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Late charges

Started by KimD7 • 8 replies • 2198 views

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KimD7 (West Virginia)
Posts: 5
Posted:
Can anyone advise what is the maxium amount a condo association can charge for late fees?
ie, a homeowner is 3 months past due with dues,(300.00) plus daily late charges that equals 1,350.
Past due notices has been sent every month since Jan.,but have been ignored. When placing a lien, is there a max amount we can ask for in late fees??
SteveM9 (Massachusetts)
Posts: 3,699
Posted:
There is no maximum per se.

One does have to follow state law on late fee charges, which varies by state.

But there is no maximum when it comes to other fees such as lawyer fees, etc to place liens, foreclosures. If you owe $300 and the HOA hires a lawyer for $5000 and other fees, paperwork, certified mail, etc, another $500, now you owe $5800. And yes, you would be required to pay.
KimD7 (West Virginia)
Posts: 5
Posted:
Thank you for your quick response. The State is WV & our bylaws state no more than 18%. Not sure what that means, would it be 18% of late fees charged or just add 18% of the past due amount? The homeowner owes over 1200.00 in late charges, plus 300.00 in association dues.
SteveM9 (Massachusetts)
Posts: 3,699
Posted:
Ask for a breakdown of the $1200.

PS. If the CCRs/bylaws of the HOA say there is an administrative fee (or similar) of $400 a month in addition to late fees, your out of luck. You agreed to the additional fee when you joined the HOA in addition to state law on late fees.
CharlesB17
Posts: 112
Posted:
Quote:
Posted By SteveM9 on 09/01/2011 6:58 AM
There is no maximum per se.

One does have to follow state law on late fee charges, which varies by state.

But there is no maximum when it comes to other fees such as lawyer fees, etc to place liens, foreclosures. If you owe $300 and the HOA hires a lawyer for $5000 and other fees, paperwork, certified mail, etc, another $500, now you owe $5800. And yes, you would be required to pay.

Steve, while this statement is true, there are some things to consider in applying your fees.One is, what is the customary amount that has been a reasonable amount for filing fees, Certified fees, and attorney fees.

I know for us, upon advice from our attorney, we charge 18% APR compounded monthly on the principle and apply as the late fee, and we charge $10 for administrative fees when we have to send a certified and first class demand for payment letter. And then, if we file a lien, we charge $150 for filing the lien. If the lien is satisfied, we do not charge for releasing the lien. However, our attorney has advised we could charge for that as well, if we would like. We decided not to, as we felt that the $150 still offset that cost and included that price in our original equation. Estoppel letters cost $150 and are generated automatically from our system.
The moral is, either consult your attorney and let them advise you on a "fair" fee structure or look at some filings in your local court. If you get taken to court, the judge could rule your fees are outside the standard norm and remove or reduce them. Either way, it would put you in bad light in the Judge's opinion if you are not in line with the "Norm".
Secondly, by making the fees so high, you are in essence defeating the purpose. We try to assist our member with bringing their dues current. So, we are somewhat flexible. Members bringing their dues current is our primary function. But, there are a few that do not see it that way.
I hope this helped.
SteveM9 (Massachusetts)
Posts: 3,699
Posted:
Quote:
and we charge $10 for administrative fees when we have to send a certified and first class demand for payment letter. And then, if we file a lien, we charge $150 for filing the lien.


You talking about an HOA that does things on its own, in house. Some HOA's do not. If you were to hire a lawyer to handle all of these things, the expense would be huge, thus passed on to the homeowner. After looking over all of the detailed lawyer bills, I doubt a judge would deny reimbursement.
CharlesB17
Posts: 112
Posted:
Does your ssociation use a MC, attorney, or outsource the collections? Or does you HOA/COA self Manage?
CharlesB17
Posts: 112
Posted:
Quote:
Posted By SteveM9 on 09/01/2011 8:32 AM
and we charge $10 for administrative fees when we have to send a certified and first class demand for payment letter. And then, if we file a lien, we charge $150 for filing the lien.


You talking about an HOA that does things on its own, in house. Some HOA's do not. If you were to hire a lawyer to handle all of these things, the expense would be huge, thus passed on to the homeowner. After looking over all of the detailed lawyer bills, I doubt a judge would deny reimbursement.

Very true statement. But then the Association does not have to defend those fees or dues in the court if they are outsourced. Their representative does. I guess it is unclear if they are self managed or outsourced. If self managed, the association will have to defend their fee structure for re-imbursement. If outsourced, then they do not need to wory about the fee structure, as it would be up to the outsourced entity to defend their fee structure. Upon initailly reading the question, it is / was not clear and I assumed by the wording, the association is self managed.
KimD7 (West Virginia)
Posts: 5
Posted:
Yes, we self-manage. Thanks for the replies.

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