Help with understanding wording in Bylaws

Can anyone offer some guidance to this question that some of us on our HOA are debating?

Late fees - Our by-laws read 10% per annum compounded on a monthly basis....

To most of us it reads this...

$391 a month HOA dues x 12 months is $4692 a year

$4692 x 10% is $469.20 - which is 10% of your annual dues

$469.20 dived by 12 months is $39.10 - which is what the late fees should be on a $391 a month HOA FEE.

Is that calculation correct?

They have been charging $3.30 a month is late fees to to most of us this isn't correct. They are using .0083333% to get to $3.30

Math was not my strong point so if anyone can offer an advise, I would greatly appreciate it.

Could you offer me a better understanding how I would determine late fees on a HOA dues of $391 (monthly)?

I am so lost - i tired the on-line calculators and come up with the same amount of $39.10.

The association is undercharging on the interest.
The association took 10% (.1) and divided it by 12. That is how you got .0083333 as a multiplier.

If you are one that is inuring the interest for late payments, be happy and stay quiet.

If you are on the board, you may want to look up compound interest calculators online.

I am assuming that assessments are due each month. I say this because many HOAs require payment of yearly dues by the end of the year. As long as the total is paid by the end of the year, there are no late fees.
Someone should double check the following:

Compound Interest = P(1 + (r/12) ) ^ (12t) - P

where
P = principal

r = annual interest rate in decimal form

t = years

For reinfocement, see https://www.cuemath.com/monthly-compound-interest-formula/ and many other sites.

Example:
A member fails to pay the assessment for April, due on April 1. The member still has not paid by May 1. How much interest is billed to the owner's account on May 1?

Interest = 391 * (1 + 0.1 / 12)) ^ 12 (1/12) - 391
= $3.26

?
0.0083333% = 0.000083333 .

In other words, the board is using 0.8333 percent = 0.8333% = 0.0083333

This is exactly how it is worded:

Interest of Unpaid Balance:
Any regular monthly assessment levied pursuant to these by-laws or the Declaration, and as amended, which is not paid in full on the last day of the month in which assessment is due shall bear interest on the unpaid balance at the rate of 10% per annum, compounded on a monthly basis.

I am on the board for a Condo complex.

Monthly dues are:

1 bed $200
2 bed $268
3 bed $391

And darn near 35 residents out of 76 pay late because of the late fee being $3.30 for a 3 bed and $2.6 for a 2 bed.

I very much want someone to double check me. Because of the format of this forum, typos and post-os are too easy.

The board is doing this:

10% / 12 = 0.83333%
= 0.83333 percent
= 0.83333 per centum
= 0.83333 per 100
= 0.83333 / 100
= 0.0083333

After one month, the interest is $3.26.

I do not know from where the board is getting $3.30. Maybe someone is recklessly rounding, or they did not want to deal with pennies.

After two months, where two months of assessments have not been paid, and as CathyA3 pointed out, interest is accumulating on the prior month's owed interest. Interest is also accumulating on the principal.

If you want numbers, ask. Or give an example, and I will run the numbers but encourage you to ask about anything that does not make sense to you.

Aside that I think is relevant: Proper math notation is to put a zero in front of any decimal that is less than one. For example, for the number 1/10th or 10% in decimal format --

Wrong notation:
.1

Correct notation:
0.1

The zero is a reading aid recognized for a buzillion years by scientists and mathematicians, lest someone confuse the decimal point with a fly speck. I am dead serious.

Understood. This wording has a particular meaning in the world of financial math. It is the meaning I gave in my first post to this thread. See the formula I gave.

I think the problem you are facing is this meaning is entirely new to you (or it has been many years since you saw this back in secondary school, like grades 6 thru 9). It is easy to forget.

The unit is one month late. So the interest owed is $3.26.

As the kids say, "plug and chug."

Compound Interest = P(1 + (r/12) ) ^ (12t) - P

P = $268

r = 0.1

t = 1/12

Plugging in:

Compound interest owed after one m 268 * ( 1 + 0.1/12) ^ (12*1/12) - 268

Chugging using a spreadsheet or hand-held calculator gives $2.23 of interest owed after one month.

I advise you to use a spreadsheet. Keeping track of numbers and mathematical operators like + and / is easier.

You can ask this question at a math forum as well.

How about you try the calculation for the unit with a $200 assessment that is late?

The Board is charging correctly per your documents as you noted. My recommendation would be to change the documents to state a flat fee per month or a flat percentage per month on any unpaid amount as allowed by your State Laws. If they were charged $25 as a late fee each month they would potentially pay on time