Fines VS Late Fees

Started by ReneeD • 7 replies • 1782 views

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ReneeD (Illinois)
Posts: 201

Posted:

In the "grand design" of keeping tabs for (non)payment of late fees and fines, should separate accounts be maintained for each by the management company who is responsible for collecting out monthly association fees? Thanks. -ReneeD

RogerB (Colorado)
Posts: 5,067

Posted:

Renee, that depends on your controlling docs and state statues (some do not allow liens which include fines); or the choice made by the Board/MC.

NancyD1 (Florida)
Posts: 447

Posted:

They should be kept seperate because if a lien or foreclosure happens, state statues or your own doc's may specify what money has to be applied first. If you only collect enough for the late fees, you have the account. The balance can be written off. The write off that your CPA uses may be different also, you have to check with him.

Check your doc's first, then the CPA.

KathyS (California)
Posts: 145

Posted:

Our management company refuses to seperate the fines from the assessments. I have a letter from the owner of the management company telling me they won't do it, don't ask, forget it! As a result, homeowners are being charged late fees for fines or their assessment money is going to the fines. In California, it is illegal but the MC is doing it anyway.

It is very important that homeowners who have fines on their bills get a receipt for their assessment money. It might be an inconvenience at the time but it may save you a collection or foreclosure proceeding in the long run.

RogerB (Colorado)
Posts: 5,067

Posted:

Kathy, if your management agreement does not require the manager to use GAAP I suggest the agreement be amended. All good management companies should be using GAAP. If yours won't maybe you should say bye bye.

GloriaM (North Carolina)
Posts: 829

Posted:

Management should keep fines and dues as separate figures. When doing an account history for verification of the debt, the document should show the amount of the dues, late fees and any fines. Therefore the accounting on the Aging report should keep them separate.

KathyS (California)
Posts: 145

Posted:

Roger,

Could you explain GAAP?

Kathy

RogerB (Colorado)
Posts: 5,067

Posted:

GAAP
Generally Accepted Accounting Principles is the standard framework of guidelines for financial accounting. It includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.

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