Applying Reasonable Late Fees to Unpaid Condo Owner Balances

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Written by Lauren Peddinghaus

Category: What We're Thinking About Lately...

Published: 25 September 2018

Your condominium association's monthly income in the form of assessments (or HOA dues) is vital to the financial health of your association. If your association does not have a policy in place to enforce timely payment and address late payers, your ability to pay the association's bills may be compromised.

The goal of a Late Fee policy is to encourage timely payment and to collect all of the money due to the association so that it can function properly. It should not be so excessive as to make payment burdensome for owners who fall a bit behind. And it should not be used to repeatedly penalize owners for balances that remain unpaid. Unresolved balances should be addressed with prompt collection action rather than simply piling on repeated fees.

Here are a few tips for an effective Late Fee Policy:

• Set a monthly due date for assessments. Ideally, this is by the 5th of the month but could be the 7th, 10th or 15th. Do not allow owners an entire month to pay.
• Apply a Late Fee if the monthly payment is not made in full by the due date. Late Fees should not exceed more than $25 or $30/month. Excessive Late Fees can create more financial problems for owners who are already strapped.
• Take action early when an account remains unpaid. Communicate directly with the owner about their plan to get caught up. If an owner is not cooperative, enlist the help of a debt collector or attorney to address the problem. Old or accumulating balances will be ignored unless the board takes action. The squeaky wheel gets the grease!
• Be educated about the cost of collection, and be sure to let the delinquent owner know they will be charged collection fees if the board has to enlist help, and how much it could cost them if they don't get caught up. Many owners aren't aware that they will bear the cost of collecting their unpaid assessments.

Creating a reasonable Late Fee Policy and applying it consistently to all owners can help to keep your association's finances on track.

Has Your Association Adopted a Written Policy for Resolving Owner Complaints?

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Written by Alexa Jackson

Category: What We're Thinking About Lately...

Published: 18 September 2018

Section 35 of the Illinois Condominium & Common Interest Community Ombudsperson Act requires all associations to adopt a written policy for resolving complaints made by owners no later than January 1, 2019. 

While it remains to be seen how the state will enforce this requirement, condo boards can more effectively address owner complaints if a written policy is in place.

The written policy must include:

1. A sample form on which an owner may submit a complaint to the association

2. A description of the process by which complaints are to be delivered to the association

3. A timeline and manner of making a final determination in response to a complaint

4. A requirement that the association issue a written final determination within 180 days after the association received the owner's complaint

In order to adopt a written policy for resolving owner complaints, the association must send notice of the proposed written policy to its members and pass a resolution adopting the written policy at a board meeting. 

To learn more, click here.

The Roles of Officers vs. Directors

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Written by Alexa Jackson

Category: What We're Thinking About Lately...

Published: 10 September 2018

All condominium associations have directors and officers, but the roles of directors versus officers are often misunderstood. 

Directors are elected by the owners. The board of directors (the "board") is responsible for the operations and management of the association and all of the property. As a board, directors make all the decisions necessary to operate the association. 

Officers are generally elected by directors, from among the board of directors. The officers don't make decisions, but they do have specific responsibilities. The Condominium Property Act and the Common Interest Community Association Act require that each association must have a president, a secretary, and a treasurer. Some bylaws may provide for other officers, such as a vice-president or an assistant secretary. 

To learn more about the differences between Directors and Officers, click here.

Recent Win Upholds Short-Term Condo Rental Restrictions

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Written by Lauren Peddinghaus

Category: What We're Thinking About Lately...

Published: 29 August 2018

The battle between condominium associations and Airbnb continues, but a recent dismissal of a "source of income discrimination" claim filed by a Chicago condo owner against a condo association further reinforces associations' right to ban short term rentals.

The lawsuit involved a condo owner who was fined for violating the association's declaration, which prohibited the leasing of units for hotel or transient purposes or terms less than six months, and provided that "no portion of the Unit which is less than the entire Unit shall be leased."

The owner filed a complaint with the City of Chicago Commission on Human Relations alleging that the association violated the Chicago Fair Housing Ordinance by discriminating against the owner based on the owner's "source of income" from the temporary Airbnb guests. The Commission ruled against the owner.

Many condominium Declarations include language prohibiting Airbnb-type rentals. Further, the City of Chicago allows those associations to register as a "Prohibited Building", which Airbnb is required to consult before listing any condo rentals in the City of Chicago. 

If short-term rentals are a problem in your association, the board should consult its Declaration to determine if short-term rentals are restricted and are encouraged to register with the city's Prohibited Building List. If you have questions about this issue, please consult a qualified Condo Law Attorney.

Learn more here.