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 Kentucky, the lease agreement is indeed a crucial document outlining the rights and responsibilities of both the tenant and the landlord. Kentucky law allows for both written and oral lease agreements, but a written lease provides clearer protection for both parties by explicitly stating the terms of the rental arrangement, including the handling of late fees. According to Kentucky's Uniform Residential Landlord and Tenant Act (URLTA), which applies in some parts of the state, late fees must be reasonable and are enforceable only if agreed upon in the lease. The lease should specify the amount of the late fee, when it is assessed, and any grace period that is provided. Kentucky's contract law also includes an implied covenant of good faith and fair dealing, which means that landlords are expected to act fairly and not impose late fees in an unreasonable or punitive manner. If a lease specifies a particular time by which rent must be paid, and indicates that time is of the essence, then the landlord may be justified in charging a late fee for rent that is even an hour late, provided this is clearly outlined in the lease agreement.