HOA late fees (Alabama)

hurrah for your pres .... now very few are late !

if you think $35 excessive, cite the law stating so

If your Board president is following the bank industry guidelines, maybe you can get the answer from your own bank. Otherwise, check if your state statues are online somewhere on the state's internet website (most have them posted) and do a few searches.

That said, I agree with John - $35 may seem excessive to you, but the entire point of late fees is not to make money, but to encourage people to pay fees in full and on time. If you know your fees are due by the 5th of the month, for example, you need to do what's necessary to ensure your property manager has the money by close of business that day, otherwise it's late, regardless of how it's paid. If there are extraordinary circumstances that created the delay, explain it to your board and they may waive the fee.

So if you pay your fees on time, you don't have to worry about how "excessive" the late fee is - if your neighbors have a habit of paying late or not at all, well, perhaps a few smackdowns in the pocketbook will encourage them to straighten up and fly right.

The amount of the late fee should be stated in your governing documents, or in the words of some resolution previously passed by your board. In any event, only the board has the authority to establish the amount of any late fee, no officer or board member, including the president, has the authority to do so, unless that authority has been granted by the bylaws or by a board vote.

Typically, no late fee, just like any law, can be applied retroactively (although some may try to). Just as with anything else, a person is entitled to know in advance what the penalty will be for non-compliance (or late payment). Once a late fee has been assessed, it's unlikely that changing it later to a higher amount will pass legal muster, unless there are provisions for adding additional fees the longer a bill goes unpaid. The late fee can be increased, but the new, higher amount can only be applied to accounts that become delinquent after the date the fee was increased. Again, this is not something that the president, acting alone, normally has the authority to do.

Glen, thank you! Well, according that code we supposed to pay $10.00 instead of $15.00!

Natalya,

I looked in Alabama statutes and the languages I found were applicable to banks, credit unions and credit companies. There was nothing specific about consumer contracts to non financial institutions. Therefore you will likely need to seek a legal opinion.

From what I read in those statutes it appears anything up to 5% of the amount or $18/20 (whichever is more) is allowed.

Again, you will likely need to seek a legal opinion.

Tim

Those Alabama business and financial institution or non-financial institution codes do not apply to non-profit HOA organizations.

There IS a set of codes that apply to Alabama condominiums.

These codes do not set or cap (nor does the HOA's bylaws and covenants) late fees, other than to say they should be "reasonable".

If, in addition to a late fee, any HOA also charges interest on unpaid dues, it IS capped at a maximum of 18% APR.

That would be interest charged that is in addition to any set late fee.

Extensive research across Alabama (just conducted) reflects that HOA fees are "all over the map": set fees, escalating fees depending on tardiness of payment, flat fee per day, fees plus interest, interest only.

Even if stretching the interpretation, calculating the fee as a percentage of the total annual fees, the calculation (at 18% APR) would be $28 per month on $155 dues a month. So certainly the president's suggested $15 or the old "I loved it" $10 late fee is far too low.

YES YES YES...the board needs to and MUST get a written legal opinion on this matter. To give up and forego valuable late fees is outrageous, especially when the delinquencies for this years board is QUADRUPLE what they were just 3 years ago. When the boards coffers are far too little and with ongoing delinquencies of approximately $20,000, there is no excuse for delay or non-action. $20,000 is a good bit more than a full month's dues income at $155 for 110 units!!! It also appears the board and property manager may not be filing liens, perhaps not even sending past due and demand letters. That is uncertain. I hope and pray they are.

Who else but a periodicly delinquent "dues payer" would wish to significantly lower late fees and applaud the lowering of those fees with such out of control deliquencies? Mighty strange to me.