$50 per month late fee for dues

good idea, solid principle.

make sure your by-laws don't restrict the amount you can charge (sounds like you did your amendment and all, so you should be good), and make sure the state doesn't have any limits on what you can charge (i believe some states set a limit on a late fee or % you can assess).

in MFHOA, the monthly due was $20, and the late fee was $15... in my current HOA, the annual due is $110, and the late fee is $10... go figure! It added up fast in the old HOA.

Good point. I should check out state law. Worst case scenario we could make it $10 late fee and a $40 administrative paperwork processing fee or something like that.

Better watch out not to charge 'criminal interest rates'. In some jurisdictions it doesn't matter what you call the fee, it would still be considered 'interest' for purposes of calculating if you are exceeding the criminal interest rate (loan sharking).

Here are some good court cases that back up the fee.
http://www.dcba.org/brief/junissue/2001/art50601.htm

http://74.125.95.132/search?q=cache43-DOiEqucJ:www.piac.ca/files/garland.pdf+Section+347+aggregate+of+all+charges+and+expenses,+whether+in+the+form+of+a+fee,+fine,+penalty,+commission+or+other+similar+charge+or+expense+or+in+any+other+form&cd=17&hl=en&ct=clnk

Try that link again cause it seems to have converted part to a 'shocked' happy face emotion.

Steve,

Normally fines are only for CCR violations; late fees apply to delinquent assessments. AZ has limitations on fines, but it's for fines for CCR violations.

I'm not worried. The association fee is $200 per month the late fee is $50 month. We had 100% owner vote of this fee and the CCR's have been amended.

I am not a lawyer, but you might want to take a look the general laws. Based on the information at the following site you may be violating laws against usury.
http://www.lectlaw.com/files/ban02.htm

MASSACHUSETTS, the legal rate of interest is 6%; the general usury
rate is 20%. Judgments bear interest at either 12% or 18% depending
on whether the court finds that a defense was frivolous.

As I think of it, I can't imagine how this wouldn't be usury in any state. It amounts to a 300% interest rate.

Not so Steve. It applies where someone is charging late fees/interest for overdue payments. In the case I cited it was a gas company (other cases involved that was charging fees for an overdue bill. Funny thing is the court found for the plaintiff and against the gas company but then, because the gas company was a regulated utility, the gas company went to court to have the court cost/award paid by it's customers.

So the Gas company broke the law by charging its customers too much, and then it turns around and those same customers have to pay for the gas company's criminal activity!!!

For us, "Code makes it a criminal offence to enter into an agreement or arrangement to receive, or to actually receive, "interest" on credit in excess of 60 per cent per annum of the total value of the credit advanced."

The latter part is important, because even if the intent wasn't to exceed 60% if I pay an overdue bill say 1 day late and that causes the annualized interest rate to exceed the limits then the biller has still broken the law because they 'received' and illegal rate. As I also said the courts here have 'read down' (adjusted) the rate to below the criminal rate rather than wiping out the debt/interest entirely, however, other jurisdictions have done the latter.

Well technically, if you sue the HOA, it comes out of your pocket too. The HOA legal fees will be ultimately paid by "you".

That was my point of my last post. Give me another reason to NOT charge the fee. But it has to be replaced with another incentive to get people to pay the dues. $50 is only a 25% late fee. High, but not outrageous. Our only goal is to have dues on time. Not a money grab. The BOD would be quite pleased if no one had late fees, but everyone paid on time.

Yes, we have thought of their financial difficulties. Its more of a priorities problem, vs. a money problem. The people that are late regularly have no problem spending money, except on the condo dues. The people that are late have no problem buying the latest iPhone, HDTV, new car, etc.

The penalty was so low in the past, people just put it off until they were months behind. And when they did pay, it really didn't cost them much more than if they were on time in the first place. This is easy for them to just ignore it and pay later, but creates huge money issues for the association.

We are not being selective. Its set in stone; if your late you pay, every property, no exceptions. I've heard a bunch of excuses so far, but people have paid.

Steve,

You say your collection policy is in your CCRs. Do you mean the CCRs state what the assn's remedies are to collect delinquent assessments. My CCRs have that provision also, but it's not the same as a board-adopted collection policy that tells the member exactly what happens each month that the assessment is delinquent. It also tells the member what the attorney fees or collections fees might be if it gets to that stage. Also, instead of just levying one late fee, if your CCRs allow it, you can levy a late fee for each month the assessment is late. And, don't wait until the delinquency is 5 or 6 months old to take legal action -- 3 months should be the limit. Being fact with going to court to dispute a lien and having to pay the court costs and attorney's fees should be a big deterrent.

First, you stated $50 a month for each month late. That is a 300% rate of charge. (You need to figure the annual cost, not the monthly cost.) While perhaps a single $50 fee followed by a low interest rate is reasonable, your rate is outrageous.

I can not wish you bad will, but do hope somehow you can lose the comfort with which you condemn those who may be struggling with their finances. Considering the current unemployment rate I would think you might start to realize that being in financial trouble is not a character flaw.

Instead of condemning those who are late for some reason you might instead focus on helping them. I have met some Board members who found great success by calling the late people and asking if there was a problem.

