Management company charging late fees

Started by LaraV • 9 replies • 254 views

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LaraV (Indiana)
Posts: 3

Posted:

So our HOA management company is charging a $50 late fee for monthly assessments paid after 15th of each month. Our bylaws say nothing about them being able to do this.Just wondering if they can do this without our bylaws being amended and our community voting on it.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By LaraV on 02/11/2024 7:59 PM
So our HOA management company is charging a $50 late fee for monthly assessments paid after 15th of each month. Our bylaws say nothing about them being able to do this.Just wondering if they can do this without our bylaws being amended and our community voting on it.

$50.00 seems excessive, is this your first late payment? I would call the property manager and ask that the late fee be reversed
provided you paid for that month. If the PM blows you off, talk to the board president.
Typically we reverse late fees if it is in the same month, a few days or a week, yes bleep happens.
People who are chronically late or that collection issues are not offered that accommodation.

DeanJ
Posts: 1,786

Posted:

Quote:

Generally there are 2 documents. The bylaws and the declaration. The declaration usually authorizes the board to establish late fees and procedures for foreclosure for delinquent accounts.

Will your management waive the fee? Maybe, but there could be a significant number of late pays in your HOA and the board wants to encourage people to pay on time.

TerriS6 (California)
Posts: 3,284

Posted:

Our late fee is established in the Declaration.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

While some states have a maximum late fee you can charge by law, Indiana has no such laws. The management companies has a list of fees for services it provides the HOA. It was voted on when the HOA decided to use the mgmt company and accept whatever the mgmt company charges for services. Dealing with a late payment is a service and they dont do it for free. They have payroll, buildings, taxes, insurance, etc, etc.

Indiana
Maximum late fee: No limit
Grace period: None specified

That said...... its easy to get around that. By law you can charge reasonable legal fees related to collecting dues. So if you state has a really low maximum like 5% per year, which is laughable when you divide it per month, the best solution is to hand it over to a lawyer who will charge his hourly rate to collect the fee from the person who is not paying. This makes it really expensive for them to be late. Example $200 legal fees on top of the $300 hoa fee. Still not paying? Tell the lawyer to start foreclosure.

Once people know this..... they will never be late.

SheliaH (Indiana)
Posts: 6,964

Posted:

I was about to say what Steve did, so there's that. The kicker is that the fee has to be "reasonable" and we all know the definition of reasonable depends on who's asking.

In my community, we list the late fee every year when we send out our annual budget (the collection policy is also attached). We also have a fee for returned payments (checks or electronic), which is based on what the bank charges, so take a closer look at that fee. If you're late AND the check was returned, I can see that jumping to $50.

When I was on the board, my colleagues and I increased rates two or three times over the 10 years I served. It wasn't about grabbing as much cash as possible, but we felt the fee had to be hefty enough so people would notice, as Steve noted. People can visit the property manager's office, pay through their bank online or through the property manager payment portal (I didn't recommend it because of the service charge), or use snail mail. We told people to allow 5-7 business days for snail mail payments to be received and processed (business days don't include weekends or holidays because the business office was closed). People can also choose to set up automatic payments, so there really isn't an excuse to be late.

If the money wasn't received by the 15th, you were assessed a late fee, regardless of how you paid it. The board could choose to waive late fees depending on the circumstances and the homeowner's payment history and its decision was final. So, if you were late in this instance, consider that an expensive lesson.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

LoriM15 (Florida)
Posts: 1,009

Posted:

Is the $50 one fee, or is it a late fee and a fee from the management company to equal $50? In our community, assessments are late if they are not received by the 10th of the month. On the 11th, the association charges a $25 late fee. The management company then charges a $30 (used to be $25) late letter charge. We can reverse the $25 association late fee if we think it was just a mistake or a once in a while thing. However, we cannot reverse the late letter charge from the management company.

I agree with others. Even though the amount may not be spelled out in your documents, there is probably language that allows the board to set reasonable fees.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By SheliaH on 02/12/2024 7:08 AM
I was about to say what Steve did, so there's that. The kicker is that the fee has to be "reasonable" and we all know the definition of reasonable depends on who's asking.

In my community, we list the late fee every year when we send out our annual budget (the collection policy is also attached). We also have a fee for returned payments (checks or electronic), which is based on what the bank charges, so take a closer look at that fee. If you're late AND the check was returned, I can see that jumping to $50.

When I was on the board, my colleagues and I increased rates two or three times over the 10 years I served. It wasn't about grabbing as much cash as possible, but we felt the fee had to be hefty enough so people would notice, as Steve noted. People can visit the property manager's office, pay through their bank online or through the property manager payment portal (I didn't recommend it because of the service charge), or use snail mail. We told people to allow 5-7 business days for snail mail payments to be received and processed (business days don't include weekends or holidays because the business office was closed). People can also choose to set up automatic payments, so there really isn't an excuse to be late.

If the money wasn't received by the 15th, you were assessed a late fee, regardless of how you paid it. The board could choose to waive late fees depending on the circumstances and the homeowner's payment history and its decision was final. So, if you were late in this instance, consider that an expensive lesson.

The average late fee for credit card in 2024 is $30.50. The late fee for my AmEx is $50.

The average late fee on a car loan is $25-$50.

If I pay my real estate taxes late, the fee is 7% or $70 per $1000 owed.

A $50 late fee is not unreasonable.

NA1 (Massachusetts)
Posts: 190

Posted:

I agree, $50 is not unreasonable. Ours starts there and goes up after a couple months. We authorize the MC to waive the fee for good reason. The goal is to get you to pay on time, not to get revenue or be badass about it.

Fines should be enumerated in a schedule by the board, and voted. They should be clear.

TerriS6 (California)
Posts: 3,284

Posted:

California is 10% of amount due or $10. whichever is greater unless declaration says smaller.

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