The penalty percentage applied to overdue rent payments.
By Angel Campa, Founder · Updated March 2026
Late fees compound quickly on large rent obligations. A 5% late fee on a $30,000 monthly rent is $1,500 per incident. If the tenant is consistently late -- even by a few days -- annual late fees can reach $18,000. Some aggressive leases charge compound interest on top of flat late fees. Understanding the fee structure allows accounting teams to prioritize payment timing and avoid unnecessary costs.
Found in the "Rent" or "Late Charges" section. Look for the fee structure (flat percentage, flat dollar amount, or per-diem interest rate), the grace period before fees apply, and whether the fee applies to base rent only or all amounts due.
Lextract uses a combination of AWS Textract OCR and Claude AI to identify and extract the late fee % from your lease PDF. The AI searches for all pages of the document, then assigns a confidence score based on OCR quality and extraction certainty. Fields with lower confidence are flagged for human review.
Monetary Cure Period
The number of days allowed to remedy missed financial payments after notice.
Non-Monetary Cure
The number of days allowed to remedy operational or physical breaches after notice.
Acceleration Clause
Landlord's right to demand all future rent immediately upon a lease default.
Liquidated Damages
A predetermined penalty fee assessed for specific breaches of the contract.
Holdover Rate
The multiplier applied to base rent if the tenant remains post-expiration.
Late fees typically range from 3% to 5% of the overdue amount. Some leases charge a flat dollar amount (e.g., $500) plus per-diem interest (e.g., 1.5% per month). A grace period of 3-5 days after the due date before fees apply is standard. Fees above 5% may be challenged as penalties.
Courts in some jurisdictions have scrutinized late fees without grace periods as potential penalties. A brief grace period (3-5 days) makes the fee more likely to be enforceable. Tenants should negotiate at least a 5-day grace period to account for mail and processing delays.
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