Late Rent Fees & Grace Periods in Michigan

Introduction

Few things ruin a renter’s month faster than an unexpected late-rent charge. While late fees push tenants to pay on time and help landlords offset administrative hassle, excessive penalties can destabilize budgets and trigger eviction filings. In Michigan’s tight 2025 rental market, understanding the difference between a reasonable late fee and an illegal penalty is essential for both sides of the lease. Michigan statutes do not set a hard dollar or percentage cap, but courts consistently apply the “reasonable relationship” test—meaning any fee must reflect the landlord’s actual costs, not act as pure punishment.

This guide breaks down how that standard works in practice, outlines typical grace periods, and offers step-by-step tools for disputing unfair charges. Whether you are a first-time renter, a seasoned property manager, or preparing for small claims, you will leave with concrete answers and printable resources.

Legal Limits on Late Fees in Michigan

Michigan’s Truth-in-Renting Act and MCL 600.2959 require that “liquidated damages”—including late rent charges—bear a reasonable relation to the landlord’s anticipated losses. The state legislature has resisted adopting a numeric cap, leaving interpretation to judges. Over the past decade, unpublished Court of Appeals opinions have drawn a soft line at roughly five percent of monthly rent. Fees beyond that threshold face heavy scrutiny, and daily compounding penalties have been struck down as punitive.

Maximum Late Fee Landlords Can Charge

• No statute sets a dollar cap, but amounts over 5 % or $75 on an average lease routinely fail the reasonableness test.
• Flat fees of $25–$50 on rents under $1,000 are widely upheld.
• Remember: once the fee is due, it legally becomes “rent.” Non-payment can trigger a 7-day non-payment eviction notice.

Covered properties under the federal CARES Act must still give a 30-day notice before charging or pursuing late fees—an important protection for many subsidized tenants in 2025.

What Must Be in the Lease

Michigan’s Truth-in-Renting Act demands clarity. A valid late-fee clause must:

1. State a fixed dollar amount or a clear formula (e.g., “5 % of monthly rent”).
2. Specify the date the fee attaches after non-payment.
3. Describe any grace period in days.
4. Confirm that assessment of a late fee does not waive the landlord’s eviction rights.

// Sample compliant clause
“Rent is due on the 1st of each month.
If payment is not received by 5:00 p.m. on the 5th, Tenant shall
pay a late charge equal to 4 % of the outstanding balance,
not to exceed $75. Acceptance of a late fee does not waive
Landlord’s right to terminate tenancy for non-payment.”

Blank spaces, “to be determined,” or clauses that say fees will be set later by management are unenforceable under Michigan law.

Grace-Period Requirements

No statewide statute mandates a grace period; however, most professionally-managed leases in Michigan include a three- to five-day window to avoid appearing punitive. Smaller landlords sometimes choose a strict “due on the first, late on the second” model, but risk a judge finding the fee unreasonable if payment methods are limited or office hours restrict remittance.

Local nuance: Detroit Legal Aid brochures recommend a seven-day notice before late fees, and Ann Arbor’s housing code suggests “reasonable grace,” though neither is enforceable statewide.

Illegal or Unfair Late-Fee Practices

• Daily compounding fees that grow every 24 hours.
• Charging a late fee on weekends or holidays when payment office is closed.
• Penalties larger than one month’s rent.
• Hidden “processing” or “administrative” surcharges.
• Refusing to accept rent unless the late fee is paid simultaneously—potentially an illegal eviction tactic.

In a 2023 Wayne County case, a landlord sought $1,500 in late charges on a $900 unit. The judge slashed the demand to $45, calling the fee “grossly disproportionate” under the Michigan Consumer Protection Act.

Documenting Disputes & Steps to Take

If you spot an unreasonable fee, follow this five-step roadmap before heading to court:

1. Locate the late-fee clause in your signed lease.
2. Gather payment receipts, bank statements, and any text or email exchanges with your landlord.
3. Send a certified “Late Fee Dispute Letter” requesting removal or adjustment.
4. Ask for a full accounting ledger within 10 days (MCL 554.613).
5. Pursue community mediation if the issue remains unresolved.

Legal Remedies & Small Claims

Michigan’s small-claims limit increased to $9,500 in 2025, making it the go-to venue for recouping overpaid fees. Filing fees range from $30 to $75 depending on the claim amount. Tenants may seek:

• Refund of illegal late fees paid.
• Statutory damages under the Michigan Consumer Protection Act (up to triple actual damages plus attorney fees in some cases).
• Court costs and interest.

If you are already facing an eviction for non-payment, you can file a counter-claim for excessive late fees in the same case. Bring proof of all payments and communications.

Best Practices for Tenants & Landlords

Frequently Asked Questions