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