Late fees

5 months past due. How to handle (IF) payment received for assessment only, no late fee included...

Reading past topics, I see that that when payment is received, the 'late fee' is paid first and the remainder applied to the 'assessment'. - Is this normal and customary, or do the docs need to be updated to reflect that payments are applied to 'late fees' first, and the remainder applied to assessment(s) due and owing?

Our docs, the HOA Act and corporation statutes give no guidance on this. Where else would I search?
Could you direct me to statute or give guidance in this matter?

While I realize the late fee could be written off for one lot, we are facing non-payment by the developer who owns 48 of 144 lots in the subdivision. (release of control occurred in 2007).

The way I have always seen dues paid when late is any funds paid on an account get deducted from the oldest debt.

Many PMCs get paid directly for late fees. In Ca. our PMC would bill us directly for everyone who was late at the end of the month. 15 accounts late we would pay $150.00 to the PMC. If the debt went uncollected the HOA lost. IF the HO went bankrupt owing us 100.00 in late fees the PMC has gotten paid and the HOA loses their chance to collect. I always have a problem when HOs request late fees to be waived because the HOA has already paid them.

MarkM19 identifed the application of payments regime in Texas.

Funds received are applied first to Past Due Assessments, then Current Assessments, then down the line to other fees such as attorney expense, late payment charges, interest, etc.

Following this sequence ensures payments are first applied to the debt from which the other charges emanate. It stops the accrual of interest and reduces the foreclosure risk as associations can only foreclose for past due assessments in this state, not all the other costs of collection.

In California, Civil Code will dictate how payments collected are paid towards one's account.

Most management companies charge an HOA for late fees charged to a homeowner. I made it a practice to charge the HOA the late fees only after the homeowner has paid. This also applies to pre-lien and lien fees. My first responsibility is the collection of the association's assessments. If the Board chooses to waive late fees in order to collect all the assessment, they are in a better position to do so. I don't rely on late fees as a source of income.