The most important source of information about a residential tenant’s rights and a landlord’s responsibilities is the written lease agreement. Some landlords prefer oral agreements, but it is more common for them to require the tenant's signature on a written lease—and a written lease protects the tenant more than an oral agreement. Be sure to read the lease carefully before you sign it.

A residential landlord’s ability to charge late fees generally depends on the specific language in the written lease agreement; the state’s landlord-tenant laws that may limit the amount of late fees the landlord can charge and the circumstances in which they can be charged; and the state's contract law.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a residential landlord who charges late fees because the tenant is an hour late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing—unless, for example, the lease agreement specifies an hour (12:00 p.m.) of the day by which rent is due and states that time is of the essence.

In Illinois, the lease agreement is indeed a crucial document outlining the rights and responsibilities of both the tenant and the landlord. It is highly recommended to have a written lease to ensure that all terms are clearly defined and enforceable. Regarding late fees, Illinois law does place restrictions on landlords. According to the Illinois Landlord and Tenant Act, late fees must be reasonable and are regulated. For example, for properties subject to the Chicago Residential Landlord and Tenant Ordinance (CRLTO), the late fee cannot exceed $10 per month for the first $500 in rent, plus 5% per month on the portion of the rent that exceeds $500. Additionally, Illinois recognizes the implied duty of good faith and fair dealing in contracts, which means that a landlord's actions in enforcing late fees must be fair and not overly punitive. If a lease specifies a particular time by which rent is due and emphasizes that timing is critical, then the landlord may be justified in imposing a late fee for rent paid past that time. However, such terms should be clearly stated in the lease agreement to be enforceable.