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DavidT3
(Texas)
Posts:18
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| 06/18/2008 7:17 AM |
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I was voted into the Presidency of our HOA in May.....at that point, we had 12 houses that had not paid their dues (a few not paying for a few years). Well, there was very little done about those dues in the past and there was horrible record keeping (we found copies of letters sent to them but no receipts of delivery, etc.)
The new board decided that we were going to have a different approach to these dues. We went door to door to these homes and made a deal with them.....if they paid their dues by July 1st, we would waive all late fees. With little to no documentation of the past, it would not be worth the fight and we would rather have the dues in the bank. Alot of folks had simply forgotten about it and cut us a check on the spot....I am happy to say that we have collected all but one house.
Here's the kicker......we told them that if they paid or made an effor to work something out with us prior to July 1st, all late charges would be dropped. However, if not, here come the late charges once again.
House that has not paid = not paid for 2006, 2007 or 2008. When you do the math, they owe $450 in dues and another $450 in late charges. $900 will be due on July 1st. We are also looking into filing a lien on their house, as per our covenants. They have received two visits, a certified letter and a phone call. We will make one more visit prior to July 1st. Here's the question after all of that babbling........how do you compute the interest that they might owe on these past dues? Not a math eprson, so wanted to get your ideas, expereinces, etc.
Any help would be appreciated. |
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MaryA1
(Arizona)
Posts:1562
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| 06/18/2008 8:02 AM |
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David,
In order to answer, we would need to know exactly what your docs say about interest. When is interest added, at what rate, etc. |
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KirkW1
(Texas)
Posts:684
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| 06/18/2008 8:06 AM |
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I am sure that someone will disagree with me. But I would compute it as simple interest. For the sake of argument, I will use 10% as the interest rate. and Jan 1 as the due date upon when interest starts accruing.
2006 $150 * 0.1 * 2.5 = $37.50
2007 $150 * 0.1 * 1.5 = $22.50
2008 $150 * 0.1 * 0.5 = $ 7.50
total amount interest = $67.50
As a note, each month the interest that accrues on a single year's dues amounts to $1.25. The interest never draws additional interest (compounding). I would also not attempt to charge interest on the late fees.
By the way, I think the way your board decided to handle the situation was admirable. If more focused on getting the money in the bank there would be fewer people focused on getting rid of HOAs. |
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SusanW1
(Michigan)
Posts:1540
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| 06/18/2008 9:09 AM |
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Wouldn't it be:
Year 1 - dues + interest
Year 2 - double dues + interest on all
Year 3 - triple dues + interest on all
Figure using national inflation rate OR what is stated in your documents.
Time to get a written policy FIRMLY in place.
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BrianB
(California)
Posts:1591
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| 06/18/2008 9:48 AM |
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| and, when you file the lien, be sure to include the cost of filing, the cost to remove, and a couple bucks for expenses, time, parking, paperwork, etc.. when i filed liens, i included ever cost, down to the parking meter at the courthouse. |
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GlenL
(Ohio)
Posts:1223
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| 06/18/2008 10:59 AM |
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| Susan is right get a written policy in place. Unless it is provided for in your CC&R's or by state law you may not be able to charge interest on this account. If you use the search feature on the topics page you can find out how to write the policy, RogerB has posted examples of a collection policy numerous times. |
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