Property Management

A North Dakota landlord's 'late fee' policy that charges 10% of monthly rent for a single day late is likely:

AReasonable and fully enforceable
BPotentially excessive and may be challenged as an unenforceable penalty clause✓ Correct
CRequired to be pre-approved by the NDREC
DAlways enforceable in commercial leases

Explanation

Courts scrutinize late fees for reasonableness. A fee that is disproportionately large compared to the landlord's actual damages may be characterized as an unenforceable penalty clause. Reasonable late fees are generally enforceable.

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