Late Fees and administrative fees(IL)

Started by ReneeD • 6 replies • 5318 views

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ReneeD (Illinois)
Posts: 201

Posted:

Senate Bill 1051--condominium late fees. In response to court decisions, a series of cases in Illinois and other states, this bill amends Section 18 of the Illinois Condominium Property Act to limit late fees for delinquent assessments to the greater of $25 or 10 percent of the amount due. The bill also prohibits an association from charging late fees more than once for the same assessment payment.

Not sure when the above became "law". Our PM calls it an administrative fee and they are sending these 1st and 2nd notices; thee are recurring charges for each monthly assessment not sent in. Call it administrative or late fee, it comes across as trying to make a few extra bucks. Curious to know how other associations are handling their delinquent account. -Renee

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Our PM calls it an administrative fee

They are charging you an administrative fee to look up the account, determine that its late, print a late notice, put it in an envelope, stamp it, mail it.

It takes time and payroll to do all of the above work, and your PM doesn't work for free. We do the same at $50 per month. As soon as we started doing it, no one was ever late again. So it works.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Renee,

The difference between an admin fee (sometimes called a rebilling fee)) and a late fee is the the prop mgmt co gets the admin fee and the assn gets the late fee. Sometimes both are charged.

RickW (Illinois)
Posts: 169

Posted:

We charge homeowners a late fee of $25.00 when their assessments is 30 days late. In addition, our property management company now charges the association $25.00 for every Delinquency Reminder Letter sent out. Therefore, the association pays the management company $25.00 while the homeowner is also charged $25.00.

The difference is that the association is billed and always pays the charge while we collect from the homeowner only if they bring their account current. They are two different things and in theory, the association could lose money. I do understand that the preparation and process of sending delinquency reminder letters is time consuming. However, this used to be a part of services the management company provided without an additional charge.

I do believe it is a way for the management company to keep their fees lower and charge only for services necessary for each association. Unfortunately for associations, the number of delinquencies are on the rise.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Rick,

Most HOAs that I'm aware of pass on the mgmt co fee to the delinquent h/o. Sounds like your delinquent h/o's are getting off easy!

RickW (Illinois)
Posts: 169

Posted:

Quote:

Posted By MaryA1 on 09/07/2010 11:19 AM
Rick,

Most HOAs that I'm aware of pass on the mgmt co fee to the delinquent h/o. Sounds like your delinquent h/o's are getting off easy!

Hi Mary,

In effect, the management company fee is passed on to the delinquent homeowner as a late fee. However, we do have a couple of accounts that we are not able to collect on as of yet, due to foreclosures and bankruptcies. In these cases, the association is charged and we pay while we do not collect. An unfortunate circumstance of the economic situation.

Rick

MaryA1 (Arizona)
Posts: 7,043

Posted:

Rick,

I hear you! Which is why many HOAs are now including a "bad debt" line item in their budget. There will be some accounts where you will not be able to collect the delinquent amount and will have to write them off as bad debts. Although our delinquency rate is extremely low we do have to write off an account from time to time. Our attorney does credit reports on all delinquent accounts and advises the board on which ones are uncollectible. Sometimes it costs more to pursue the collection than the delinquency amounts to. And in some cases the member has also filed for bankruptcy. The bad debt write-off can always be reversed if at some point down the road the member pays the delinquency.

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