HUD Handbook 4350.3 § 6-23

A.       Paragraph 6-23 does not apply to cooperatives. Cooperatives may collect any
                 late charges that are approved by the Board and that are consistent with the
                 cooperative’s organizational documents and state and local laws.

B.       Paragraph 6-23 does not apply to Section 202/8, Section 202 PAC, Section 202
                 PRAC and Section 811 PRAC projects. Owners of Section 202/8, Section 202
                 PAC, Section 202 PRAC and Section 811 PRAC projects cannot charge fees for
                 late payment of rent.

        C.       Owners may assess a charge if the tenant has been given at least 5 calendar
                 days as a grace period to pay the rent. The rent must be received by the fifth
                 day, not postmarked by then.

                 On the sixth day, the owner may charge a fee, not to exceed $5 for the period of
                 the first through fifth day that the rent is not paid. Additionally, the owner may
                 charge a fee of $1 per day for each additional day the rent remains unpaid for the
                 month.

        D.       Field Offices or Contract Administrators may approve a higher initial late fee if:

                 1.       It is permitted under state and local laws;

                 2.       It is consistent with local management practices; and

                 3.       The total late charge assessed for the month does not exceed $30.

        E.       An owner may deduct accrued, unpaid late charges from the tenant’s security
                 deposit at the time of move-out, if such a deduction is permitted under state and
                 local laws.

        F.       An owner must not evict a tenant for failure to pay late charges.