M.D. from Illinois writes:
Dear Mister Condo,
Can the Association impose fines for unpaid late fees, fines, etc., if they are not paid within a certain time period? For example, we have a few owners who have refused to pay late fees and fines, going back several months. Association wants to come up with a rule to impose a $25 fine per month to all individuals who don’t pay their dues (late fees, fines, etc.) within 3 months.
Mister Condo replies:
M.D., as long as the condo documents support the fines being levied and there are no state or local laws to the contrary, the association is allowed to collect fees and fines when monies owed are not paid on a timely fashion. In fact, the whole concept of fines and fees is the only power the association has to protect itself from non-payment of fees it is owed, short of taking very costly legal action against any delinquent unit owner. The motivation to the unit owner is to not get himself or herself in arrears with the association. Common fees are the lifeblood of any association. All of the common expenses are paid from these fees. When they don’t materialize on time, associations ca find themselves strapped for operating cash to pay the bills of the association. These bills are for services that directly, or indirectly benefit the unit owners. Why should they be allowed to not pay their fair share in the same timely fashion that all of the other unit owners are paying. By paying late, they are actually creating a burden on their fellow unit owners. The fine system is designed to keep the payments coming. If those payments are tardy, even late fees and fines, the association needs to continue to motivate them to pay on time. The fine system allows them to do just that. Honestly, these unit owners simply need to get caught up and not fall behind again. All the best!
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Please note that some state statutes may contain language specifically spelling out the order of payment application. Ohio has such language. Payments are applied to fines, late fees, legal costs, etc., before maintenance fees or assessments which are at the bottom of the priority list. In this scenario, a late payment would be applied to the late fee and any unpaid balance would be the balance of the maintenance fee or assessment. This type of statutory language makes it very clear and easy to respond to owners who wish to argue about how their payment was applied to their account balance.