Assessment Late Fees
Now that we are self-governing do our fees have to follow what the management charged? I found their fee schedule, but the Statements don’t quite follow their fee schedule. Somewhere I read “12% or prevailing interest rate of Housing Association Loans” but can no longer find that source. I don’t late fee numbers in our documents. Can the Board draw up a fee schedule? I am the volunteer accounting person, so that would fall to me. This would be less than the management was charging, which is the direction the Board wants to go.
• Late Fee $15.00 after 30 Days Past Due and $15.00 Monthly until Paid in full
• Delinquent Processing Fee $5.00 for each Delinquency Notification Mailed
• Postage for Certified Mail for Delinquencies after 90 days
• Send to Collections After 4th Month $50.00
• Lien Filling, includes release of lien $260.00
Do management companies make up what they want, and we are limited by law?
Thanks, again!
PS We got a bid for HOA insurance to save almost $700/year. I’m investigating 2 financial overpayments. It’s our funds and we’re willing to do the work.
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TYPO: “I don’t find any late fee numbers in our documents.”
FOUND IT!
CC&Rs Section 9
Any Assessment or installment thereof not paid when due shall be deemed delinquent and shall bear interest from thirty (30) days after the due date until paid at a rate equal to the greater of (a) twelve percent (12%) per annum or (b) the then prevailing interest rate on loans insured by the Federal Housing Association, or (c) the then prevailing interest rate on loans guaranteed by the Veterans Administration, and the Member shall be liable for all costs, including attorney’s fees, which may be incurred by the Association in collecting the same. The applicable interest rate on delinquent Assessments shall be determined on a daily basis. The Board may also record a Notice of Delinquent Assessment against any Lot as to which an Assessment is delinquent and constitutes a lien and may establish a fixed fee to reimburse the Association for the Association’s cost in recording such Notice, processing the delinquency and recording a notice of payment, which fixed fee shall be treated as a collection cost of the Association secured by the Assessment Lien.
Brenda,
Well done. The key to all of this is that you are allowed to pass on any cost you incur in the process of collecting any delinquent assessment including any attorney cost. But the key word is incurred. Most attorneys offer what is called a no cost collection service which charges the association nothing for their collection cost and simply adds that cost to the homeowners account. That contract and service is totally illegal under Arizona law and in your specific case your own governing documents. What these attorneys do is then run up the cost on the homeowner to up to 10 times the delinquent assessment and use any money paid by the homeowner to apply to their charges and not to the delinquent assessment. This again is totally illegal in Arizona. Don’t think for a minute that just because an attorney is licensed in Arizona that they will comply with the law of Arizona. The Arizona bar is a rubber stamp good old boys club and protects their own. Your governing documents are consisten with the current Arizona law contained in ARS 33-1807.
Dennis
Brenda,
With limited statutory restrictions the association is able to charge reasonable fees for its services. The assessment late fee is limited by law to a one-time payment of $15 or 10% of the late payment. recuring late fees are not allowed. The payment of $50 to send to collections is unreasonable, as is the lien filing and release fee. The collection costs are all added to the lien as you realize those cost, Assessment liens are statutory and do not have to be recorded to be valid. Most associations record those liens as a money-making option for either the attorney or the community manager, you do not need an attorney to record a lien. You are allowed to charge reasonable interest on the delinquent assessments. It cost less than $50 to file and release a lien each time. Why are you looking to gouge the homeowner with this unreasonable fee. If the homeowner is having financial difficulty already, why do you think it is OK for you to pile on this charge to unnecessarily record this lien. You can record the lien but keep it closer to your actual cost.
Dennis
This explains why the management Charged One Late fee $15.00, then the next line items are “Delinquency Processing Fees”.
RE: Assessment liens are statutory and do not have to be recorded to be valid.
Is this for us to set a Fee schedule-it doesn’t have to be in the CCRs beyond what is there? The only reason for late fees I can see is incentive people to pay and reduce sending out Late Notices adding costs. I was surprised to find around 50% members are late many months. AND we definitely want to go to our neighbors and find out if they have any issues.
Any suggestion for “reasonable interest”?
RE: Lien costs you saved me research!
Brenda,
Management companies make a lot of money off of delinquent assessments and have figured out ways around the laws that exist. Being self managed you have an opportunity to make this a better community and understand issues that homeowners have and work with those homeowners to find solutions. Don’t get me wrong homeowners are unconditionally obliged to pay their assessments and the association is entitled to recover any and all cost that they incur in attempting to collect those assessments including the value of the time for anyone to pursue those assessments. If homeowners don’t want the extra fees charged by the association, they can pay their assessments on time or if a hardship exist the onus is on them to contact the association and work out a payment plan that they can work with to get their assessments paid. People how refuse to pay assessments for any reason other than financial or medical hardships deserve everything that comes at them, and the association has the right to foreclose on their homes for as little as $1,200 of delinquent assessments or if they have been delinquent for over one year since the assessment was due. This is not a game and should not be treated as such by homeowners.
I believe that with a delinquency rate of 50% your association has a real issue that needs to be addressed. You need to first understand why this is happening and put actions in place to correct it. This could be friendly reminders or whatever the reason is. If people get in the habit of waiting many months before catching up on assessments, then that behavior will never stop, and you will find yourself in a cash flow problem and causes you to not be able to pay your bills.
Dennis
Hi Dennis,
Little did I know the one thing the management DID was charge late fees. I was stunned when recently reviewing statements to see how these fees multiply. When you use a lens of “community” it’s a better guide thus self-governing is a good match. I am glad we’re small enough to be doing this!
Always thankful,
Brenda