Late fees on fines?

Started by MelissaP1 • 23 replies • 654 views

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MelissaP1 (Alabama)
Posts: 13,836

Posted:

Someone posted a warning that the "HOA lady" was out and about taking notes/pictures. A comment came across that struck me as odd. They said "The PM didn't find anything last time so they put a late fee on my old fine". That does not make sense. Am I missing how one can charge late fees on a fine?

My former HOA we never fined. Plus late fees were only on dues. We paid once a month. Current HOA we pay dues once a year. Late fee is charged if not processed by September.

Is it odd a fine would get a "late fee" or is it common practice? My opinion is that isn't right...

Former HOA President

MichaelT21 (Arkansas)
Posts: 462

Posted:

Our current PM doesn't seem to be applying late fees or interest to fines. I have no idea if that is correct or not, we hardly ever fine people.

KerryL1 (California)
Posts: 14,550

Posted:

An owner told you this, Melissa? You've mentioned out owners indoor HOA don't understand the rules or anything else. Isn't it possible this person misunderstood whatever notice they received?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That is why I am asking Kerry. That seems odd. It is a new HOA so this seemed a bit suspicious of they misunderstood or the PM is shady...

Former HOA President

JeffT2 (Iowa)
Posts: 880

Posted:

Well, what is the exact wording in your documents about fines and late fees?

MaxB4
Posts: 3,513

Posted:

In a state like Alabama, who probably doesn't believe in much regulation, I can see them adding a late fee on just about anything their sweeet hearts desire.

KerryL1 (California)
Posts: 14,550

Posted:

Jeff's question is a good one, Melissa.Pleaae share your own documents on the point, not where you used to live.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The question still is has anyone heard of charging a late fee on a fine? That makes no sense to me. I can read my rules but this sounds wrong. Especially since fines are punitive charges.

I think this person misunderstanding the PM charges...

Former HOA President

CathyA3 (Ohio)
Posts: 6,299

Posted:

I haven't heard of a late fee on a fine, only on assessments. I also think it's odd, but.... It may depend on how fines are treated. In my state they're treated as assessments, meaning that we can foreclose for non-payment of the fines. In this case, we *maybe* could legally impose a late fee on a fine. But even so, the potential for abusing this is obvious, since we could "late fee" someone into foreclosure, and I'm pretty sure that state law did not intend that.

Yeah, it sounds wrong to me.

LoriM15 (Florida)
Posts: 1,009

Posted:

In Florida we can add late fees to fines. Our documents and the statutes allow us to charge interest on any late amounts. We charge a $25 late fee for every late assessment plus 18% interest monthly on the entire late amount.

Once the unpaid fines and/or assessments have been turned over to the attorney for collection, there are late fees on the whole amount, not just on the assessments and also there are attorney fees.

That's how the one big late account went from $3000 in fines plus 2.5 years worth of late assessments to over $14,000. It adds up quick.

KerryL1 (California)
Posts: 14,550

Posted:

What DO yours docs say, Melissa?

AugustinD
Posts: 1,027

Posted:

I see the Alabama HOA statute says that the Board may impose "reasonable penalties" for violations of the governing documents, following notice and a chance to be heard in a hearing. If the governing documents indicate late fees for fines may be imposed, then I think this is the way it is. (Here I am assuming the violation was resolved but the fine of course remains.) If the governing documents do not so provide, then I would hesitate to support a board imposing late fees on fines. Especially given the high likelihood the governing documents say that late fees can be imposed for failure to pay on time the regular assessment. Expressio unius est exclusio alterius kicks in.

I see the Texas Condo statutes permit a COA to impose late fees on fines, unless the Declaration says otherwise. It's a statutory "may" clause, so I think the Bylaws or Declaration have to say the COA can impose late fees for fines.

BillD16 (Texas)
Posts: 973

Posted:

Quote:

Posted By AugustinD on 11/17/2022 7:57 AM
I see the Alabama HOA statute says that the Board may impose "reasonable penalties" for violations of the governing documents, following notice and a chance to be heard in a hearing. If the governing documents indicate late fees for fines may be imposed, then I think this is the way it is. (Here I am assuming the violation was resolved but the fine of course remains.) If the governing documents do not so provide, then I would hesitate to support a board imposing late fees on fines. Especially given the high likelihood the governing documents say that late fees can be imposed for failure to pay on time the regular assessment. Expressio unius est exclusio alterius kicks in.

I see the Texas Condo statutes permit a COA to impose late fees on fines, unless the Declaration says otherwise. It's a statutory "may" clause, so I think the Bylaws or Declaration have to say the COA can impose late fees for fines.

I haven’t checked the statutes, but our PMC charges late fees on fines here in Texas.

I have mixed feelings on the notion.

BillD

HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By BillD16 on 11/17/2022 8:09 AM

I haven’t checked the statutes, but our PMC charges late fees on fines here in Texas.

HOA or COA?

Out of curiosity: Has your company checked what the governing docs say?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I do not trust the PM nor the developers who are in charge at this point. If you saw our CC&R docs they do not seem to be filed right. Plus my builder does not own the HOA it is the other builder. Our builder has different requirements but not documented in the rules officially. It is in their sales stuff.

