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 Colorado, the lease agreement is indeed a crucial document outlining the rights and responsibilities of both the tenant and the landlord. Tenants should thoroughly review and understand the lease before signing, as it provides more security and clarity than an oral agreement. Regarding late fees, Colorado law (as of the knowledge cutoff in 2023) allows landlords to charge late fees as specified in the lease agreement, but these fees must be reasonable and related to the actual costs incurred by the landlord due to the late payment. The law also caps late fees at the greater of $50 or 5% of the past due rent for each month the rent is late. Additionally, Colorado recognizes the implied covenant of good faith and fair dealing in contracts, which means that a landlord's actions, including the imposition of late fees, should be fair and not violate this implied duty. If a lease specifies a particular time by which rent must be paid and emphasizes that time is of the essence, tenants should be aware that failing to comply could result in legitimate late fees, as long as those fees comply with the lease terms and state regulations.