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ReneeD (Illinois)
Posts: 201
Posted:
We are an Illinois HOA.

Several homeowners have told me that our MC tacks on a late fee and not interest if payments are not received by the 10th. This is contrary to what our Declarations state which is "...that any charge which is delinquent for 10 days or more shall bear interest from the due date to the date when it is paid." It also goes on to say that "...the BOD may add a reasonable late fee to any installment of an assessment which is not paid within ten (10) days of its due date.

Our fees are due on the 1st of each month and, based on what I've now read and been told, I don't believe that our MC's collection efforts are being done in accordance with our Declarations. Am I correct? How do you interpret this? Thanks. -ReneeD

BrianB (California)
Posts: 2,820
Posted:
typically, interest is the lesser of the two fees that can be charged... most states limit the interest rates to very low levels.. a late fee is a much more punitive/costly fee, and get more attention.

For instance, we can charge a late fee of $15 for the month, which is 75% of our monthly dues... If we charged only interest, we could get about a buck, maybe a $1.25 out of a person. Unless the unpaid dues racked up over years and years, interest payments are hardly worth it.. Late fees are the way to go to get the attention.
RogerB (Colorado)
Posts: 5,067
Posted:
Renee, your Board establishes late fees and interest not the MC. So ask you Board what their policy is. The procedures you described are what we commonly follow,i.e., $10/month late fee after a 10 day grace period and 0% interest.

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