Late Fee
Synonyms: Late Payment Fee، Late Rent Fee، Penalty Fee، Default Fee
Last updated: 2026-10-05
Short Definition
A charge some landlords stipulate for late rent; Ejar's unified residential lease has no late-fee clause, and Article 178 of the Civil Transactions Law excludes money obligations such as rent from compensation fixed in advance.
Overview
Legal Basis
Article 178 of the Civil Transactions Law issued by Royal Decree No. (M/191) of 1444 AH lets contracting parties fix compensation in advance except where the obligation is a sum of money, and rent is a sum of money (Article 429). Ejar's unified residential lease template has no late-fee clause and allows additional terms only if they do not conflict with its own terms, otherwise they are void (Article 18). Unpaid rent is recovered through an execution request at the Execution Court via Najiz, and daily fines under the Execution Law are paid into the court's account or to the State Treasury, not to the landlord.
Practical Example
Al-Mizan Real Estate office in Dammam used to put a SAR 200-per-week late fee in its paper leases. When it began documenting leases on Ejar with the unified residential template, it found the template has no late fee and that Article 178 of the Civil Transactions Law excludes money obligations from compensation fixed in advance. When tenant Majed was late with his April instalment (SAR 10,000), the office waited for the lease's grace period to pass, then contacted him through Ejar; when he still did not pay, the owner filed an execution request via Najiz under the documented lease to collect the SAR 10,000, without any fee.
Common Mistakes
- ✗Assuming Ejar calculates and adds a late fee automatically — the unified residential lease has no late-fee clause.
- ✗Applying the fee without stipulating it in the contract — owner has no right to impose fees not agreed upon in advance.
- ✗Relying on Article 178 of the Civil Transactions Law to stipulate a fee for late rent — the article expressly excludes obligations whose subject is a sum of money.
- ✗Overlooking the unified lease's grace period — it runs from the due date (15 or 30 days depending on the payment cycle), and under the termination clause the lease cannot be terminated through Ejar for late payment before it ends.
- ✗Assuming daily fines imposed by the Execution Court are paid to the landlord — they are a means of compelling the debtor and are not paid to him; his right is the unpaid rent itself.
International Differences
Late fee controls differ between countries. In the UAE, fees are applied at specified percentages according to RERA controls in Dubai, usually 1-5% of overdue rent. In Turkey, Gecikme Faizi (late interest) is applied according to the Central Bank interest rate and may accumulate. In Egypt, fees are less clear and rarely applied in practice. In the UK, Late Rent Fee is legally limited (in regulated contracts, not exceeding 3% above Bank of England Base Rate), applied only after 14 days. In the US, varies between states, usually not exceeding 5-10% of rent. In Saudi Arabia, Ejar's unified residential lease contains no late fee; the landlord relies on the grace period, the right to terminate and an execution request under the documented lease.
