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Subject: HOA late fees
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01/30/2006 11:27 AM  
We have a small HOA only 65 units. Our dues are paid quarterly and are $330. In the past we have added a late fee of $50 for every month late. Now we are being told a per month late fee is illegal and aganist Colorado law and we should be adding only a one time late fee. Our bylaws have stated per month since 1980 when the association was formed.


01/30/2006 1:22 PM  
We had just adopted the SB100 resoulutions for Colorado that were prepared by our legal council Orten and Hindman that specifically states that an "Association shall impose on a monthly basis a $25.00 late charge for each owner who fails to timely pay his/her monthly installment of the assessment within 10 days of the due date.

Now that sounds to me, like we can charge a monthly late charge because our assessment is a monthly. Maybe, because yours is quarterly or some other time table that you can only charge a one time fee for that quarterly time table.

Is your legal council telling you that you can not, or just some lay person? I would like to know, because maybe we need to take a second look by a new attorney.


01/30/2006 1:28 PM  
Yes, a lawyer who works only with HOA's says it's aganist the law and that a judge would probably not honor the late fee if we had to sue a homeowner. This all came about because we were trying to update because of SB100.


01/30/2006 3:50 PM  
DarleneG, I don't believe a reasonable late fee is against the law. Perhaps your attorney was refering to the $50/month. A judge may find that to be unreasonable. I trust Tom Hindman of HindmanSanchez.



01/31/2006 7:01 PM  
Darlene G,
Currently serving on our Board as President and performing the duties as Treasurer until another appointment is made, I agree with Roger B, I don't believe a reasonable late fee is against the law. If they were why would there be any mention of it in the SB100 that the State of Colorado mandated. However, one needs to keep in mind what the sole purpose of a late fee is.

The amount, how often and when the late fee(s) are applied is very important and Iam sure often times than not, this is really the problem and the late fee(s)then is viewed as excessive (no matter how much)thus giving the late fee(s)a bad rap.

I say the late fees are a great tool if used correctly. I do not believe you will find anyone person or a professional establishment, willing to provide you with the going rate if any is when it comes to charging a late fee. They may share with you what they feel works. But you just have to use your best judgment and be sure that it’s a BOARD decision on how much to charge (if any).

Also you may want to check in the immediate surroundings of where your HOA is located and inquiry into other HOAs and ask them what they charge. Then you can gage your late fee on this data.



02/01/2006 9:33 AM  
Thanks to all that replied to my question. I appreaciate all your comments.



02/01/2006 10:36 AM  
To add another layer to this:

I am interested in changing our by-laws to charge homeowners a one time late fee in the amount of $50.00 and a 1% interest on the balance each additional month till paid in full.

If someone has that already written in their by-laws my I have a copy of that excerpt to modify our by-laws to allow us to do the same without reinventing the wheel.

And do you think this would be reasonable?



02/01/2006 1:28 PM  
WardellD, if your Board has the power to approve Rules and Regulations I suggest you consider creating a Collection Policy under Rules and Regs. This is normallly done by the Board without having to amend your bylaws. I have previously posted an example Collection Policy.



02/01/2006 5:40 PM  
Roger, would you mind (terribly) posting an example Collection Policy for those of us who have not seen this? Thank you so much! -ReneeD
(North Carolina)


02/01/2006 6:52 PM  
The following is a delinquency policy that was prepared by an Attorney in North Carolina:


The following will be the _____________________________ Delinquency Policy. This policy has been written within the guidelines of the Declaration of Covenants, Conditions and Restrictions for _____________ and the laws in the State of North Carolina. This policy will be enforced to ensure the Associations financial security for the homeowners of the _____________ Community. This policy will have a certain protocol, which will be followed. Should a circumstance arise which is not covered in this policy, the Board of Directors at that time, will determine what course of action will be taken to enforce whatever is necessary for collection. This delinquency policy will be enforced effective __________________.

Each homeowner will be billed _______, in advance, for the assessment of that year. The due date for the annual assessment will be the 1st of each ________. Payment in full of the assessment is due within ______ days of the due date, if not received within _______ days of due date it will be considered past due.

If payment, in full, of the assessment is not received within ____ days from the due date, a late charge of $________ will be added to the assessment. A late notice will be issued allowing another _____ day period in which to pay assessment, late charge and costs of collection incurred.

If payment, in full, of the assessment, late charge and all costs incurred have not been paid within ________ days of the original due date, no more notices will be issued, this matter will be turned over to an attorney for collection. The homeowner will be charged costs of collection and reasonable attorney fees.

If an action at law is brought against the Owner or if the lien against the property is foreclosed, late charges, costs of collection and reasonable attorney fees of such action or foreclosure shall be added to the amount of the assessment.

There will also be enforced a returned check reimbursement charge of $30.00 or the maximum allowed by North Carolina State law, issued to any account whose checks on which payment has been refused by the payer bank because of insufficient funds, or because the drawer did not have an account at the bank.


02/01/2006 7:25 PM  
ReneeD, following is the example I previously posted. RogerB
Rules and Regulations on Delinquent Assessments

Assessments are delinquent when payment has not been received by the due date. A 10 day grace period is provided for receipt of payment after which the property is assessed a late charge of $10.00 per month.

Assessments may include, but are not limited to, the annual (regular) assessment, special assessments, late charges, interest, fees, fines, attorney fees, collection costs and court costs. All costs related to a delinquent account shall be assessed to the property and paid by the owner. The Declaration (Covenants) establishes that an assessment is a continuing lien upon the property and a personal obligation of the owner.

The annual assessment is determined by the Board of Directors as part of the annual budget. The annual budget is ratified, or vetoed, by homeowners at the annual meeting. If the members veto the budget, then the prior budget, including the annual assessment, remains in effect until a new budget is approved. The annual assessment may be paid on a quarterly basis with payments due on the first day of each quarter beginning January 1st, April 1st, July 1st, and October 1st. Assessment payments shall be applied to the oldest assessment first and progress toward the most recent assessment.

Statements may be provided by mail, e-mail, or coupons as a reminder to homeowners of the amount and due date of a quarterly assessment. Nevertheless, it is the responsibility of the homeowner to remember to pay by the due date even if a statement is not received. An owner may request consideration by the Board of Directors to defer payment due to extenuating circumstances.

An account delinquent over 10 days will be charged $10.00 each month it maintains a balance over $10.00. If a check is returned the account becomes delinquent plus there is a charge of $35.00 for the returned check.

An account delinquent over 70 days shall be provided a warning that a lien will be recorded on the property if payment is not received within 30 days.

An account delinquent over 100 days will have a lien filed with the Douglas County Clerk. The lien amount will include a filing charge of $100.

An account delinquent over 130 days shall be provided a warning that the account will be referred to an attorney for collection if not paid within 30 days.

The Association shall make a good faith effort to resolve disputes first with the Owner. If resolution is not reached the Association stands ready to go to binding Arbitration under the Uniform Arbitration Act. The parties are herein forewarned that if court proceedings are necessary to resolve a dispute, the court shall award to the prevailing party reasonable collection costs, attorney fees, and other costs.
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