Excessive HOA late fees

Started by LynneV1 • 31 replies • 10210 views

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LynneV1 (South Carolina)
Posts: 211

Posted:

I would appreciate some input on this subject. My Board had an executive(private) meeting and decided on this without any input from or notification to our community members. And they went retroactive on the prior assessments. This was hidden in the minutes to that meeting.
"A $25 late fee will be assessed monthly on day 21 of each month until payment is made **Also a $5 monthly fee is additionally assessed by Management Company. "

Our HOA fees are $115 /quarterly due Jan 1st , April 1st, etc.. A neighbor was just charged $60 late fee for being 2 mos. late on a $115. payment. That's more than 50%of the amount due . It would be $360 per year for each quarter missed. So, if some one goes into foreclosure that over $1400. on yearly $460. HOA dues. Is this even legal in So. Carolina??

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Read your documents it will tell you what the HOA can raise dues to yearly. Plus the late charge isn't that unreasonable as banks charge a similar fee for returned checks. I am not sure about what the additonal $5 fee is to the PM is about but it also sounds reasonable. Overall, I have to say it does sound within guidelines and reasonable for what they past. Never have to worry about it as long as your not late or not paying assessments.

HOA's typically do NOT foreclose until way after a lien is filed. The great thing about liens or foreclosures? They stop as soon as you pay them! Imagine that? So if your not making payment arrangements with your HOA to catch up, then you suffer the consequences. I can't feel sorry for anyone who doesn't pay their dues on time or at all. They should be punished by having a late fee or face lien/foreclosure for it. The less someone else pays the more I may have to pay with my assessments. Why wouldn't I want some kind of punishment or way to collect?

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

Lynn,

Late charges are normal in Associations. Our CC&Rs specify a 10% charge of the balance due for every month the payment is late plus the costs of collections (postage, administrative charges, legal expenses, etc.).

At times it does become excessive. Therefore, Boards should take this into consideration when applying the charges. However, and it's unfortunate, some individuals just don't pay unless they are hit with these type of charges. For example, I have two individuals that just don't pay until we send out our certified letters for being 90 days behind.

CarolR11 (Colorado)
Posts: 2,563

Posted:

Was your HOA not charging late fees previously?? If your own governing documents do not specify how much HOAs may charge for late fees, perhaps your state laws do. I've learned form John46 that SC is pretty loose, but take a look anyway. Melissa's personal opinion about what seems "reasonable" may not be legal.

LynneV1 (South Carolina)
Posts: 211

Posted:

I, personally, have never been late. But these are difficult times. For years we charged a one time fee of $20. per quasterly fee that was late. Then it increased to $25 per quarter late...Now $30 per month for some one who is already financially hurting? Even IRS charges only 5 % per month up to a total of 25% total for late payments of taxes......
I do not see anything in our by-laws or covennants about late fees only this: "The Board may establish reasonalbe payment procedures to allow or require payment of annual asessments in installments during the Assessment Year." and later on it does state
" The Board may assess owners: ... 3. Reasonable fines as may be imposed in accordance with the terms of the Declaration and By-laws".
I believe the latter is for fines for breaking specific by-law rules.

LynneV1 (South Carolina)
Posts: 211

Posted:

Pardon the prior typos - I depend on Spell Check---- I was hoping JohnC46 would know this. I believe SC was limited to 18 % late fees but it may have changed in the past 2-3 years. I googled it and got many responses that contradicted each other.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I take my queue from what banks charge for bad checks. Those rates have gone up over the years. Since a late fee to a HOA is similar to a bad check, I would want to charge the same rate as banks do. The banks are legally bound by the state and federal laws. So using them as a guideline for what the laws may be is a good start.

Former HOA President

KevinK7 (Florida)
Posts: 1,343

Posted:

I would check state statutes. Here in Florida I believe the state limits late fees and the amounts you described would surely exceed those limits.

KevinK7 (Florida)
Posts: 1,343

Posted:

Quote:

Posted By LynneV1 on 04/01/2013 10:57 AM
Pardon the prior typos - I depend on Spell Check---- I was hoping JohnC46 would know this. I believe SC was limited to 18 % late fees but it may have changed in the past 2-3 years. I googled it and got many responses that contradicted each other.

you may want to check to see if that rate is annual or less.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

if one pays one's bills on time late fees will not apply

pay your credit card late = ?????

pay your taxes late = ????

pay your car late = ????

etc

but pay your HOA late should be free ?

CarolR11 (Colorado)
Posts: 2,563

Posted:

The other part of your post that's troubling is how could the board make this decision in executive session? It seems to be a policy matter only and, at least in CA and most states I've heard about, the process to make that decision and the decision itself shouldn't have been secret and behind the backs of homeowners.

When the discussion is about particular named h'owners, that's a different topic and needs to be handled in executive session.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Lynn

I am not familiar with the usuary laws in SC. We have tons of PayDay Loan, Title Loan, type places so I expect SC laws are pretty loosey goosey on what one can charge. I am not saying there are no usuary laws but if memory serves me right they mainly apply to money lenders, not to associations collecting dues, fines, etc. Try paying a parking fine late. Do not hold me to any of this.

Our Covenants say late charges, interest, are not to exceed the rate permitted by law or 18% per annum but the Covenants then say we can also charge additional costs without limitation.

So I say if you owe us $100.00 for a year then we can charge $18.00 interest so you owe us $118.00 at the end of the year. Now if it "cost us" $100.00 to collect (lawyers, lien filing, phone calls, letters written, time is money type stuff, etc.) then you owe us $218.00.

Hope this helps.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

LauraR5 (Tennessee)
Posts: 220

Posted:

What do your covenants say about late fees? That wouldn't supercede state law, but it probably prevents the board from going in and changing it without community input.

