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Subject: COA billing question
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JeffT3
(Maryland)

Posts:4


12/18/2018 8:40 AM  
Hello, Should the COA or HOA keep a separate account and invoice between monthly dues and other charges like violation fines, late fees, special assessments, recreation fees, etc. or should it all be combine into one account and invoice? If more than one account should it be invoiced separately? Should dues and other charges be invoiced separately no matter what or can they be combined?
BillH10
(Texas)

Posts:359


12/18/2018 9:14 AM  
Jeff, at a minimum, each charge should carry its own item/identification number in the accounting system to facilitate accounting, report generation, and budgeting.

We maintain two or three types of accounts for almost all our clients: operational checking, reserve, and sometimes an operational reserve which is used by some clients to hold operational funds for large non-reserve items, such as annual insurance premiums which are accrued during the course of the year. Some clients with large reserves will "ladder" their funds into different savings type accounts to gain advantageous interest rates.

I recommend you and your board discuss why it may be useful to segregate the funds, and also discuss it with your accountant. As long as your accounting system can provide reports which segregate the items you mentioned I see no need to maintain separate accounts other than as I described above. An exception might be if you have non-assessment taxable revenues, such as from pool and common facility rentals, etc. Your accountant should provide guidance in such situations.
JeffT3
(Maryland)

Posts:4


12/18/2018 9:25 AM  
So your are saying just lump it all together and send 1 invoice
RichardP13
(California)

Posts:3511


12/18/2018 9:50 AM  
In a chart of accounts, different general ledger codes are set up as well as different posting codes.

For instance, one can bill on the same invoice, the regular assessment, a special assessment, maybe a parking space charge, a late fee and an interest charge for past due account.


Been there, Done that
SheliaH
(Indiana)

Posts:2464


12/18/2018 11:42 AM  
In our community, we have separate line items on our budget for all of this. When someone gets an invoice, related charges might be listed, such as monthly dues, late fee (if appropriate), returned check charge (ditto). Items that aren't as frequent, such as a special assessment or recreation fee (e.g. a seasonal pass for the swimming pool) would receive a separate invoice.

When it comes to an account STATEMENT, people want to know (1) do I own any money (2) how much do I owe and (3) how did you arrive at this figure. For this, I think individual charges should be listed separately and added up in a way that you can take one look and know exactly where you stand - and if there's a charge you need to question.

You can do whatever you like as far as combining everything or not, but since we're talking about invoices, I think you need to go with whatever's the easiest for the homeowners. You might want to work with your association accountant or property manager to come up with one or several and test them to see what's most effective.
JeffT3
(Maryland)

Posts:4


12/26/2018 11:18 AM  
Followup:

If you send an invoice with Monthly dues, parking, violation late fees, etc. and the owner sends a partial payment that would be enough to cover the monthly dues and not the rest, where does this payment get applied.

IE: the owner disputes some charges and refuses to pay but will pay the monthly dues. How would you know to apply this to the dues or which charge to apply to.

I would think that this would come into play because not paying certain things would have different repercussions than others would. If you take the partial payment and apply it to parking and fines, then the owner would be delinquent on dues for which they may possibly be foreclosed upon but will still have a parking space, where as if you apply it to the monthly dues and not parking you just lose the parking spot
RoyalP
(South Carolina)

Posts:698


12/26/2018 11:40 AM  
The answer will be found within your 'governing documents' and/or state law.

If, and only IF, unpaid fines and/or late fees become assessments then any payments are applied according to 'due date'.

And yes, the member 'could' lose their home over an unpaid fine.

Depending on state law of course.

? What says the corporate attorney ?
CathyA3
(Ohio)

Posts:243


12/26/2018 11:43 AM  
Posted By JeffT3 on 12/26/2018 11:18 AM
Followup:

If you send an invoice with Monthly dues, parking, violation late fees, etc. and the owner sends a partial payment that would be enough to cover the monthly dues and not the rest, where does this payment get applied.

IE: the owner disputes some charges and refuses to pay but will pay the monthly dues. How would you know to apply this to the dues or which charge to apply to.

I would think that this would come into play because not paying certain things would have different repercussions than others would. If you take the partial payment and apply it to parking and fines, then the owner would be delinquent on dues for which they may possibly be foreclosed upon but will still have a parking space, where as if you apply it to the monthly dues and not parking you just lose the parking spot




In my community we wouldn't send a single invoice that mixes the monthly assessments and fines. Homeowners receive a coupon book each year to use with their assessments, and fines appear on separate notices. Legally assessments are different from fines. The association can foreclose for non-payment of assessments, but not so for fines for violations. In addition, homeowners may dispute fines and the association may forgive some or all of the fines it imposes; however, there is no negotiating on the amount of assessments.

