Late Fee Schedule

I'm looking for examples of Late Fee Schedules that will work. I'm thinking 5% after 15 days, then 10 % for every 30 after and only applying the late fee percentage to the fees and assessments, not including previous late fees.

Thoughts?

Thank in advance.

We met with an attorney last week and this was one of the topics. Our CC&R's do not state what the late fees are. They do say that the board can charge fees for late payment.

I'm just looking for examples of what works. Once I see that, I'll check the legality of it.

Care to share what you late fee schedule is?

Not really looking for state max, but thanks for the info.

Does anyone have an example of their late fee schedule? Or does everyone follow state law/CC&R's to the letter?

The language below is from the Declaration of a 12 year old condominium complex in the Dallas area with specific language which refers to Regular Assessments only:

Failure to pay the Assessment by the fifteenth (15th) day of the month shall require the imposition and assessment of a late charge of ten percent (10%) of the amount of the Assessment due, or such amount that may be established by the Association from time to time.

Under the language above, the 10% would apply to the Regular Assessment amount only and would not be 10% of any other outstanding charges such as fines or previously applied late charges. The documents for this Association are silent with respect to charging past due interest.

We personally believe this language should have also made reference to late payment charges applied to Special Assessments.

I have my own rule of thumb....follow state laws

There can be state law limits (like the interest rate on a credit card) but there can also be additional "overhead costs" added in.

We had one owner that was 3 years behind in dues to the tune of $1,800. With all additional charges, late fees, legal charges, etc. the bottom line would have been $4,200 to pay is all off.

Example:

Assessment is 300.00 per quarter. Late fee is 5% after 15 days late, and 10% after 30 days.

If not paid in 16 days:
300.00 assessment
15.00 late fee
315.00 is due

If not paid in 35 days:
300.00 assessment
45.00 late fees.
345.00 is due.

In your respective associations, does this continue to build? Say it goes past 60 days, do you ad another 10% of the assessment to the late fees. The way the law seems to be written, it's a one time fee. Unless I'm reading it wrong.

To give you a better idea of what we're battling, we have some resident that will wait 9 months and pay 900.00. I want them paying on time, or early. So, I'm looking for "motivation" to get these payments made either monthly, or quarterly as the documents require.

The attorneys we use for our clients have POA specialized practices and include collections in the services they offer. So, if you have access to a POA attorney, ask him or her.

When I joined the board, the attorney we had at the time was good but fairly conservative in what he did regarding collections - it wasn't that he didn't like it, but I think stuff like rule enforcement and amending the documents was more his speed. Eventually, we switched to another firm where our attorney specialized in HOA collections (his family ran a collection agency and we worked together when he was a law clerk - I referred his firm, but then stayed out of the final consideration and vote to ensure there was no possible conflict of interest, although there really wasn't one).

To begin, I think the collections attorney should have EXPERIENCE in handling HOA collection cases, because there are nuances in that type of collections vs. actions against people who don't pay off their credit cards. That's why you really need to ask for references and CHECK them. I also I also like attorneys who are willing to teach and explain things in plain English so the board will understand why a certain action is being recommended or not - they have the final say anyway, so why not make an informed decision. Your attorney should be willing to help you review your collection policy from time to time so it lines up with state and federal law and you've tweaked, added or eliminate tactics that just don't work. Ideally, your policy will stop delinquences early and often before you go to the attorney and spend bunches of money with nothing to show for it.

Speaking of money, get someone who'll provide a fee schedule, so you can make a decent estimate on how much this will cost the association and when you get the bills, they should be itemized. Our attorney was fairly liberal with answering quick questions on specific accounts, but you need to know if you get billed everytime there's a phone call or email - you might consider looking for someone who will give you a certain number of hours at no cost and then you can better decide when to contact the attorney (emails may turn out to be cheaper than a phone call).

Our attorney also had a website for clients so you could check on what was going on in specific cases. Although our attorney sent that information to our property manager for the management report, as treasurer, I found it useful to check the website to get the very latest information and present that during the meeting. That way if something needed to be done relatively quickly, we could tell our property manager and it was taken care of the next day instead of waiting a day or two before the attorney contacted her, then she contact me or the president, update the attorney and so on.

Finally, ask about skip tracing - some attorneys do this in-house, others hire someone - it doesn't matter how it's done, but how effective it is. The attorney can tell you what he or she will need at a minimum, and you might be able to set up some in house protocols with your property manager to gather that information in advance. And while they're doing that, please be sure your attorney is well versed in federal and state laws like the fair debt collection act and fair credit reporting act - you don't want someone doing something that'll get you in trouble with your local attorney general's office or the FTC (fines for violating federal laws like the fair credit reporting act are really hefty).