I’m interested in learning about restrictions and limitations governing HOA late fees. Is there is a penalty “limit” that an HOA can impose for late assessment payment?

ANSWERS:

Generally, most declarations of covenants authorize late fees and legal fees for nonpayment of assessments. In order to assess the issue, the Association should review the declaration and bylaws to see if late fees are authorized and whether there are any limits on the amounts. Some older declarations only authorize 8% interest.

The Association should also consult applicable state law to make sure that late fees are legal. The general rule from most case law decisions is that late fees must be reasonable.

David G. Hellmuth
Attorney at Law
Direct dial: (952) 746-2107
dhellmuth@hjlawfirm.com
8050 West 78th Street
Edina, MN 55439
Phn: (952) 941-4005

Not in state law.  But I would suggest that if late fees are not reasonable, and an owner sues on that basis, the Association may find itself on the losing side. The late fee should either be a percentage of the unpaid amount or a (reasonable) flat fee each month the amount is unpaid, regardless of the amount. I also suggest you check the Association’s Governing Documents to ensure no limit on imposition of late fees is listed therein.

Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
717.846.2246 phone
717.846.2248 fax
saustin@austinlawllc.com