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 Michigan, the lease agreement is indeed a crucial document outlining the rights of tenants and the responsibilities of landlords. A written lease provides clarity and legal protection for both parties more so than an oral agreement. Tenants should thoroughly review and understand the lease before signing. Regarding late fees, Michigan law allows landlords to charge them as specified in the lease agreement. However, the fees must be reasonable and are subject to limitations under Michigan's landlord-tenant laws. For instance, late fees cannot exceed the greater of $20 or 5% of the rental amount due per month, and they can only be enforced after the rent is past due for more than four days. The concept of good faith and fair dealing is also recognized in Michigan contract law, which means that a landlord's actions, including the imposition of late fees, should not be arbitrary or unfair. If a lease specifies a precise time for rent payment and emphasizes that timing is critical, then the landlord may be justified in charging late fees for even minor delays. However, such terms should be explicitly stated in the lease agreement to be enforceable.