Maryland Late Fee Cap Law 2025: 5% of Unpaid Rent Only

Maryland law now caps a late payment penalty at 5% of the unpaid rent due for the rental period the payment was delinquent for.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

The percentage itself, 5%, isn't new. What changed is the base the percentage is calculated against: the unpaid portion of rent, rather than the total rent due for that period.

Picture a tenant who owes $2,000 in monthly rent but pays $1,500 on time and is late on the remaining $500. Under the prior calculation method, a landlord charging 5% of the total rent due could charge 5% of the full $2,000, or $100. Under the current law, the 5% applies only to the $500 that's actually unpaid, capping the fee at $25.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

That's a genuinely different outcome for the same underlying situation, a $75 difference in this example, and it only shows up when a tenant pays part of the rent on time and falls short on the remainder. A landlord whose tenants either pay in full or not at all may not notice much practical change, since 5% of unpaid rent and 5% of total rent produce the same number when the unpaid amount equals the full rent due.

This calculation change has the most practical effect specifically in partial-payment situations, since that's the only scenario where "unpaid rent" and "total rent due" produce different numbers.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

A landlord who previously calculated late fees against the full rent amount regardless of how much the tenant actually paid needs to specifically update that calculation for any tenant making partial payments, since that's precisely where the old method now overcharges relative to the current cap.

For rental arrangements billed weekly, the cap works differently: no more than $3 per week, or a total of no more than $12 per month.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

That's a flat dollar cap rather than a percentage-based one, and it applies specifically to weekly rental arrangements rather than the standard monthly lease structure most residential tenancies use.

Any lease provision prohibited by this section is unenforceable by the landlord.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

That's a direct consequence tied to the lease language itself, not just the amount actually charged. A landlord with an existing lease template that still calculates late fees against total rent due has a lease clause that's now unenforceable as written, independent of whether the landlord has actually charged an overage yet.

The statute doesn't specify a grace period a landlord must observe before charging a late fee at all.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

A landlord shouldn't assume this law creates or requires a specific number of grace days before a late fee becomes chargeable. Any grace period a landlord currently applies comes from the landlord's own lease terms or practice, not from this statute.

The law doesn't include a stated restriction preventing a landlord from charging more than one late fee tied to the same delinquent payment.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

That absence is worth noting directly rather than assuming a limit exists. A landlord's own lease terms, and general principles of reasonableness a court might apply, remain the practical check on repeated fee assessments, since the statute itself doesn't set that boundary.

This law doesn't address whether a late fee can be treated as additional rent for purposes of an eviction case.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

That's a genuinely unresolved point within this specific statute. A landlord considering whether unpaid late fees can factor into a nonpayment eviction filing should look to Maryland's broader landlord-tenant framework and existing case law on that question, rather than assuming this late-fee cap statute settles it.

This bill drew opposition specifically framed around property rights and the impact on smaller rental operations, reflecting a broader tension in how Maryland has approached fee regulation across several recent pieces of landlord-tenant legislation.

[Cite: CPAC Foundation, Maryland Senate bill ratings page for HB 273]

That context doesn't change the compliance obligation itself, but it's useful background for understanding why this specific calculation method became a legislative focus rather than the percentage figure itself, which remained unchanged at 5%.

A landlord's compliance work here isn't just changing "5% of rent" language to "5% of unpaid rent" in a lease template, though that's a necessary first step. The actual fee calculation applied at the point of assessment, whatever software, spreadsheet, or manual process a landlord uses to compute a specific tenant's late fee, has to reflect the unpaid-rent basis as well.

[Cite: Maryland HB 273, Chapter 580, 2025 Regular Session, enrolled text]

A property management system that still defaults to calculating late fees against total scheduled rent, rather than the actual unpaid balance for that period, will keep producing noncompliant fee amounts for any partial-payment tenant even after the lease language itself gets updated.

Governor Wes Moore approved this bill on May 13, 2025, but the law didn't take effect until October 1, 2025, nearly five months later.

[Cite: CPAC Foundation, Maryland Senate bill ratings page for HB 273]

That gap gave landlords, property managers, and the software systems many of them rely on time to update fee calculation methods before the new standard became enforceable, rather than requiring immediate compliance at the moment of the Governor's signature.

This bill's sponsor described the fix as coming down to a single word: "unpaid." The prior statutory language was ambiguous enough that industry guidance generally expected the 5% cap to apply only to unpaid rent, while some landlords, in practice, calculated it against the full monthly rent instead.

[Cite: Citizen Portal, Maryland Senate Judicial Proceedings Committee coverage of HB 273]

One example raised during the legislative process involved a renter charged a full late fee after an autopay arrangement failed to increase following a rent increase, resulting in a partial payment that triggered a fee calculated against the total rent rather than the shortfall itself.

[Cite: Citizen Portal, Maryland Senate Judicial Proceedings Committee coverage of HB 273]

That example is a useful illustration of exactly the scenario this law targets: not deliberate overcharging, but an automated or default calculation method that hadn't caught up to what the statute actually intended, producing a fee larger than the law allowed even without any intent to overcharge.

Committee coverage of this bill's progress noted no recorded committee vote and no substantive opposition from committee members, consistent with a bill framed as clarifying existing intent rather than creating a new, contested policy.

[Cite: Citizen Portal, Maryland Senate Judicial Proceedings Committee coverage of HB 273]

That relatively low-friction legislative path is worth knowing alongside the technical calculation change itself: this wasn't positioned as a fight over whether landlords could charge late fees, but specifically over which number the existing 5% figure should apply to.

The practical starting point is auditing both the lease template language and the actual fee-calculation process, whether that's a property management system, a spreadsheet, or a manual calculation, to confirm late fees are computed against unpaid rent specifically, not total rent due for the period.

For any tenant currently on a partial-payment arrangement or history, recalculating recently assessed late fees against the unpaid-rent standard, rather than assuming existing charges were already compliant, closes the most likely source of an unenforceable fee under this law.