Late Fees/Billing

I'm a new board member in a Georgia HOA.

One of the reasons I ran is because I saw some things that were a bit concerning. One of the issues that we are dealing with is that we have a yearly assessment that is due on the 31st of January. Our CCR's etc. do not state a due date. Last year we also changed management companies and the assessment doubled from $150 a year to $300.

We are in a relatively affluent neighborhood for the area and right now 47% of our homeowners are past due with the 2019 assessment and have had a late charge applied (we have 130 homes).

Some other things.

One neighbor in my cul-de-sac who is is the type that is always super organized, on top of everything etc.. only found out that the dues went up and that they were past due because their mortgage company called them to let them know. They contacted the old management company, who referred them to the new management company who told them about the new fees etc.. They never received a notice about the new management company, the increase in the assessment etc.. They contacted me and only then found out that I was on the board and that there had recently been a board meeting (I would have made a point to tell them about it if I'd known they were not receiving mail). The Management Company is stating that they sent out a notice to this person and our secretary is blaming the post office as the reason this person did not receive the previous notices. After the management company was contacted about this this person received a past due bill with a late fee attached.

Another neighbor moved in mid last year. After I got on the board I was checking some of the HOA records after the one neighbor had the issue with the mail and noticed that this new neighbor was not even listed in the management companies system as the owner of the property. They had also been in touch with the HOA shortly after they moved in to submit a ACC request to change the color of their house which was approved. Yet, as recently as today their lot was listed under the previous management company who's mailing address probably different from the house in the our management companies system. When I saw that I reached out to them to see if they had received any mail from the HOA and they responded that they hadn't but were under the impression they they had pre-paid for the year. I diplomatically informed them about how it works vs what they understood, they are sorting out getting their assessment caught up, but have had a late fee and interest tacked on to their account.

Also, out of the 11 home sales in the neighborhood during the past year, 3, including that one neighbor have the wrong owner listed in the management companies system.

Given what I'm seeing here I'm inclined to think that we, the HOA, have some issues on our end. I've suggested doing a blanket 2019 assessment late fee amnesty for 60 days (ie: if your past due on the 2019 assessment, get it caught up in 60 days and we will waive the late fee), and sending a friendly reminder. The rest of the board does not seem to be receptive to that.

Our secretary is the designated contact person with the management company and was on the board last year. After the amnesty push back I asked them if we were in a similar position last year and this persons response was "I don't remember, it was on auto pilot for this kind of thing".

In my mind, if we have made some reasonable efforts to notify the neighbors of the due date and amount and a few are late, then a late fee is appropriate. But in our case there is some reasonable doubt, especially given how many homeowners are late, so I would think that using the carrot before jumping to the late fee stick would be more reasonable, and overall create less conflict. AKA, when we use the stick it's because we've taken extra effort with the carrot and you never responded, so we had to use it vs, we made a half hearted effort with the carrot and are now going to hit you with the stick.

Does anybody have any experience with this?

Lance

Sounds to me like the BoD did not manage the transition between management companies ... and, given that the new MC has records issues, the BOD is not managing that, either.

If you have that many owners in arrears, clearly that and the affluence is a mismatch.

Everyone knows there is supposed to be an assessment ... however, it is the job of the BoD to ensure the MC bills, and bills on time, and bills with the date due clearly shown.

Time to deep dive on the MC ... they don’t get a portion of the late fee, do they?

Also, somewhere there must be a due date for mandatory dues ... maybe take a look, again, to clear this up. If there isn’t, add some sort of BoD resolution for the date you have used in the past.

Lots of digging and fixing to do.

Being in the management field, I have handled my share of transitions, some good, some bad and some, well, pretty contentious.

Not sure when the transition happened, but one of the first things asked for is a owner list, which would include the mailing list, in the event there are off-site owners. Once the owners are inputted into the system, I send out a Welcome Packet on behalf the of the Board. It will have a letter from the Board notifying them of the management change, if they are on ACH to stop, how assessments will be mailed and processed, etc...

The notice of an increase should have mailed separately at least 30 days prior to the increase. In California, that is mandatory. If 47% of the owners were late on the payments and the Board was not informed by the MC, I would be alarmed.

As far as current owners, it depends on how the escrow process is set up with the MC. There could be instances where the new owners information is never forwarded and may have slipped through the crack with the transition. I have had instances where I was never given an owners list. But I am able to find any owner in any state within 10 minutes and your MC should have that capability and if not should get it. In theory, I could fix your owner list problem in ten minutes.

In my opinion, the MC was totally wrong in slapping the late fee without first going to the Board and sounding an alarm.

To George, as a MC, we do collect the late fees, once an owners has paid them. It is part of our contract/agreement.

I can only speak to what I would have done if the same thing occurred.

If letters and statements are coming back as undelivered, I have a way to check ownership changes through a title company. What I wouldn't have is a mailing address if was investment property. I would ask the MC if in addition to an owner list if there was a mailing list also. I would ask how current your rental list was.

The other thing I wold question, is how many people blew off the mail altogether. It happens. Knowing what happened a year ago should help if you can find the information.

I have always waived late fees for 6 months after a transition to make sure there is as transition as possible and work through any issues as quickly as possible.