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.