HOA late fee

Hi, it's my first time on the forum. I am so excited to have a place to discuss and get instant feedback! I am a new board director and have a question.

A homeowner complains that he was trying to set up auto deduct to pay for HOA fee but it never got set up. He has to mail in HOA fee manually which is OK. But one day he got a letter from HOA attorney saying he was late for 2 months. He needs to pay the balance, late fee, processing and attorney fee. Besides actual 2 months HOA fee, he needs to pay additional $1000 for the misc. fee. Is it normal?

I suggest the homeowner to pull cancelled check to make sure he is actually late for 2 months (because he thinks he was only late for 1 month). However, I thought HOA company should send out a courtesy notice first before sending this to attorney and have homeowner to pay for attorney fee.

Please advise. Thank you!

FM, that is not normal. Did the HOA provide the homeowner with their delinquent collection policy? And why are you using attorneys for routine collection of delinquent accounts? The homeowner is responsible to make sure they pay and to pay Board established additional late charges and other fees.

Thanks for everyone's response! Now I know I should request a collection policy from the management company to verify if it's the right procedure. I feel it's awkward to have homeowner to pay such a high amount of misc. fee. The other board member who is on board for almost 5 years told me that we can help H/O to remove the fee but then the fee will come out of reserve. I think it’s even worse. Can board member revise collection policy if it doesn’t make sense?

A fee that the HOA decides to "waive" should not be "coming out of reserve". A fee is just that, a fee. It shouldn't be budgeted for, because no HOA knows what fees will be collected. It's not coming out of anything...it just is not being paid (IF the HOA decides to waive the fee).

FM...tell us a little more about your association? Condo? Townhome? Single Family? How many homes/units? How many board members? Do you have ALL your HOA's founding documents?

Finally, can a board member revise a collection policy. As you'll find SOOOO many times on this site (and it can be frustrating...)...it depends. A collection policy should be "rooted" in your CC&R. There should be an article/section in your CC&Rs dealing with assessments and homeowner obligation. If your collection policy is in line with the CC&Rs, then NO...a board member (or a full board) can PROBABLY not revise a collection policy. What you would be doing is revising your CC&R, which USUALLY require member majority vote to amend. With those crazy fees, IF they are in your CC&Rs, I seriously doubt you'll have a problem getting member majority votes to change those crazy fees...even if you have a lot of apathetic homeowners.

And, you're in California? I'm NOT, but I hear you have that Davis-Stirling (sp?) Act dealing with HOAs...

Also, WELCOME! I was new here, and I've learned SO MUCH over these last few months. This is an awesome site.

HOA's in California are required to adopt a collection policy describing its policies and practices in enforcing lien rights and other legal remedies for collecting delinquent assessments. The policy must be annually delivered to the members not less than 30 days nor more than 90 days immediately preceding the beginning of the association's fiscal year. Civil Code §1365(e); §1365.1(a).
Necessary Elements. The policy must include the association's policy for payment plans, imposing late charges and interest, the owner's right to dispute the delinquency, their right to internal dispute resolution and their right to request alternative dispute resolution with a neutral third party. Civil Code §1367.

And while Associations collecting late fees are limited to:

Civil Code §1366. Duty to Assess, Limitations on Assessments
(e) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent the association may recover all of the following:

(1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney's fees.

(2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.

(3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney's fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

Collections by the MC are not subject to the same limitations:

Brown v. Professional Community Management, Inc.
(2005) 127 Cal.App.4th 532
[5] Here, the language of section 1366.1, in context, contains no ambiguity. The statute prohibits an "association" from charging fees or assessments in excess of the costs for which the fee or assessment is charged. As noted ante, an "association" is a defined term under the Act, and the definition requires the "association" to be a nonprofit entity. In contrast, the Act imposes separate duties on a managing agent. (See §§ 1363.1 & 1363.2.) And those statutory duties are owed to the "association" and its board of directors, not to individual owners of separate property interests in the common interest development. (Ibid.) Significantly, the Act does not require a managing agent to be a nonprofit entity. It is clear, both from the definitions in the Act and from the separately imposed duties, the Legislature meant "association," when it used that term, and it meant "managing agent," when it used that term.

[7] We conclude the duty to refrain from the conduct prohibited by section 1366.1 is imposed solely on the "association," the nonprofit entity designated by statute as having the responsibility to manage the affairs of the common interest development. Section 1366.1 has no application to an association's vendors. Competitive forces, not the statute, will constrain the vendors' fees and charges. [127 Cal.App.4th 540]