New PM new payment rules

Texas-

Old system: dropbox accessible 24/7 or mail. According to R&R, "Each owner shall pay monthly assessments as assigned by the Board by the 10th of each month. On the 11th of each month, $50 late fee will be assessed for late payments" Payments that were put in the box by midnight on the 10th were not counted late. If late payment assessed in previous month, Neither board when it was collecting fees, nor old PM charged recurring late fees if only payment not made on time were late fees, ie, were not charged late fees solely on unpaid late fees.

New system under new PM: Dropbox accessible ~12/6, mail, or electronic portal- fee for CC no fee electronic banking. According to R&R same but, "Each owner shall pay monthly assessments as assigned by the Board by the 10th of each month. On the 11th of each month until payment is paid in full." Payment is counted late if not processed by the 10th. If the 10th is a holiday, of falls on the weekend, payment must be made before office closing on last day before the 10th. IE, in Oct. payment had to be made before 5:30pm Oct 7th. If a late fee is assessed, and next months assessment is paid on time but the late fee from previous month remains unpaid, an additional late fee is assessed.

I talked to the PM manager and asked for a copy of their rules and procedures and they printed a copy of our R&R. I asked for a copy of their own procedures, and they said they simply follow each HOA's R&R. However, the PM says we are responsible for when they are not going to be in the office and so payments not processed by them by the close of business on the 10th are automatically charged late fee on the 11th. Sometimes they even charge late fees when they are out sick, or the check scanner isn't working, and it is up to homeowners to challenge those late fees.

Texas code: Sec. 209.0063. PRIORITY OF PAYMENTS. (a) Except as provided by Subsection (b), a payment received by a property owners' association from the owner shall be applied to the owner's debt in the following order of priority:

(1) any delinquent assessment;

(2) any current assessment;

(3) any reasonable attorney's fees or reasonable third party collection costs incurred by the association associated solely with assessments or any other charge that could provide the basis for foreclosure;

(4) any reasonable attorney's fees incurred by the association that are not subject to Subdivision (3);

(5) any reasonable fines assessed by the association; and

(6) any other reasonable amount owed to the association.

(b) If, at the time the property owners' association receives a payment from a property owner, the owner is in default under a payment plan entered into with the association:

(1) the association is not required to apply the payment in the order of priority specified by Subsection (a); and

(2) in applying the payment, a fine assessed by the association may not be given priority over any other amount owed to the association.

What would be the point of assigning priority to payments if it is legal to charge fees simply for unpaid late fees? or is this not legal?

Is it legal for PM to break the R&R of the HOA by stipulating payments are due before close of business on last day before the 10th, and not make that change in writing or even verbally?

Many of us are frustrated by new PM, most of all that it seems like they are making up the rules as they go along, changing what they say from one conversation to the next or even mid conversation.

MaxM7

You are missing point of 209.0063: this section stipulates the order in which the payment is to be applied to the outstanding balance on the account upon receipt of the payment. It has nothing to do with when the payment was received or the application of a LPC to the account if the payment was received late. The full amount of the payment must be applied in the order specified, with no "short-cuts" if it is late to pay a late payment charge, before being applied to the account in order 1, 2,3, etc. A payment applied to a late payment charge should not occur until the 6th step in the application of payments process.

Why don't you make life simple for yourself and set up an automatic recurring payment regime with your bank so the assessment payment is received by the PM on the 1st of the month, which is probably when the payment is due anyway. Or, if the MC offers an auto-debit process, sign up for that so your account is debited on the 1st, 2nd, or whatever, and is never late.

I have never seen late payment charges (or past due interest) applied to previous unpaid late payment charges; we do not do so. Some MCs do so. I have no idea if it is legal or not.

Where is your Board in all this. The MC should not unilaterally be making changes to established processes, especially when the changes may conflict with the R&Rs of the Association as you suggest. Such changes should emanate from the Board, or at least be approved by the Board and distributed to the owners prior to implementation.

I hate to pay $150 to ask a lawyer a simple question over a disputed $150 late fee. But if I knew these practices were illegal, as to a laymen it appears they are, I might want to get a lawyer.

The bank process I described is an automatic send from your bank, the MC has nothing to do with it other than to receive and process the check.

Thanks for the reply Bill, I wish I had an edit button, i would make edits i see would make things a lot more clear. I'm not waking you up via text every time I reply am i?

Max

I forgot to mention, the documents of many associations stipulate when assessments are due and when they are considered past due.

You should read your Declaration to determine if it contains due and past due date information.

With Bill, you should have more c docs beyond solely the RR&R & the Bylaws. Th most import governing document is called different things. "Declaration" is common, but also some call it the "covenants,' "deed restrictions," or "CC&Rs." (Covenants, Conditions & Restrictions). It must be recorded in your county, which might not be required for your Bylaws or RR&Rs.

We sometime see here that in some HOAs, the Bylaws & Covernabts, are in a single document. That might be the case with yours.

A final important document is your "Articles of Incorporation," assuming you're incorporated.

Thanks, Kerry, and everyone for your replies, interest and patience.

There is an elected board of directors.

They have decided to remove the late fee for weekend of Columbus day (Oct 10th), but not for a time when I showed a photograph of dropping off the check on the 10th at 6:38 PM. I wish they would have either kept both late fees in place, or removed both of them, at least then I'd feel more understood.

