Our Road Association By-Laws, formed under Title 23, allow the Board of Directors to establish a policy on Late Fees and Penalties. As President/Road Commissioner, I would like to know what other Road Associations have as policies they consider fair and enforceable. Our policy is currently as follows:

"Members in default will be subject to a late charge of 5% on the unpaid balance and 1% simple interest for each month their fees remain unpaid with this penalty being capped at 12% annually."

May we use compounding? Any other suggestions would be welcome. Thank you.

When we set up our statutory road association our attorney advised us that Title 23 does not provide for late fees. The only penalties it describes are court and notice of claims. Thus, we do not have late fees. It is my understanding the many non statutory road associations can and do have late fees.

Andrew L Allen wrote:

Board of Director Member wrote:

When we set up our statutory road association our attorney advised us that Title 23 does not provide for late fees. The only penalties it describes are court and notice of claims. Thus, we do not have late fees. It is my understanding the many non statutory road associations can and do have late fees.

I call to your attention, under Resources on this website , "Sample RA Bylaws.pdf", Article XIII, the following quote:
"Members who are in default of their fees shall also be liable to the Association (for) reasonable interest and late charges set in advance by the Association and for reasonable costs of collection, ..."

Please be aware that the sample by-laws you cited do not a have a date indicating when they were prepared. The most recent changes to title 23 occurred in 2013. It is very important to check that the resources available were prepared after the most recent law change. Otherwise, they may be irrelevant or directly conflict with current law. Unfortunately, there are many outdated resources, even on the maine.gov website, that are available to assist road associations and actually conflict with the newest laws. Furthermore, it is the responsibility of a the road association to update their by-laws to make sure they align with the law as it changes.

I completely agree with your feeling of wanting to change late fees/interest, I wanted to establish such a structure for our association as well. When we formed last year we were told "no" by our attorney. Your best direction to getting your back owed dues ought to be filing a notice of claim. Often times, just sending out the letter to the owner that you are going to file such a claim is enough to get them to pay. Under the current law, any fees incurred with such filing can be added to what they owe. Be sure to include in the amount they owe the fees for filing the claim and the fees for releasing the claim once it's paid. There is a very specific time frame outlined in the law for filing notice of claims http://www.mainelegislature.org/legis/statutes/23/title23sec3104.html Alternately, the association you could also take the owner to court and any attorney or court fees could also be recovered by the owner.

Another thing you should know is that if you do file a notice of claim, that debt will be found by title companies if the property is ever sold, and it will be paid at closing. Being sure to place the notice of claim in the name of the owner can also impact their credit score. Credit reporting companies often search through registries of deeds looking for such debts. Therefore, if the owner tried to get a loan for a car or something it will make it harder for them, another incentive for them to up.

I hope you are able to recover what you are due. Perhaps your association would want to consider these options. Good Luck!

Andrew L Allen wrote:We formed our Association at our Organizational Meeting on April 30, 2016. Our attorney approved our By-laws and presided at this meeting. I do not believe that having a policy on late fees and penalties necessarily conflicts with 23 M. R. S. 3101-3104. Certainly, the use of civil action together with collection of costs and reasonable attorney's fees set forth in 3102 and 3104 is most helpful. The statutes cannot possibly cover every subject needed to provide a fair, functional Association. Our owners have determined that reasonable interest and late charges are also indicated.  

Attorneys have differing opinions. We like our attorney's interpretation and plan to continue our policy of reasonable late fees and penalties. Let the courts decide we are being unfair. We have thus far filed two Notices of Claim using Peter Dunn's excellent protocol. We are keeping track of associated costs and have not yet used our attorney. Thank you for your reply.

Given that info, then I would love to hear from other statutory associations on their policies on interest/late fees? Because personally, I prefer the type of structure you adopted. Attorneys certainly do have differing opinions, and obviously we followed what ours said. I would feel comfortable with your attorney's interpretation as well, since it was as recent as last year.

I 100% with your statement to let the courts decide fairness. We need more of that attitude among our legislators (I defer to the 4 road association related bills before the legislature this session...).

At each Annual Meeting, our owners vote on the interest rate. It has been 18% for many years, however we don't charge interest unless the prior year's taxes are still outstanding when the next year's bills are produced. We, unfortunately, have a few owners who owe for several years.