Past Due Penalty

I think this may fall under what I had posted under another post. The HOA can charge late fees if it's in their documentation to do so. Of course the amount has to be legal. (Prime Rate is a good rule of thumb when using percentages). The HOA can't be a "Loan shark". Our late fees were set at $20 and we charged $50 a month. A pretty stiff penalty but allowable. However, we didn't use a percentage system.

What I believe this may refer to in layman's terms is that the HOA can't use the late fees as basis for legal actions such as liens/foreclosure. Example: Your dues are $100 a month and have a 10% late fee. The owner pays their regular dues LATE every month for a year but does NOT pay the late fee. At the end of the year that is $120 owed. The HOA can't lien for that $120 as it is late fees ONLY. That balance will just have to stay on the owner's record. Which means the owner is NOT in good standing with the HOA since they don't have a ZERO balance. A member NOT in GOOD STANDING may lose their ability to vote or run for an office. It depends on what the HOA says in regards to this.

However, IF the owner decides after a year to STOP paying their dues. The HOA can then lien the owner for backdues, late fees (past/present), interest, and legal fees for filing the lien. That means that $120 can now be added into the overall amount owed when dues are involved.

Confused? Basically, the laws are making sure that the HOA isn't loansharking their members and the interest rate appropriate. Otherwise the HOA is going to have a battle on their hands if an owner decides to push the issue in court. Keep in mind a HOA could waive the late fees if it would be a compromise to have the owner pay. If that doesn't confuse you more...