Friday, March 17, 2006

 

Late Fees

Late fees need to be written in the lease agreement. I highly recommend that you charge a late fee. Your late fees have to reasonable to be enforceable. If you live in Chicago, and you are not a live-in landlord of a 2-6 unit building, then your late fee is determined by the Residential Landlord Tenant Ordinance (RLTO). The RLTO allows for a late fee of $10 for the first $500 in rent and 5% of anything over $500. If your rent is $1000 dollars a month you can charge a late fee of $35.
$1000 - $500 = $500, late fee of $10 for the first $500 and the second $500 X 5%= $25, so you add the $10 + $25 = $35 total late fee.
If your monthly rent is only $300 a month you can still charge a late fee of $10. If you are a small live-in landlord not covered by the RLTO you should still be careful to charge a reasonable late fee. I recommend $25.
Most municipalities have rules regarding tenants and landlords. You should check with your local government to see what rules you need to follow. It is your responsibility to know what the local laws are. Remember ignorance of the law is no excuse. Beware, most courts and local governments favor tenants over landlords and if you write the lease and it is unclear or contradictory, a judge will favor the other party.

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