Real Estate Law
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I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear about your situation.
Late fees in a residential lease in California are illegal. A landlord may not charge a tenant a penalty for failure to pay the rent on time. Cal. Civ. Code, Section 1671. It's actually not that much of a gray area. The statute says that a late fee in a residential lease is void UNLESS two conditions are met. First, the late fee agreed to in the contract must be presumed to be the amount of damages the landlord would incur from a late payment. Second, the actual amount of damages the landlord would incur from a late payment must be extremely difficult to determine. That's where the landlord will lose, every single time. When a tenant pays the rent late, the landlord is damaged, at most, in the amount of interest he is paying on his mortgage for that month's rent payment. It is extremely easy to calculate the daily interest paid on a mortgage. In cases where there is no mortgage, than the landlord is at most damaged in the amount of interest he could have earned investing the money. That's also easy to calculate. Thus, the fees are illegal.
You could actually sue for a rebate of all late fees paid dating back the past 4 years (because 4 years is the statute of limitations in California). It would be illegal for your landlord to evict you because you sued them for violating California law. Cal. Civ. Code, Section 1942.5.
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