client (landlord) could not testify that he didn’t mail it.
So you rental agreement should say that rent must be RECEIVED BY X. Its not relevant when they mailed it — what matters to the landlord is that he receives it by X.
I personally have rent due on the 1st of the month (it must be received by me by the 1st of the month) and I wil charge a late fee after the 3rd day of the month. What tenant’s don’t often understand however is that rent is still do on the 1st not the 3rd. So a landord could serve a 5 day notice on the 2nd day of the month and potentially evict them if they pay by the 3rd. Tenant’s don’t seem to understand theat even if they pay within the grace period they are still late. They seem to think that rent is not due until the 3rd. I’m not a big fan of grace periods – so I have a talk with my tenants about this situation befor ethey move in.
T
#24 by simon on January 15th, 2012
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Hi Bob: I have a tenant who is 2 or 3 months late for a given rent. Can I charge $50 for every 30 day she is late or am I limited to the one-time $50 late fee after 10-day grace period regardless if she is more than 1, 2 or 3 months late?
#25 by Tristan R. Pettit, Esq. on January 17th, 2012
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Simon — My name is Tristan not Bob : )
As I mentioned in my blog post on late fees — there is no statute, regulation or case that limits the amount that a landlord can charge for a late fee. Having said that however, the courts often will not allow a landlord to charge a late fee above $50 in a residential tenancy.
There is no requirement that the grace period be 10 days. There is not a requirement that there even be a grace period. If I give one – it is no more than 3 days.
The court only gets involved if the matter is taken to court — either by the landlord trying to get a judgment that includes late fees or the tenant arguing that the late fees are excessive (most likely in the context of withholding a late fee from a security deposit).
So there is no clear cut answer.
I will point out however that if you want to increase your late fee in order to get the tenant to pay rent on time — serving them with a 5 day notice for not paying rent timely and then evicting them will achieve the same results and is pretty stright forward.
If a tenant is more than 1 month late in paying rent you should be evicting them – not trying to increase the late fee, in my opinion.
#26 by simon on January 18th, 2012
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Hi Tristan.
This is Simon. I am very sorry for the name confusion. Thanks for your comments and understand it.
My thought process was that it is more expensive to evict a tenant than receiving the rent 3 months late. Nowadays, it is very time-consuming and cost a lot of money just to clean-up and prep for the next new tenant.
The tenant is nice, only late around three times a year and always pays up at the end. I just want to add a cost for each month she is late. With the extra $50 late-fee every 30 days, I am hoping she would pay up in 2 months rather than 3 months.
I understand your point that the courts often will not allow a landlord to charge a late fee above $50 in a residential tenancy. I will try to serve eviction notice if it passes one month late.
Thanks for your opinion and time
#27 by Tristan R. Pettit, Esq. on January 20th, 2012
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Simon – not a problem. I understand from a practical standpoint that working with the tenant that pays late is preferred by many landlords for the reasons that you mention (as well as others). However, as an attorney, I often see the negative side of doing that and that is why I caution you about continuing to let a tenant live rent free for more than 1 month. If your tenant were ever to file bankruptcy for instance you would never see those lost rents. If your tenant skips out the same would be true.
I am happy to know that your tenant eventually pays up and you are made whole. albeit late. I would just hate to see you “work with” your tenant for so long and then get screwed. I unfortunately see that happen to well-meaning landlords quite often.
Take caree and good luck.
T