And I really don't think you should make late fees retroactive even if you can. I do, however, think that late fees need to be high enough to give people incentive to pay. Ours are $20/month, and honestly when a credit card charges $25-35, I think we get put at the back of the list because it's less expensive to not pay us.

CarolR11 (Colorado)
Posts: 2,563

Posted:

Suspension of common area amenity privileges is very effective in my HOA, Laura. But your governing docs need to permit it, and you need to have privileges worth suspending and a way to enforce the suspension.

LynneV1 (South Carolina)
Posts: 211

Posted:

I appreciate all of your opinions. Their decision was posted as follows:

"Next BOD Meeting is April 3, 2013 at 6:30PM at the Clubhouse

All residents are welcome to attend. Participation is at BOD's discretion due to time constraints.

Prior Meetings:
February 13 Monthly Meeting
Feb 19 Exec Meeting
March 6 Meeting ."

So to find out about this change, you would have had to open the minutes. Most H/O do not go to the 3rd page on our web site and know how to manuever around. I believe a letter of explanation should be mailed out as today is April 1st and payments are due again.
When I was on the board, after 3 notices and 120 days we would contact a lawyer for collection. The HOA initially paid $100 for the lawyers time to file a lien. However - we have no lawyer now and have not filed liens on any one in arrears for the past 2-3 yrs. I believe this is their way of addressing the arrears issues.
And yes 18% per annum is fair. But, not 26% per mo. which is 312% per year.

LynneV1 (South Carolina)
Posts: 211

Posted:

Just found this under New Proposed HOA laws for SC:
"South Carolina Homeowners' Association Act"

" An association may impose a charge for the late payment of assessments. A payment by a member is considered late if it is unpaid thirty or more days after its due date, unless a longer period is permitted in the governing documents. A charge for the late payment of assessments is limited to the greater of fifteen dollars or ten percent of the assessment. "
So once this gets passed into Law - my question will be answered!
Thanks to all of you!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Lynne

Yes that act is proposed but it has been dead in committee for several years. I for one lobby my state rep and senator to keep it dead.

I do not want politicians and/or state beaurecrats controlling things. Ussually when they try to, they end up stepping on their own "tails".

LynneV1 (South Carolina)
Posts: 211

Posted:

I realize the SC H/O Act has not passed, but if our legislators feel that a $15 fee or 10% is fair for HOA's in the entire state of SC...my board should consider it fair for us too! Maybe they will reconsider.
Uniform rules and protection for homeowners is a plus, not a minus in my book.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Can the HOA charge whatever they want for a late fee? Yes.
Is it legal? Probably not.
Is any homeowner going to bring them to court to recoup the late fee? Probably not.

Tell your neighbor to stop being a deadbeat and pay his dues on time. LOL.

ValerieS2 (Michigan)
Posts: 244

Posted:

"Uniform rules and protection for homeowners is a plus, not a minus in my book."

I agree wholeheartedly. Just because Pay-Day loan predators and credit card companies charge excessive fees does not mean HOA's can or should.

GlenL (Ohio)
Posts: 5,491

Posted:

"Uniform rules and protection for homeowners is a plus, not a minus in my book."

I agree and that is what this rule seems to do. Any homeowner who is late has to pay a late fee which protects all homeowners against the deadbeats.

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

LynneV1 (South Carolina)
Posts: 211

Posted:

Thanks again for the input - But this h/o was charged 52 % interest for be 2 mos late. Next month it would have been 78& etc. No notice was sent in Jan or February.
We have a new management company and that was the 2nd payment due to them. The "deadbeat" neighbor signed up for the mgmt co to automatically debit her bank account. She owns a business and thought it came out in December. The board voted on this in secret behind closed doors late February and never notified the community. Our by-laws state all meetings are to be announced and open to the h/o.
Remember the board is voted in "by" the community and are supposed to be "for" the community.

GlenL (Ohio)
Posts: 5,491

Posted:

Quote:

Posted By LynneV1 on 04/02/2013 3:40 PM

Remember the board is voted in "by" the community and are supposed to be "for" the community.

Remember that these Board members are first and foremost homeowners just like you. While it might seem excessive to you and her, if she had simply checked her bank statement she would have known something was wrong.

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

GlenL (Ohio)
Posts: 5,491

Posted:

BTW Has she simply gone to the Board and explained the problem? If she is someone who normally pays her assessment on time they should have no problem removing the fine or part of it. The part to the MC may have to be paid after all there was paper work involved sending out the late notices and MC's don't work for free.

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

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

if she had simply checked her bank statement she would have known something was wrong.

Yep.

JanC2 (South Carolina)
Posts: 1

Posted:

It looks to me as though that Homeowners Act Bill that included the $15 or 10% fees was passed. See if you agree. It's so full of legalize. If you click on Full Text, you see a complete copy of the bill and at the bottom it seems to me to say it was passed in 2015.
http://www.scstatehouse.gov/billsearch.php?billnumbers=18&session=121&summary=B

PitA
Posts: 1,416

Posted:

wrong

NOT yet passed

last action = scrivners error corrected (while in committee)

BarbaraT1 (Texas)
Posts: 821

Posted:

Late fees are meant to act as a deterrent. They are meant to encourage people to pay on time. If there are no consequences for paying late, you will have more and more owners paying late - or not paying at all - and that leads to limited cash flow, deferred maintenance, and disgruntled owners who ARE paying on time wondering why they bother since everyone else can just pay whenever they feel like it.

Homeowners who are financially strapped should contact their Association as soon as they know they cannot pay and make payment arrangements. In most cases, late fees are not assessed to owners in current payment plans.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Old thread reactivated for ???

BarbaraT1 (Texas)
Posts: 821

Posted:

Sorry, I didn't notice!

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