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Late Fee

A Late Fee refers to a charge that is added to a regular payment when it is not paid on time.

Late fees are typically stipulated in a lease or mortgage agreement and serve as a financial penalty for failing to pay rent or mortgage payments by the specified due date. They are designed to encourage timely payments and to compensate the lender or landlord for the inconvenience and potential financial loss associated with late payments.

The amount of the late fee and the grace period before it is applied can vary depending on the specific agreement and local regulations. Some jurisdictions have laws that regulate the amount of late fees that can be charged, while in others, it might be a matter negotiated between the parties involved.

In real estate investments, late fees can affect cash flow and yield calculations, making timely collections an essential part of property management. They can also impact the relationship between landlords and tenants or lenders and borrowers, potentially leading to disputes if not handled appropriately.