Steve,

I agree with Kirk that the BOD should be trying to determine why so many members are continually late. To just think they're not having financial problems because they're able to buy ". . . the latest iPhone, HDTV, new car, etc." is being short-sighted. Many people are so materialistic that they spend money they don't have (credit cards). Listen to Susie Orman sometime! People are tens of thousands of dollars in credit card debt for eating at McDonald's every night! Outward appearances don't mean anything; it's what you have in the bank that counts and no one can see that! Your $50 late fee is outrageous and I'm surprised no one has complained about it. Of course many people just automatically think the board can do whatever they choose and let them get away with it. But, charging such a high fee just because you think the members can afford it is not right. That's making unfound suppositions just to justify your actions.

Whatever the excuse as to why they didn't pay, it would not change the outcome. It might be late fee, foreclosure, fine, etc. So the "reason" means nothing when enforcing rules and regulations on late fees.

The CCR's are to be followed without prejudice and one cannot make exceptions depending on the excuse. Many people run in to trouble with running HOA's and favoritism. They let one owner do something, but don't let another do the same thing.

Steve, the Fair Debt Collection Practices Act doesn't address Criminal interest rates so whether a Condo is bound to the FDCPA, or not, doesn't really matter.

Kirk provided the link for the state usury which gives a state by state breakdown.

http://www.lectlaw.com/files/ban02.htm

As is the norm for courts, our Supreme Court of Canada looked to at U.S. case law and how usury has been addressed by its courts.
Apparently we've gone in a different direction since sale of goods (home heating gas, other services) are bound interest rate limits. Further, rather than wiping out the entire debt as has been done in the U.S. if someone was found to charge a usurious rate here our courts simply wrote down the amount so as to bring it to just under the criminal rate.

Another angle they took was to go after several Pay day loan companies for charging usurious (criminal interest rates).

Today I see we're now going after credit card companies. Seem the politicians on both sides of the border are looking for some points with the public.

Delaware Code Title 6 Section 2301 states:

(a) Any lender may charge and collect from a borrower interest at any rate agreed upon in writing not in excess of 5% over the Federal Reserve discount rate including any surcharge thereon, and judgments entered after May 13, 1980, shall bear interest at the rate in the contract sued upon. Where there is no expressed contract rate, the legal rate of interest shall be 5% over the Federal Reserve discount rate including any surcharge as of the time from which interest is due; provided, that where the time from which interest is due predates April 18, 1980, the legal rate shall remain as it was at such time.

This is invoked by our covenants for interest on unpaid assessments and liens.

Our annual assessment is due in January and we offer a 10% discount for those who pay within 45 days. Those who don't pay on time are charged the full amount plus interest at the above rate.

The Delaware Uniform Common Interest Owners Act (Effective July 1, 2009) states that unless the declaration provides for a different rate of interest, interest on unpaid assessments shall accrue at the rate of the lesser of 18% per annum or the highest rate permitted by law.

DON ->
Was that a joke? Credit card companies "DO" charge more than $50 for late and other fees per month. You either have a good credit card or you have never been late. Credit card companies usually set up shop in states where there are no usury laws. Congress is finally looking at it, right now, but no action has been taken yet. They are looking into a federal usury law that will supersede state laws. Call it an abusive fee if you like, its legal and it works. I give a 30 day grace period, if your not late you don't have to pay it.

JAMES ->
Delaware Code Title 6 Section 2301 is for "lenders" A HOA is not a lender, therefore lender laws do not apply. Condo dues are a sale of goods. It is not a loan. It has been consistently held that a sale of goods to a buyer on credit is not a loan, and therefore such a sale is not subject to state usury laws. On that basis, courts have consistently upheld service charges, also known as delinquency charges, late fees, and finance charges.

Steve,

Honestly, do you really think a $50 late fee is "reasonable" on an assessment of $100! Please try to be objective with your answer. Frankly, I would be very surprised that a judge would think so. But, of course, this is really a moot point as the members of your assn have agreed to it, albiet stupidly, IMO.

I was going to shut up and let you have the last word when you reposted on the 27th but you are nuts if you think 50.00 is a 'reasonable' fee on a 200.00 monthly charge. People whine about bank fees gouging but 25% A MONTH is absolutely abusive and I hope the appropriate government level would look at it the same way they are looking at banks, credit cards and others who gouge consumers.

To all the haters......my association has 100% on time dues because of this late fee.

How is your association's delinquency rate?

One has to wonder why you are so defensive about this. You posted the process that your HOA uses. So far it seems to work for you. The other members of this forum don't think much of the idea, but again it seems to be working for you. So if it's all working so great for you, why do you feel it is absolutely necessary to argue with everyone here? Just accept that we don't agree with your process even if it does currently work for you and let it go.

From the URL posted by Steve:
"This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter"

I think this is a legal matter. All the same, I don't know what that has to do with the whole usury laws. I know that I would be collecting signatures to remove you from my Board.

Sorry, this all just doesn't sound believable to me. Clearly you have people who have been late. Not only do you mention that the majority don't ever pay late, but why would the issue come up if there were no problem?

Do I believe that you perhaps got 100% of those in attendance and "eligible" to vote for this? Yes, but that is a far cry from what you have stated. Your organization is exactly why there is so much legislative activity regarding HOAs.

I know you will never back down until shortly after losing your job. And while it isn't easy, I do hope that you come to the understanding that not all people who are late intend to be that way. And yes, I do hope that you and others on such high horses get to experience the "joy" of being laid off and subsequently hit with unexpected expenses. If only for a long enough time to understand that bad things happen to good people. Of course the "beauty" of it is that you won't be able to vote for the repeal. The good news is that my hope is that you will be able to save your house at the last minute.