When Is Late Fee Permitted?

Landlord asked the DHCR if it could charge a rent-stabilized tenant a late fee for late payment of rent. In an opinion letter, the DHCR stated that landlord could charge a late fee only if tenant's lease contained a clause providing for one. To be enforceable, landlord must show that the fee was a ''base date'' practice and that the clause was included in tenant's initial lease and every renewal lease. Late fees must also be reasonable. The DHCR generally considers a 5 percent late fee to be reasonable. Late fees of $10 and $20 have been upheld. However, in another case, a $50 late fee for a rent of $405 was found unreasonable.

DHCR Opin. Ltr. by Charles Goldstein (8/12/97) [2-page document]