Late Fee

A charge imposed on a homeowner who fails to pay their assessment by the due date. Late fee amounts and timing are specified in the association's collection policy, which must be adopted by the board and distributed to all members. In California, Civil Code Section 5650(b)(2) caps late fees at 10% of the delinquent assessment — so for a $300 monthly assessment, the maximum late fee is $30. The collection policy must specify when the late fee is triggered, typically after a grace period of 10 to 15 days beyond the due date. Late fees serve two purposes: incentivizing timely payment and compensating the association for the administrative costs of managing delinquent accounts (staff time, notices, postage, and accounting). In addition to late fees, the association may charge interest on the unpaid balance at a rate not to exceed 12% per annum (Civil Code Section 5650(b)(3)). Late fees and interest accrue on top of the unpaid assessment and are included in any lien the association may record. The association's right to charge late fees depends on having a properly adopted and distributed collection policy — without one, the ability to impose late charges may be challenged. Boards should ensure that late fees are applied consistently and uniformly to all delinquent accounts; selective enforcement can create legal liability and erode homeowner trust. Some associations waive the first late fee as a courtesy for owners with a strong payment history, though this practice should be documented in the policy to avoid inconsistency.