Am I allowed to add a late fee clause in a lease for a Jewish tenant? Is it ribis?

Answer:

It is permitted to add a late fee clause in the form of a single “fine” for late payment.

If one wishes to add a clause with a fine that increases over time ($50 for every day of late payment), a heter iska must be included in the document.

A clause in the contract can refer to a heter iska, and stipulate that all payments related to the contract that might involve ribis are subject to the conditions of the referred heter iska.

Best wishes.

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