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Our Clients Ask Us: Collection Policy/Late Fees

Question: Our association implemented a collection policy last month after several years of not having one in place.  The policy provides that we can charge monthly late fees.  If an owner has been delinquent for two years, but we have never charged a late fee, can we go back now and charge them retroactively?

Answer: PROBABLY NOT.

The first question is whether your governing documents have provided a specific amount for the late fee all along.  If the documents state that the late payment fee is $25.00, then the Board has a better argument that the owner was previously on notice of amount of the charge.  However, the Board would also have to go back to every owner who was late during that time, and charge him or her a late fee as well. And if they were ever invoiced with the balance, you cannot suddenly add in multiple late fees.

If your documents do not provide the amount of the late fee and a copy of the policy containing the amount of the late fee was not distributed to the owners, then no, the Board cannot retroactively charge back late fees for two years.  The Board may generally implement reasonable rules and regulations, depending on your documents, but before any such policies become effective, they must be distributed to the membership so that the owners are on notice of the policies.  The Board cannot impose consequences for violation of a rule that is not in the governing documents and has not been distributed to the owners.  Begin charging all owners late fees from the date the policy was implemented and send invoices to owners with balances.

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