Late Payment Grace Period

Planning to make some changes re late payment grace period. Wanted to see what others are doing:

1. Is there a grace period requirement in your organizing docs? How many days?

2. Do you publish a grace period to your membership? How many days?

3. What is the actual grace period that you use - How many days?

1. Assessments are DUE on the first of each month, and become delinquent after 15 days. I have had associations where the delinquency period was the last day of the month, per their CCRs. It is not a grace period.

2. California statues require an Annual Disclosure of the association's collection policy and an statement for overnight payments.

3. Before a late fee is assessed, I look at which day of the week the 15th falls on. If it is on a weekend, I will wait until checks are posted Monday evening after the weekend.

One thing associations need to consider on whether they are self-managed or not. It does make a difference. Most management companies will keep the late fee as part of the collection process. Some though will charge an amount, and let the association keep the late fee, if they collect. The collection fee is paid upfront. Have to be careful because, if you waive, you may be losing money.

FYI. Per our organizing docs, late fees can be applied after 10 days. MC has been applying fees on the 12th (later if 12th falls on weekend or holiday). Just gave MC instructions to move it back to the 17th.

Gave MC instructions not to publicize that we pushed back the date.

About to print coupon books. (About half our owners still write and send checks.) Coupons state amount of late fee and due date (1st of month), but don't say anything about when late fees get applied. Not sure if we should add anything.

Thoughts?

Written policy: Due on the 1st of the month. 10-day restriction on applying late fees is in our CCRs - But no one looks at those. People do look at our Rulebook which says nothing about when late fees get applied.

So yes - it's consistent.

My rule of thumb in such cases like late fees or extra charges... Is to look at what banks/credit card company policies are. You know they are going to play by the rules. So if it's a $28 fee for a bad check then I know that would be around what we should charge. Grace periods on bills owed, I would look at what the credit card company grace time.

As for interest charges, that is usually put into your HOA's documents along the lines of %5 above the tax rate of your state allows. If it is not spelled out, then go look at the bank's interest charges. It won't be perfect, but you will be in the ballpark. Which is better than running the risk of being sued for "Loansharking". Courts don't particularly like it when a HOA may erroneously decide to charge 25% interest when the rate is more along the lines of %10...

They are using the max rate allowed in their home state. Most of the credit card companies intentionally incorporated in states with the highest allowable rates.

See the following article if you want to learn more:

http://www.cardhub.com/edu/usury-laws/