Of course I will adjust the time that I pay now that I know the effective policy is that payments have to be processed by MC by the 10th. That is not the issue. The main reason I started this thread was to try to find out if the change in policy that late fees could be charged solely for unpaid late fees was legal. It has not been our practice to charge late fees solely for unpaid late fees. The reason this came up was because on a month that I had paid the assessment by the 29th of June, before it was due, I was charged a late fee in July that I had no reason to know about. It wasn't until I challenged the late fee that I was told that someone was sick at the MC and that is why the late fee was assessed and that is also the time that I found out about the change in policy about charging late fees solely for late fees. In the board meeting around that same time when this was brought up, the MC's reasoning for this being good policy, was "because payments are applied to oldest debts first".

After research, I can see that that being a good reason to charge late fees solely because of unpaid late fees is not true, and not a good reason for this policy change.

If they want the payments due on the 1st, late on the 2nd, I don't care, I just ask that due diligence is made in letting people know instead of only having them find out when it becomes a problem.

I have a real problem with the policy that late fees can be charged simply for unpaid late fees, and I hope you can see why.

Charging late fees solely on unpaid late fees does not really line up with the verbiage in our Declarations (I found a copy I had been emailed last year), R&R and Bylaws. They talk about penalties for unpaid assessments, not for unpaid late fees. The only verbiage that could warrant charging late fees for unpaid late fees is "paid in full" but, looking at older copies of the R&R, this was the same verbiage as when we were not charging late fees for unpaid late fees.

If this is our policy, so be it, I think this is very dumb, and I don't like it, but what I don't like the most is that it's not communicated clearly when it changes and one only finds out about it when it becomes a problem. And also I don't like being lied to about why this is a "good policy".

When it comes to when a payment is due, the Declarations says simply "when due".

Doing an email search of "by the 10th day" I did find one email that clarifies when payments are due. On may 7th, as we were changing to new MC, in the middle of a 21 line paragraph covering multiple topics with no paragraph breaks, I found, "After the 10th a late fee will be assessed regardless of the date on the check or when it was mailed or received. You must mail payments to XXX or use the XXX Portal or AutoDraft from your bank to ensure payments are received and posted by the 10th."

You can blame me for not being familiar enough with the word "posted" to understand exactly what was being said here. If I read this, I probably thought this pertains to the post office since the subject was about mailing checks and doesn't pertain to me since I wouldn't be mailing checks. I for one do not think this is a very good way to communicate a change in policy, burying the change in a sea of information without any paragraph breaks in between subject changes and only being signified by the word "posted".

I can not describe to you how badly communication goes between the MC and me. I know I can be argumentative, and I am working on that, but this MC guy is super squirrely and makes me look like Mary Poppins.

So, I'd say that there was probably decent enough communication between the MC and our board to make the changes clear, but between our board and us, I'd say the ball was dropped.

For many other reasons I have not included, I am VERY concerned for how things are going here at our HOA. A lot of us are and I only hear a fraction of it. I can say, I as an owner have dropped the ball in my mediocre amount of involvement in shaping things around here.

For further qualification about what I mean by MC being squirrely, back in August, when I was dealing with the late fees when someone was sick, (or the check scanner was down as someone else in the office told me speaking of the July debacle the day before yesterday), I was on the phone with the MC the morning of the day that happened to be a Board meeting day. When I asked him if it was our policy to charge late fees solely for unpaid late fees, he would not answer the question. He avoided answering the question over and over while at the same time telling me he had answered the question. I could not get a straight answer out of him. I think I caught him off guard and he didn't know how he wanted to answer that question, so he evaded in a very frustrating way. It was a very strange, bad conversation.

Later that day, in the Board meeting, he explained why our policy should be that we should charge late fees for unpaid late fees alone, because "payments should apply to oldest debts first". Everyone was convinced. This became the policy of our board after it already was the policy of the MC. Nothing in the Bylaws, R&R or Declaration has changed. No email has been sent out notifying us of this change, I only know about this change because it has affected me, and I challenged it as it was being adopted by our board. I didn't know that payments go to oldest assessment to newest assessment owed first, then they go to everything else after that, and didn't know this argument was just a made up reason to get the preferred policy of the MC to be the policy we allow.

From the the May 7th email, I can tell the MC and board had discussed the policy change thoroughly enough to include the change in verbiage to "posted" when normally we always just said "by the 10th", but that word "Posted" is the only indication of that change to policy in writing.

Bill,

I don't know if we are a Texas Property Code Section 209 Homeowners Association. Do you think this is important to know?

Personally, I would charge late payers as large a penalty as we can. I would also publicly shame them but that is just me.

AND you could get a LOT more people paying late if you advance the date due without telling them... Imagine all the shaming you could do! Wouldn't it be great!

If you're really diabolical, you could tell them about the change as cryptically as you could, hiding the one word that signifies the change in a 1000 word essay with no punctuation. Then while you're publicly shaming them, make sure you let them know how idiotic they are for not knowing about the change. But only after you've gathered 5 late penalties from the Columbus day trigger that got more people paying late so that you could shame them at the same time... gives a whole new meaning to public shaming. MUHAHAHA!