The amount of late fees charged by owners and managers of residential rental property is a matter of some controversy. Unlike some other states, California does not set the amount of late fees. Instead, their validity is left up to the courts. From a practical standpoint the question is whether the effect of the fee is to penalize a tenant for late payment or rent or whether the amount reflects the cost to the owner of the delayed payment. From a legal standpoint, the question is whether the clause meets the requirements of California’s liquidated damages statute. Once the validity of the fee is established, the controversy does not end. Tenant advocates have met with some success challenging the inclusion of late fees in three-day notices and unlawful detainer actions. As a result, even a valid late fee may be difficult to collect.