When to Apply Late Charges
Adams Stirling PLC
Menu

WHEN TO APPLY LATE CHARGES

Unless an association's governing documents provide for a longer period of time, regular and special assessments are delinquent 15 days after they become due. (Civ. Code §5650(b).)

Postmark. While some associations use the postmark for imposing charges, it is a minority position and seems to be limited to associations and management companies that handle funds without using lock box services.

Date Received. The majority of HOAs and management companies use lock box services and do not track the postmark--they impose late charges based on the date payment is received (as do credit card companies). Online banking has also become a factor. In online banking, payment is counted when received by the bank, not when transmitted by the owner. Accordingly, if payment is due on the first of the month, the assessment is delinquent 15 days after they become due, i.e., the 16th of the month, at which point late charges can be levied.

Reversal of Late Fee. Some associations have a policy of waiving one late fee per year per account when requested by a delinquent owner. If an owner wants more than one late fee reversed, they are asked to write a letter to the board asking for the waiver. If there is good cause, the board may allow a second waiver.

RECOMMENDATION: Both policies for applying late charges are acceptable: using the postmark for when payment is sent as well as using the date when payments are received. Boards need to work with their management companies to pick a policy and then make sure the collection policy is in writing and annually distributed to the membership.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC