The past month, August 2013, tenants in one of my rentals called well in advance to let me know circumstances beyond their control would make the September rent late. So far these tenants have paid on time, all the time, and kept the property up. I told them that was fine and not to worry about the late fee for rent but next time the late fee would apply. I hate doing that but it's part of my landlord strategy and planning that I came up with a long time ago and stick to.
Having a plan for late fees and sticking with it in the rental business is crucial to keeping good and bad renters from being late. Let's face it, we all forget something or can't pay a bill from time to time. Many creditors, if you call them, will waive all or a portion of the late fees at least once per calendar year. I understand this and is why I will usually waive a late fee once though I do not make that known. It helps to keep the good renters in and at least let them know you have some sympathy for their issues.
Your late fee should also sting in the sense if invoked it will be severe enough to prevent the renter from allowing it to happen again. If it's too great it may not be legal and you may find yourself dissuading the savvy tenant from dealing with you. The late fee should not be so low that it encourages late behavior as well. For my lease, I have a graduating scale for late fees. If the rent isn't paid in x amount of days, then there is a fee. So many days after that the fee goes up. This continues until the rent is 10 or so days late at which point my automatic eviction proceedings begin.
Something else landlords need to be aware of is applying your late fee strategy equally. Due to HUD requirements, you simply cannot excuse the late fee of one tenant and not do the same for the other. If you do this and are found out you stand the good chances of being accused of unfair or discriminatory practices. It's best to either excuse a late one or more times or not do it at all. This includes the actual fee amount for late fees. To give partiality amongst properties with higher rent, it would be better to structure your late fee as a percentage of the rent.
One of the biggest questions deadbeat tenants will ask is "can a landlord charge late fees for rent?" The question is undeniably yes. However, how that late fee is applied and with what consistency is what really matters and can make the difference in attracting good tenants, fairly punishing the "bad", and avoiding a federal lawsuit.