calculations of fines for late payments...

Hey everybody - so far, our condominium association has not had a formal policy for collecting penalties for those who pay their monthly fees late. So far, this has been handled informally on a case-by-case basis, so we need to improve on how we are handling this....to make sure everybody is treated fairly and squarely.

I would appreciate your thoughts on how this is handled in your own associations. Advice, suggestions and such will be appreciated!

Oh yes, by the way - i sure am glad i found this discussion board....some mighty smart gals and guys hang out here. I am enjoying reading all your thoughts and opinions!

oljim, in texas

Good thinking Kerry. I definitely need to research this....and will let you know if i find something. Our own governing documents are pretty much silent on any specifics for this (other than the board does has the authority to levy fines); however, there may be something in our state condo law which addresses this.

Thanks!

oljim, in texas

You would need to look your association's CCRs and/or Bylaws to see what late fees can be imposed and the rate of finance or interest charges allowed.

As former board treasurer, I believe late fees should be used as a deterrent – if you don’t want to pay $25 or more on top of assessments, pay your fair share in full and on time. That’s why we use them (we pay monthly) and I think they work better with monthly assessments than annual because if you find yourself paying $25 in late fees every month, that adds up pretty quickly and should change your behavior.

Our board usually doesn’t waive late fees because assessments are considered late if not paid by the 15th of the month – they’re due on the 1st, so that’s plenty of time to send in the money, especially since our property manager also accepts payments electronically or you can visit the office and drop them off. However, if someone had verifiable proof the money was received on time (postmarks don’t count) or something really goofy happened on the manager’s end, the fee will be waived. We’ll also consider waiving accumulated late fees if someone negotiates a payment plan for delinquent fees and brings the account current within 90 days or less.

You should, however, be mindful of the usury laws in your state to make sure the late fee isn’t excessive, otherwise if you were to sue for delinquent fees, a judge might disallow them. We used $20 as the late fee for many years, increasing to $25 after I became treasurer 7 years ago, then $30 two years ago.

Once we refer our accounts to the attorney (after 60 days), we don’t bother with late fees because our documents allow us to accelerate unpaid assessments for the year (all unpaid assessments would become immediately due and payable).

Finally, don’t factor in late fees as part of your annual budget – when listing them as a line item under the budget, the line should be set at zero. Otherwise, it’s like you’re depending on people to pay late to make money, when in fact, all assessments should be paid by the due date so the association can pay its bills on time, fund reserves and all that stuff.

Jim,

Our penalty is outlined in our CC&Rs (10% of the assessment).

Our policy is to impose this charge when applicable and notify the residents. However, our policy also allows for the Treasurer, at their sole determination, to be able to waive up to 3 of those late charges per year. Any other waivers requires Board approval.

As Treasurer, I will typically waive the first charge of the year. This waiver is conditioned on the requirement that the account is brought current the following month.

When considering a second waiver, I look at the payment history of the account and any communications that may have occurred between the member and the Association. If there is a hardship or if payment history is good, I will offer a second waiver under the same condition (that the account must be brought current by the following month). I typically don't offer third waivers.

I hate dealing with interest rates as it can get complicated (is the interest compounded daily, monthly, yearly?). I prefer a flat charge. If your governing documents do not specify an amount, the board should propose a resolution that has a specific amount or rate (vs. one that says "as allowed by applicable statutes"). Check with an attorney if need be.

Tim

Excellent information everybody - and good food for thought. I knew i could count on you for some good thinking. Thanks much for all your responses!

oljim, in texas