The most important source of information about a residential tenant’s rights and a landlord’s responsibilities is the written lease agreement. Some landlords prefer oral agreements, but it is more common for them to require the tenant's signature on a written lease—and a written lease protects the tenant more than an oral agreement. Be sure to read the lease carefully before you sign it.

A residential landlord’s ability to charge late fees generally depends on the specific language in the written lease agreement; the state’s landlord-tenant laws that may limit the amount of late fees the landlord can charge and the circumstances in which they can be charged; and the state's contract law.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a residential landlord who charges late fees because the tenant is an hour late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing—unless, for example, the lease agreement specifies an hour (12:00 p.m.) of the day by which rent is due and states that time is of the essence.

In California, the written lease agreement is indeed a crucial document for outlining the rights and responsibilities of both residential tenants and landlords. It is advisable for tenants to thoroughly review and understand the lease before signing, as it provides more legal protection than an oral agreement. Regarding late fees, California Civil Code Section 1671 and other relevant statutes regulate the imposition of such fees. Landlords are allowed to charge late fees as specified in the lease agreement, but these fees must be a reasonable estimate of the damages the landlord would incur as a result of late payment and cannot be punitive in nature. Additionally, California recognizes the implied covenant of good faith and fair dealing in contracts, which means that landlords must act fairly and may not impose late fees in a manner that breaches this duty. For instance, charging a late fee for rent that is only an hour late without a clear stipulation in the lease that time is of the essence would likely be seen as acting in bad faith. Tenants who believe their landlord is violating the terms of the lease or acting in bad faith may have legal recourse and should consider consulting with an attorney for guidance specific to their situation.