Texas Late Fees and Rent Acceleration: What § 92.019 Allows and What It Doesn’t

Section 92.019 of the Texas Property Code caps residential late fees at 12% of the rent for properties with four or fewer rental units, and at 10% of the rent for larger properties.

The most common late-fee mistake we see in Dallas County leases isn’t the cap itself; it’s the reasonableness component. Even within the 12% statutory limit, the fee must be reasonable in light of actual damages and not act as a penalty. We’ve seen courts reduce fees that landlords thought were safely under the statutory cap. Lease provisions that exceed these caps are unenforceable, and a landlord who collects fees in excess of the cap can be ordered to refund the overage and pay statutory damages. The same statute restricts daily late fees, NSF fees, and rent acceleration clauses. What follows is a walkthrough of what the statute allows, what the lease can and can’t add, how the fee interacts with eviction and deposit deductions, and the most common drafting mistakes that turn enforceable late fees into refund obligations.

The basic § 92.019 cap

Section 92.019 was added to the Texas Property Code in 2007 and revised since. The current rule:

For a residential rental unit in a property with four or fewer rental units, the late fee may not exceed 12% of the amount of rent for the rental unit for the rental period.

For a residential rental unit in a property with more than four rental units, the late fee may not exceed 10% of the amount of rent for the rental unit for the rental period.

The cap applies per rental period (typically per month). A single late fee per month, capped at 12% or 10% of monthly rent, is the maximum.

Example. On a property with three units and $1,500 monthly rent, the late fee can be up to $180 (12%). On a property with 100 units and $1,500 monthly rent, the late fee can be up to $150 (10%).

The fee can only be assessed once per rental period for failure to timely pay rent. A lease that purports to charge a late fee plus a daily late fee on top is generally not enforceable beyond the statutory cap.

When the late fee can be charged

The lease must specify the date rent is due and the date after which the rent is late. The grace period (the time between due and late) is set by the lease, not the statute. Common practice is a 3-to-5-day grace period, but leases vary.

The late fee can be assessed on the day after the grace period ends. The lease should clearly state the trigger date and the amount.

The fee can be assessed only for the actual delay in payment. A landlord cannot assess multiple late fees for a single late payment by re-running the late-fee calculation in subsequent months. If rent for January was paid late, that’s one late fee; rent for February paid on time does not trigger another fee on January’s amount.

Daily late fees

Many lease forms include both a flat late fee and a daily late fee that accrues until rent is paid. The daily late fee is widely used but generally does not survive § 92.019.

The statute caps the late fee at 12% or 10% of monthly rent, period. A flat fee of 5% plus a daily fee of $5 that accumulates to more than the cap exceeds the statute. Courts that have addressed this generally limit the total recoverable late fee to the statutory cap, even if the lease provides for a larger amount.

This means landlords using leases with daily late fees should:

• Treat the daily fee as informational/preventative rather than as collectible beyond the cap.
• Stop accruing daily fees once the statutory cap is reached.
• Avoid demanding daily-fee amounts in collection letters that exceed the cap.

NSF fees and bounced check fees

NSF fees (returned check fees) are generally enforceable separately from the late fee analysis. The lease can provide for a reasonable NSF fee, typically $25 to $50, to cover the bank charges and administrative costs of a returned payment.

NSF fees are not “late fees” for § 92.019 purposes. They are fees for the specific event of a returned payment. A landlord whose tenant pays late by check that bounces can charge both the late fee (capped at § 92.019) and the NSF fee.

That said, a lease provision charging an unreasonable NSF fee (e.g., $200 for a single returned check) can be challenged as a penalty and may be limited to the actual cost.

Rent acceleration clauses

A rent acceleration clause is a lease provision that purports to make all remaining rent under the lease term immediately due and payable on default. For example, a 12-month lease at $2,000/month with rent acceleration would, on default in month 3, allegedly entitle the landlord to immediately collect the remaining 9 months ($18,000).

Texas law treats rent acceleration clauses with skepticism. They are generally enforceable only to the extent they reflect actual damages, meaning the landlord cannot collect the full accelerated amount and also re-rent the unit and collect new rent. The landlord has a duty to mitigate damages under § 91.006, which requires reasonable efforts to re-rent the unit.

In practice, rent acceleration in residential leases:

• Is rarely enforced for the full term.
• Typically results in damages limited to the loss period during which the unit was vacant despite reasonable mitigation efforts.
• Often functions more as a leverage tool in settlement negotiations than as a recoverable claim.

Commercial rent acceleration is more commonly enforceable, though the duty to mitigate (Texas Property Code § 91.006) still applies.

How late fees interact with the eviction process

For purposes of eviction:

• The notice to vacate can demand payment of unpaid rent and any late fees that have been properly assessed under the lease and § 92.019. A demand for late fees in excess of the statutory cap is defective and may be a basis for dismissing the case if the tenant raises the defect.
• The judgment can include unpaid rent plus late fees as part of the money judgment, again subject to the statutory cap.

Late fees deducted from the security deposit under § 92.104 follow the same § 92.019 cap. A deposit deduction for late fees that exceeds the cap is itself a basis for a bad-faith deposit claim.

How late fees interact with security deposits

Late fees can be deducted from the security deposit at move-out, provided:

• The fees were properly assessed under the lease and § 92.019.
• The fees relate to actual late payments documented in the rent ledger.
• The deposit accounting itemizes the late fees with dates and amounts.

Common mistakes:

• Padding the late-fee deduction beyond the actual fees properly assessed.
• Including late fees that exceed the statutory cap.
• Charging late fees as deductions when no actual late fee was assessed during the tenancy.

Each of these can support a bad-faith deposit claim under § 92.109.

Lease drafting: what to include

A compliant late fee provision in a Texas residential lease:

• States the due date for rent.
• Defines the grace period (the time between due and late).
• States the late fee amount as a fixed percentage or dollar amount, capped at the § 92.019 limit.
• States that the fee is assessed once per rental period, not per day.
• If a daily fee is included, clearly states that the total late fee shall not exceed the § 92.019 cap.
• States the NSF fee separately, with a reasonable amount.

For commercial leases, the § 92.019 cap does not apply (it’s a residential statute), but lease language and Chapter 93 should be reviewed by counsel for the appropriate fee structure.

Practical implications for collections

A landlord pursuing post-eviction collections for unpaid rent and late fees should:

• Verify that all late fees demanded comply with § 92.019.
• Limit the demand to the statutory cap, regardless of what the lease says.
• Be prepared to defend the fee calculation if challenged in collection litigation.
• Document the rent ledger thoroughly, with dates of payment, amounts, and late-fee assessments.
• Avoid daily late-fee calculations in demand letters; use the flat statutory cap.

Inflated late-fee demands undermine the broader collection case and can produce counterclaims for fee refunds and unfair-debt-collection-practice violations.