You should have a delinquency policy and schedule of fines that spell out when items are considered late, penalties for late payment and the order in which payments are applied when multiple things are outstanding. If you don't have these items in place, it would probably be better to direct partial payments toward the assessments. This could end up in court eventually, and courts often frown on association actions that they think are "abusive" - by directing partial payments towards fees first it may appear that the association is trying to force a foreclosure.
RoyalP
(South Carolina)

Posts:698


12/26/2018 11:51 AM  
'My' docs (valid in SC):

Article X Penalties and Compliance

Section 3 Fines

e) Collection of Fines: Fines shall be treated as an assessment subject to the provisions for
the collection of assessments as set forth in Article V hereof.



Article V is a 'mother' ;)





We pay-up or we are FORCED to move.
CathyA3
(Ohio)

Posts:243


12/26/2018 12:30 PM  
Posted By RoyalP on 12/26/2018 11:51 AM
'My' docs (valid in SC):

Article X Penalties and Compliance

Section 3 Fines

e) Collection of Fines: Fines shall be treated as an assessment subject to the provisions for
the collection of assessments as set forth in Article V hereof.



Article V is a 'mother' ;)





We pay-up or we are FORCED to move.




I stand corrected: Ohio condominium law also refers to fines as "enforcement assessments", which puts them in a different category than usage fees and the like. The law also specifies that, unless the declaration states otherwise, payments are applied to interest, administrative late fees and legal collection costs AHEAD OF principal payments.


As with so many other questions, the answers are in the declaration and in state laws...

RoyalP
(South Carolina)

Posts:698


12/26/2018 1:28 PM  
.....As with so many other questions, the answers are in the declaration and in state laws... .....


JohnC46
(South Carolina)

Posts:8267


12/27/2018 6:58 AM  
Royal

Do you know of any association in SC that tried to foreclose based on unpaid fines?

When we asked our attorney (one of the largest HOA Law Firms in SC) about this, he said he was pretty sure no court in SC would allow foreclosure based on unpaid fines. He said his firm would never represent an HOA in such an action.
RoyalP
(South Carolina)

Posts:698


12/27/2018 7:22 AM  
The foreclosure is based upon unpaid assessments.

The fine IS an assessment assuming the 'docs' were followed including the appeal process and notification procedure(s).

This is a Covenant !
RoyalP
(South Carolina)

Posts:698


12/27/2018 7:24 AM  
ps.

.....When we asked our attorney (one of the largest HOA Law Firms in SC) about this .....



sounds just like the bums we just fired - the SC Bar even voided their fee
JeffT3
(Maryland)

Posts:4


12/27/2018 7:42 AM  
Thanks for the replies. After reading them and some other threads that I found, it appears that how to apply partial payments is regulated by governing docs and state laws. Find out the order of applying the partial payments based upon that.

Next question is: After applying partial payments to the correct line items on the invoice, there will be a balance for the remaining items on the invoice. Do you just create a new invoice/statement for the next billing and included this info and new charges or do you just resend the invoice for the remainder and create a new invoice for new charges?

I am thinking the new invoice with all of the payment info, remaining items and any new charges.
RoyalP
(South Carolina)

Posts:698


12/27/2018 10:24 AM  
..... just create a new invoice/statement for the next billing and included this info and new charges .....


PERFECT
RichardP13
(California)

Posts:3511


12/27/2018 10:55 AM  
Posted By JeffT3 on 12/27/2018 7:42 AM
Thanks for the replies. After reading them and some other threads that I found, it appears that how to apply partial payments is regulated by governing docs and state laws. Find out the order of applying the partial payments based upon that.

Next question is: After applying partial payments to the correct line items on the invoice, there will be a balance for the remaining items on the invoice. Do you just create a new invoice/statement for the next billing and included this info and new charges or do you just resend the invoice for the remainder and create a new invoice for new charges?

I am thinking the new invoice with all of the payment info, remaining items and any new charges.



I would leave this up to professionals who know state laws and legally how payments are applied within your state. You have people giving advice on how payments are applied in Florida, which is completely different than how they are applied in California, which might be different in Maryland.

Been there, Done that
RoyalP
(South Carolina)

Posts:698


12/27/2018 12:09 PM  
ERGO:

Posted By RoyalP on 12/26/2018 1:28 PM
.....As with so many other questions, the answers are in the declaration and in state laws... .....







JeffT2
(Iowa)

Posts:464


12/27/2018 7:30 PM  
Posted By RoyalP on 12/27/2018 7:22 AM
The foreclosure is based upon unpaid assessments.

The fine IS an assessment assuming the 'docs' were followed including the appeal process and notification procedure(s).

This is a Covenant !


It may be a covenant (and presumed valid), but when brought before a court in a foreclosure proceeding, it may be judged 'unreasonable' and unenforceable. For example, the covenant may impose a burden on the property that substantially outweighs the covenant's benefits to the residents.

Foreclosing on fines? Doesn't sound too reasonable.
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