Anyway it does not sound right to me. Maybe there is more to the story. We do have some that do not seem to play by the rules...

Former HOA President

JeffT2 (Iowa)
Posts: 880

Posted:

It's not exactly a late fee on fines, but it's actually a late fee on balance due (which is basically the same thing). If an owner does not pay the fine, then a balance will be due and a late fee may be assessed. The late fee is on the balance still owing from the owner.

It's quite common in some states, but specifically prohibited by law in other states. It should be prohibited, since it can lead to abuse.

In Alabama, fines ("penalties") are considered assessments. So unless late fees are restricted by your documents, then your HOA can charge a late fee on unpaid balances that can include fines.

So what is the wording in your docs about assessing a late fee? About fines (penalties)?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Thanks Jeff that sounds more like the situation I figured the neighbor did not understand what the charge was for. Someone else stated it happened to them too. I have not had the displeasure of a fine. Just a few warnings. I am sure have several neighbors new to HOA living that do not understand. I suspect they do have some fines stacked up...

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

It sounds like former HOA prez, Melissa, is unable to tell us what the governing documents of her assn. say about assessments, fines, etc.

JohnP47 (Washington)
Posts: 31

Posted:

Haven't checked out docs on this. To start off, the rules, fines, and fees are published and knowable by all owners. The reasoning for adding the late fees on top of fines is not to "abuse" any powers the boards or property mgt co (PMC) hold. It's to encourage compliance. The sooner you pay, the cheaper, and everyone can go back to their lives.

In my small 12 unite condo, here are the "burdens" assessing fines and fees incur:
1) owner dissatisfaction with their neighbor/board members. Showing this by ignoring the fine, complaining, bullying, and denying having violated the rule.
2) hearings and mediation
3) collection costs including time to compose and send letters, time to track and report on compliance, time to discuss and record in minutes; time to go to the post office
4) financial costs of paper, toner, envelopes, and registered mail,
5) interaction and communication costs of repeated check-ins with bookkeeper to learn if fines/fees are paid; referring uncollected fines/fees to a collection attorney or agency
6) legal representation risk should the matter end up in a court setting. This might draw in the master insurance policy, thus a
7) master policy rate increase risk
8) copycat risks of other owners/tenants seeing someone "get away with" their violation

I've been looking into the rules in various cities around AirBnb, short term rentals situations. Violate the city's rules incur risking treating each day as a separate violation and high charges per day. Fines, fees, and daily interest is also a tactic the IRS uses.

Fees and fines are the last resort—after the owner withholds voluntary cooperation or grudging compliance.

Increasing the "pain" is the only thing some people "get."

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By JohnP47 on 11/17/2022 11:56 AM
Haven't checked out docs on this. To start off, the rules, fines, and fees are published and knowable by all owners. The reasoning for adding the late fees on top of fines is not to "abuse" any powers the boards or property mgt co (PMC) hold. It's to encourage compliance. The sooner you pay, the cheaper, and everyone can go back to their lives.

In my small 12 unite condo, here are the "burdens" assessing fines and fees incur:
1) owner dissatisfaction with their neighbor/board members. Showing this by ignoring the fine, complaining, bullying, and denying having violated the rule.
2) hearings and mediation
3) collection costs including time to compose and send letters, time to track and report on compliance, time to discuss and record in minutes; time to go to the post office
4) financial costs of paper, toner, envelopes, and registered mail,
5) interaction and communication costs of repeated check-ins with bookkeeper to learn if fines/fees are paid; referring uncollected fines/fees to a collection attorney or agency
6) legal representation risk should the matter end up in a court setting. This might draw in the master insurance policy, thus a
7) master policy rate increase risk
8) copycat risks of other owners/tenants seeing someone "get away with" their violation

I've been looking into the rules in various cities around AirBnb, short term rentals situations. Violate the city's rules incur risking treating each day as a separate violation and high charges per day. Fines, fees, and daily interest is also a tactic the IRS uses.

Fees and fines are the last resort—after the owner withholds voluntary cooperation or grudging compliance.

Increasing the "pain" is the only thing some people "get."

This is why I won't ever live in an HOA again.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By MaxB4 on 11/17/2022 12:08 PM

This is why I won't ever live in an HOA again.

I agree and especially in a condo association. I know there are some good ones but it doesn't take long for incompetent Boards to come in and create a lot of damage. Buyer beware...

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Kerry my copy is on my computer at home. It does not matter as curious if anyone has ever heard of it before. I certainly never heard of late fees on fines before. Just on dues. Which even those can be forgiven in some circumstances.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

I have not heard of it.

I have heard of payments going 1st toward late charges, then fines, then assessments and have a late charge on the assessment.

I have also heard of fines being x amount per day/week/month until the issue is resolved.

BillD16 (Texas)
Posts: 973

Posted:

Quote:

Posted By AugustinD on 11/17/2022 8:14 AM

Posted By BillD16 on 11/17/2022 8:09 AM

I haven’t checked the statutes, but our PMC charges late fees on fines here in Texas.

HOA or COA?

Out of curiosity: Has your company checked what the governing docs say?

It’s an HOA.

We’re still transitioning to a new PMC - it’s a bit difficult to ask them questions like that one. Even harder to get an answer from the previous PMC (who were never particularly responsive).

BillD

HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”

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