Contract trap · Lease
Daily compounding late fees
Late rent triggers flat fees plus per-day charges, 10%+ of rent, interest of 15%+ p.a. or 3% per month, 'notice'/'posting' fees, returned-payment fees and fees accruing on the fee balance; RU variant: пени 0,5-1% в день (180-365% годовых).
- Severity
- Expensive
- How often it turns up
- Almost always
- Holds up?
- Depends where you are
- Clause phrases
- 20
What it looks like in a contract
Redline matches these phrases against your document verbatim. Drafters rarely invent new wording — they copy it, which is why the same sentences turn up across unrelated contracts.
In English-language contracts
- late fee of $
- per day until paid in full
- each day the account is in arrears
- 10% of the monthly rent
- compounded
- notice fee
- posting fee
- returned payment fee
- interest at 15% per annum
- 3 per cent per calendar month
- a charge of £3.50 per day plus VAT
- letter charge
In Russian-language contracts
- пени в размере 1% за каждый день просрочки
- 0,5% от суммы за каждый день
- штраф за просрочку оплаты
- неустойка за каждый день просрочки
- 1000 рублей за каждый день
- начиная с первого дня просрочки
- штраф 5000 рублей за нарушение срока оплаты
- пени начисляются на сумму задолженности, включая ранее начисленные пени
Check your own contract
Paste a clause, a page or the whole document. Nothing leaves your browser: the matching runs here, on this page, against the phrases above.
Why it bites
Fees quickly exceed the cost of late payment and become a profit centre; NCLC found late fees reaching 50-100% of rent and fee-on-fee cycles ending in eviction; many leases exceed statutory caps tenants do not know exist.
Is it enforceable where you are
The same clause can be routine in one country and void in another. What follows is what the law says where you are — not advice on your particular contract.
In the US, deposit deadlines and entry notice are set state by state; in England and Wales the Consumer Rights Act 2015 and the deposit protection schemes apply, and in the EU national tenancy law sits on top of Directive 93/13.
United States
State/local caps vary: NY $50 or 5% whichever is less (RPL 238-a, HSTPA 2019); Chicago RLTO $10 on the first $500 plus 5%; MD 5%; VA 10%; TX 'reasonable' with a 10-12% safe harbor; daily fees and fee-on-fee often unenforceable as penalties; junk 'notice' fees attacked under FTC Act s.5 and state law.
- Cited
- FTC
European Union
93/13 Annex 1(e); Germany BGB 555 voids contractual penalties — only statutory default interest (288) plus actual costs; France: pénalités/frais de relance for late payment réputés non écrits (loi 89-462 art 4).
- Cited
- 93/13 Annex 1(e)
- BGB 555
- loi 89-462 art 4
United Kingdom
Tenant Fees Act 2019: the only permitted default fee is interest at ≤3% above Bank of England base rate once rent is ≥14 days late; any other late fee, letter or admin charge is a prohibited payment (fine up to £5,000; repayment via First-tier Tribunal).
- Cited
- Tenant Fees Act 2019
Russia
Договорная неустойка законна (ст. 330 ГК), но 1%/день = 365% годовых — суды снижают до уровня, сопоставимого с ключевой/двойной ставкой (ст. 333, Пленум ВС № 7 от 24.03.2016); если наймодатель — ИП/организация, применяется ст. 16 ЗоЗПП.
- Cited
- ст. 16 ЗоЗПП
- ст. 330 ГК
- ст. 333
Where this has actually happened
Regulator actions, court rulings and the contracts they were fought over.
- NY Real Property Law 238-a (2019): late fee capped at the lesser of $50 or 5% of monthly rent
- OFT356 (2005) unfair examples: 'Interest... of 3 per cent per calendar month'; 'A charge of £3.50 per day plus VAT... each day the account is in arrears'; '£35 plus VAT' per reminder letter
- NCLC et al. comments to FTC (Feb 2023): Arkansas $15/day late fees reaching 100% of rent; Utah $75 first day plus $10-20 daily
What to do
In order, from the thing that takes a minute to the thing that takes a letter.
- Cap at a modest flat amount or ≤5% of monthly rent after a grace period, no daily accrual, no fee-on-fee, no notice fees
- Check your state/country cap and refuse to pay above it
- RU: never sign 1%/день, ask the court to reduce under ст. 333 ГК.
Traps that travel with it
Drafters who use one of these usually use several.