Late payments, penalties and interest

Hi! Just found you folks. Think I'll be a frequent visitor and contributor based on how our HOA operates.

Anyway, here is question concerning late quarterly assessments.

Our association has an 18% penalty if a payment is one day late...plus an 18% per annum interest rate for the number of days it is late.

This seemed excessive so I did the math. It is around a 5200% annualized rate for being one day late. Obviously that charge goes down to 18% if you are late for a full year. Of course for a full year there's another 18% in interest due.

Are these numbers common in other HOAs? Either way, what type of numbers are in your HOA?

By the by, and no symppathy anticipated, we were late in our payment because my wife had 2 life-threatening surgeries (and now 7 months later she is still just getting back to about 90% normalcy).

Thanks for any information and advice.

Mike Mogil
[email protected]
239-592-6636; 240-426-2900(cell)

Thanks. I agree with the 18% per annum. It's the penalty that seems excessive.

Mike Mogil

Mike, is the 18% penalty really a late charge? If so, I suggest your HOA should change it to "Late Charges -- There is a $XX late charge for each month the account is in arreas, with payments applied first to the oldest outstanding debt and lastly to the most recent charges.

Regarding interest charges, I recommend that no interest be charged until such time as a lien is filed against the property. It is difficult for many people to accurately compute interest, e. g. if payment is made 23 days after the due date and there is a 10 grace period, the assessment is $100, and the late charge is $10. How many additional pennies of interest are due if interest is 10% APR?