Late Fees

A landlord can charge a reasonable late fee if you pay rent after the due date and any grace period according to your lease agreement. If you do not pay your rent on the due date (or beyond the grace period), the landlord may have the discretion to either declare you in default under the lease agreement or accept the rent and the appropriate late fee.

If you offer to pay the rent and appropriate late fee, and the landlord refuses to accept it and demands that you vacate, you may still have a chance in court in an eviction case. You should read the lease carefully and argue that you offered to cure the problem according to the lease. A court may also consider your rent to be paid on time if you have established a clear and undisputed pattern of acceptance of late payment by your landlord. You should argue that if your landlord no longer wished to accept late payments, it should have given you some advance notice.

Must be in a Written Lease and Mandatory One Day Grace Period

Texas law now requires late fees to be in a written lease agreement to be charged, and recognizes that tenants should have a grace period before any late fee can be charged.  The grace period is one day at present.  So, if your rent was due on the 1st, the late fee cannot be charged until the 3rd day of the month. Section 92.019, Property Code.

Limit on Late Fees Not Specific, But Spell Out the Test

The Texas Legislature recently placed a limit on late fees that is not specific: a landlord can only charge a late fee so long as it is a "reasonable estimate of uncertain damages to the landlord that are incapable of precise calculation that result from late payment of rent". Section 92.019, Property Code.  The late fee must be based on some damage to the landlord -- that is key.  If a landlord has not been harmed at all, then no fee should be allowed.  If there is a $50 fee for being late (past the grace period), that might be acceptable depending on the amount of the rent, what the landlord has to do each month to collect rent from tenants, how much it costs the landlord for tenants to pay late, and other factors.  Clearly, many landlords hope tenants pay a little late each month because late fees can really add up.  If a judge were to agree that the fee is too high, you are entitled to $100, three times the amount of the illegal fee charged, court costs and attorney fees.

(Note that a lease is not a loan of money. Usury laws, which put limits on interest rates and fees for loans do not apply to leases.)

Late fee for nonpayment of late fee

Sometimes a tenant may not be aware a landlord has even charged a tenant a late fee, or sometimes a tenant disputes whether the rent was late. Being the greedy people that they are, some landlords deduct a late fee from the tenant's rent and then claim the tenant is behind on rent again the next month. Then the landlord charges late fees again. You may wish to challenge this practice.  A court also may also refuse to evict a tenant if the tenant has merely not paid an unreasonable late fee. (However, this is a very risky and is not the best strategy for challenging a late fee unless you simply don't have the money. Having an eviction even filed against you is probably harmful to your rental history whether you win or lose.)

Late fee deductions cannot bootstrap landlord self help remedies

A landlord should not deduct a late fee from rent to cause a default and then threaten some other action like a lockout, or landlord lien. A landlord is restricted in using these remedies, and they only are available when the tenant is actually behind on rent. A landlord may have provisions in the lease agreement allowing late fees or some other fee to be deducted first; however, the landlord cannot use this provision in order to claim nonpayment and use one of the self-help remedies described above. A lease provision used in this manner is void according to the Texas Property Code. For a detailed discussion of these landlord self-help remedies see Lockout, and Landlord's Lien.