Charging Late Fees in NYC: What Tenants Should Know

Late fees are one of the most misunderstood parts of renting in New York City. Both landlords and tenants often disagree about how much can be charged, when late fees kick in, and what happens if the fee isn’t paid. Here’s a straightforward breakdown of the rules, plus a sample calculation to make everything easy to understand.

Are Late Fees Legal in NYC?

Yes — late fees are legal in New York if they follow state limits and are clearly stated in the lease. Under the 2019 Housing Stability and Tenant Protection Act (HSTPA):

• A landlord may not charge a late fee until rent is at least 5 days late.

• The fee can be no more than $50 or 5% of the monthly rent, whichever is less.

This limit applies to all residential leases — market-rate, rent-stabilized, and unregulated apartments.

Sample Late Fee Calculation

Monthly rent: $2,500

Five percent of $2,500 = $125, but the law caps late fees at $50, because the fee must always be the lesser amount.

Maximum legal late fee: $50

Monthly rent: $800

Five percent of $800 = $40 — this is below the $50 cap.

Maximum legal late fee: $40

How Often Can Late Fees Be Charged?

A landlord can charge a late fee once per month for each month the rent is late. They cannot charge:

• Interest on late fees

• Daily accumulating penalties

• Multiple fees for the same missed payment

One fee per late month — that’s it.

Can Late Fees Be Waived?

Yes. A landlord may waive a late fee at their discretion. Common reasons to waive include:

• First-time late payment

• Banking or payment app errors

• Tenant hardship (job loss, medical issue)

• Good faith communication from the tenant

If a late fee is waived, the landlord should put it in writing: Late fee waived for [month] as a courtesy; this does not waive future rights.”

Waivers do not change the future legal right to charge late fees again.

Can a Landlord Deduct Late Fees From the Security Deposit?

No — not automatically.

New York law says a security deposit can only be used for:

• Unpaid rent

• Damage beyond normal wear and tear

• Certain legal costs if the lease allows it

Late fees are not considered "rent." Because late fees are penalties, most landlords cannot deduct them from the security deposit unless:

• The lease explicitly defines late fees as “additional rent,” and

• The landlord follows all legal requirements

Even then, many courts still disallow it because late fees are not essential housing charges.

Bottom line: security deposits generally cannot be used to cover late fees.

What Happens If a Tenant Doesn’t Pay the Late Fee?

If a tenant refuses to pay a late fee:

1. The landlord cannot evict solely for nonpayment of late fees. Evictions can only be filed for unpaid rent, not penalties.

2. The landlord can:

   • Continue to show the balance on the ledger

   • Request payment

   • Deduct the fee from future discretionary credits

   • Bring it up at lease renewal

   • Potentially pursue the fee in small claims court

3. The landlord cannot:

   • Add interest

   • Harass or threaten eviction

   • Block access to amenities or services

Most disputes end with the fee sitting on the ledger until resolved, waived, or negotiated during lease renewal.

Key Takeaways

• Late fees are legal in NYC only after 5 days and cannot exceed $50 or 5% of monthly rent.

• Only one late fee per month is allowed.

• They can be waived at the landlord’s discretion.

• Security deposits generally cannot be used to pay late fees.

• Nonpayment of a late fee cannot lead to eviction, but the balance may remain owed.