Legal Question in Real Estate Law in California

Generally a late charge that is up to 5% of the rent is universally upheld by courts. 6-8% is pretty safe. 10% and over is almost always called a void penalty instead of reasonable compensation for the late payment.

The underlying legal reasoning is that the landlord should be able to recoup his/her/its reasonably-foreseeable economic harm resulting from the late payment (interest, additional billing costs, lack of cash to cover expenses, etc.) but that imposing what amounts to a "fine" for late payment would be a function for a judge, but not for a landlord.