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mingomag · Sep 27, 2011, 05:34 PM

Can I charge a daily 5% late fee for tenants in Michigan?

ScottGem · Sep 27, 2011, 05:42 PM

Not unless its mentioned in the lease and the tenant agrees to it.

CliffARobinson · Sep 27, 2011, 05:45 PM

Late fees need to stay within the bounds of "reasonable expense" placed on you by the late payment. Fees cannot be a penalty, like 5% a day sounds.

Examples of reasonable expenses will vary by jurisdiction, but they can include late fees from your mortgage holder, cost to collect the rent, etc.

Typically, those late fees are around $25 - $30 dollars. And, including fees which go beyond "reasonable expense" can be overturned if the matter went before a judge.

As a landlord myself, trust me, I know the temptation.

ScottGem · Sep 27, 2011, 06:02 PM

I couldn't find any specific limits for MI, but you cannot charge until the rent is 30 days late. This is very tenant friendly. I also found that MI courts have overturned unreasonable late fees. So even if it is in the lease, I think fees that high would not withstand a legal challenge.

Fr_Chuck · Sep 27, 2011, 06:07 PM

I normally change 10 percent of the rent ( not daily) just for a late fee. It is due on the 1st and late on the 5th, so anytime after they fifth they pay the late fee.

I had on a few properties at one time an additional 5 dollars a day, it got thrown out by the judge, ( been there and tried that)

After 30 days I start eviction proceedings the next month is already due and the new late fee for that month hits.

Now on my commercial rentals, it is different and I have gotten away with higher fees for it.

CliffARobinson · Sep 27, 2011, 06:15 PM

Some states are more landlord - friendly, some aren't. Be careful what you charge, check with your state's landlord-tenant regulations. The answer to your question is Michigan looks for "reasonable expense reimbursement", and not penalizing amounts as late fees.

As an example of differences between states, California doesn't allow for a "non-refundable deposit" of any kind. All deposits are refundable less unpaid lease payments, reasonable expenses to repair and clean following certain guidelines, etc. I notice in Michigan, it is within regulations to have a non-refundable cleaning fee, so research your state's guidelines and be careful.