Does HOA have to specify late fee amount in rules?

Started by JohnH26 • 5 replies • 2496 views

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JohnH26 (Washington)
Posts: 1

Posted:

I understand they have a right to collect the fee. The right to collect is in the rules and in code for Washington state but nowhere do I see the any amount of the fee specified. It would appear that the board would have to approve a specific fee and notify the owners. Do HOA's typically specify the amount in the rules?

According to code:
RCW 64.38.020
11)Impose and collect charges for late payments of assessments and, after notice and an opportunity to be heard by the board of directors or by the representative designated by the board of directors and in accordance with the procedures as provided in the bylaws or rules and regulations adopted by the board of directors, levy reasonable fines in accordance with a previously established schedule adopted by the board of directors and furnished to the owners for violation of the bylaws, rules, and regulations of the association;

GlenL (Ohio)
Posts: 5,491

Posted:

Yes the late fee should be set in the collection policy, it also may be limited by an article in the CC&R's.

Studies show that 5 out of 4 people have problems with fractions

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Your HOA needs to also make sure it's in conformance of STATE laws in regards to how much late fees are. If it's done on a percentage basis, that has to stay within certain terms. I believe around 5 -6% above the prime rate is about max. More than that, you start stepping into some deep legal areas...

Our HOA charged $20 late fees after the 15th. Dues were only $50 a month. Pretty steep amount but the unpaid fees did accummulate with or without the dues payments. A member may pay all their dues on time but miss one payment and $20 could stay on your record as a balance. Although we usually over look this type of balance if it were ever less than $50. However, once it pretty much went over that threshold, it gave us an indication of history of late payments. The fees are collectible by lien ONLY if it is included WITH the unpaid dues. Otherwise, the late fees typically can't be the ONLY reason for lien/foreclosure. (In some states this is different).

Former HOA President

PamelaB2 (Missouri)
Posts: 16

Posted:

Quote:

Posted By MelissaP1 on 05/26/2011 3:01 PM
Your HOA needs to also make sure it's in conformance of STATE laws in regards to how much late fees are. If it's done on a percentage basis, that has to stay within certain terms. I believe around 5 -6% above the prime rate is about max. More than that, you start stepping into some deep legal areas...

OKLAHOMA INTEREST RATE LAWS
*Interest rates in the state of Oklahoma are dealt with in Title 15, Chapter 6 of Section 266. § 266. Legal and Contract Rates of Interest Pursuant to Section 266, in the absence of any contract concerning the rate of interest, the parties may not exceed a lawful rate of six percent (6%) interest provided under this Section. Furthermore, the parties may agree to any rate, as authorized by law, in a contract they agree upon. (Your covenant would be your contract. Does your covenant even state that the HOA can charge interest? If so, does it state a percentage? In Oklahoma, if it specifically says in the covenant that the HOA can charge but yet, does not give an amount the HOA board can charge only 6%.)

According to Section 3 of Article XIV, Oklahoma Constitution, any person taking, receiving or charging a rate of interest greater than that allowed will forfeit the entire interest. Moreover, any person or his/her legal representative can recover double the amount of usurious interest paid to any person, firm, or corporation.

Be sure to check to see if your covenant (your contract) actually allows for “late fees”.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Pam,

Good information. However, the original poster is in Washington State so only Federal and Washington State laws apply.

Since the thread is almost a year old, the issue might already be resolved.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

To insure consistency and avoid claims of unfair and/or unequal treatment, all fees, fines, etc. should be specified in writing somewhere.

We supply our homeowners with a coupon book to mail in their monthly dues. The amount of the late fee is printed on each monthly coupon (if mailed after the 15th of the month, the payment is XX dollars more). This is similar to the way some banks and loan companies collect their payments for loans, like a car loan.

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