Assesment Fees vs Late Fee VS PM (new) charges

Looking for feedback..comments made by our Association Manager as this all sounds rather fishy to me; couple other homeowners agreed. Read on....

Our BOD held their meeting earlier this week. On the agenda for discussion was alternative means to collect assessment fees. Our Community Association Manager was trying to convince our BOD to go along with the following idea [totally new!]:

If current month's fee not received by the 30th of the month, PM will send a letter to owner with a $30 fee stating they are late. If for whatever reason PM must mail a 2nd letter there will be a $60 fee. She wasn't clear whether the $60 fee is for non-payment to the first month or, if that charge represents non-payment to the 2nd month. However, she did mention that this would be an incentive for homeowner to get current before they are sent to the attorney. If she gets the BOD to approve, I'm pretty sure PM will call it something other than a late fee (based on recent legislation). Also, it will be considered PM revenue not the association, as she states, due to the research involved (what research?!?). The BOD Prez seemed to agree that association could not realize this revenue because of our not for profit status. IMHO, they should then stop fining homeowners left/right 'cause this generates revenue.

Background:
Section 18 of the Illinois Condominium Act amended recently limiting late fees on delinquent assessments to the greater of $25 or 10% of the amount due and prohibits associations from charging lates fees more than once for the same assessment. [good to know.]

Our association fees are actually due on 1st and, if payment is received after the 10th of the month, a late fee is assessed against unit owner's account. After 60 days, owner's file is turned over to attorney. [already knew.]

Renee, I suggest your Board establish Rules and Regulations on Delinquent Accounts policy if they don't have one (example attached). A late charge has nothing to do with being a non profit and is not taxable income.

The management company usually includes an hourly rate for those items which can be variable, such as delinquency notices. This should be part of the management agreement. I think $30 or $60 is high. We charge $40/hr in quarter hour increments; so a delinquecy notice costs $10.00.

Roger,

Roger, thank you for attachment. Also, there is nothing in management agreement regarding 'administrative' fees handling delinquency notices but it does mention if agent is required to perform any additional services the Association would pay agent $50 per hour. Additional services include but not limited to court appearance, reconstructed financial records, etc.

So, would the delinquent charges actually need to be spelled out or does this automaticaly fall under the description of additional services? If not, PM contract needs to be amended before BOD adopts this delinquency charge?

My two cents,
Renee, this sounds like the Board is sitting back letting the M/C dictate terms to the Board. Should be other way around. I think Rogers post and method was probably an agreement decided on between M/C and Board, nothing wrong with that and the results seem a lot more reasonable than having an individual dictate terms. I would be against her proposal on the face of it. This kind of action has to be Board initiated, IMO.

Eva,

I don't think our current BOD knows to read/comprehend our governing docs. IMHO, I think our PM is instructing our Community Association Manager to sell these additional costs to the BOD so PM can make money and in the process buckling down on homeowners to pay up before incurring additional fees from the attorney. It felt like I was at a theatrical play and not until some homeowner spoke up questioning her and the BOD's logic behind all this, CAM backed off and the BOD stated they needed to discuss this more before making any decisions.

As far as waiving late charges, I wouldn't know because BOD/PM does not willingly share this information. Our BOD meets every other month and the only input our Treasurer announces is Total Cash Assets.

Late fee increases have been communicated in our newsletter but there is no specific reference to collection practice/costs in management contract and no specific dollar amounts are referenced for collecting any late fees/interest/any other reasonable costs in our governing documents although the Homeowner Rules and Regulations Guide does mention a $10.00 late fee. When it comes to hierarchy of documents, wouldn't this be conflict to our governing documents?

Renee,
I don't know about conflicts with your documents but from reading the statements you made about how your association operates, I would venture to say they have a conflict with transparency, and I would bet your M?C is in the middle of that.

If your members are going to accept this kind of management, well, shame on them. But that doesn't mean you have to like it as an individual and what that individual does is a reflection of how much they care. You sound like you care, and are looking for the truth of the pudding. I wish you luck and sometimes the reward is in the fight and not who wins the game. You are approaching this in a reasonable manner trying to find out, in effect, more than the BOD and the management knows. Lots of people on this site with that understanding, it is really not that hard, many BOD have no idea, and many M/C look for someone to push around. That is why it is such a pleasure to read a post where the M/C does a good job, and some do.