What is your opinion regarding changes to CCR's?

I would like to know your opinion regarding changes to the CCR's.

Specifically, our recorded CCR's state "each owner shall be obligated to pay assessments made pursuant to this section..... and any unpaid assessments shall bear interest at the rate of 12% per annum from the due date until paid,."

Because there are several homeowners who were continually deliquent, the association wanted to give them an incentive to pay on time. At as our budget at our last annual meeting we voted to change the late fee to a flat $15.00 if paid by the 25th of the month and $25.00 if not paid within the month the dues were owing. Every homeowner was advised of this change in writing, including those who never come to the meetings. The individuals who never come to a meeting are objecting to this now even though they have already paid 2 late fees of $25.00. They have never paid on time,had presented NSF checks and now refuse to pay $125.00 of accrued late fees. They contend that because the Association did not make the changes to the CCR's and file them in the County records we cannot collect this late fee and that we can only collect the 12%.

Any comments are appreciated. Thanks!

KarenT - A late fee is not the same as the rate interest accrues on an unpaid assessment. Therefore you aren't changing anything. Also DonnaS is correct with her post. If 12% accrual is not incentive enough, I don't know what is. Delinquent/non-payer must be a more politically correct way of saying deadbeat.

You asked for an opinion regarding changing a cc&r. If you were making a change, say from 12% to 13% my opinion would be to follow the percentage requirements of owners necessary to amend the cc&r's and not change anything on a board level without the owner's vote.

And charges back to the homeowner for the NSF should be covered by a policy set by the Board. That has nothing to do with late fees.

KarenT: You asked for opinions on changes to CCRs...if your association wants to impose another method for handling unpaid assessments, rather than to do what the CC&Rs state to do, then you are not following the official documents.
You can call it a 'rule' or the imposition of a late fee, but IF you are not charging the 12% on unpaid assessments until paid, and prefer to add a 'late fee', you are changing the directed process. This is an amendment change which must be officially treated as such.

A Board, preferrably with the approval of members present at a meeting of the members of the association, can establish Rules and Regulations (policies and procedures) on delinquent assessments. When they do not conflict with the Declaration of CC&Rs, late charges and other policies and procedures can be established. In fact, in Colorado the Colorado Common Interest Ownership Act REQUIRES common interest associations to establish these. It does not require amending the Declaration to establish late charges, fines, costs related to NSF checks, etc. If this is challenged in court the judge will consider first the Declaration and last the Rules & Regs.

- If the CC&Rs give a specific interest rate to charge on delinquent accounts that should be followed. If not followed, the Board (or PM when delegated) can be held accountable. However, CC&Rs often state "up to X% interest"; in which case the Board can select 0%. I am not a proponent of charging interest because it is usually so minor it provides no incentive to pay and the time and effort is not justified.

- Following the CC&Rs interest rate schedule does not preclude establishing Rules and Regulations when allowed by the CC&Rs. These Rules and Regulations can include a Collection Policy which can establish late charges, time and cost schedules for various actions, and other critical details. These Rules and Regulations can often be approved by just the Board, but it is better to also get them approved at an association members meeting.

DonN: ..."The best protection for the owners against arbitrary and capricious action of the board of directors is to prescribe the fees, interest and other charges in the CC&Rs." Thanks, you cleared up the CC&R change nicely!!!