------------------------------------------------------------------------------------------------------ Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain. ------------------------------------------------------------------------------------------------------Click Continue for Post Continuation plus Comments.
- History:_
- 2007 Mar 14 — Added recollection of prior action of the bylaws cmte, added more discussion and analysis.
- 2007 Feb 27 — Expanded the scope of the analysis to answer more questions.
- 2009 Apr 03 — Initial Post, but indexed to the date of the document which is 2007 Feb 23
- Links:_ $25.00 Late Fee Likely Inconsistent with Master Declaration at [http://swagmanmwpoa.blogspot.com/2007/02/2500-late-fee-likely-inconsistent-with.html]
- Key Words:_ Governing Documents; 2005-7 Amendment Initiative; Governing Documents, General; MOA Board of Directors; MOA Governance; MOA Members & Members' Rights; late fees; delinquent dues; assessment
$25.00 Late Fee Likely Inconsistent with Master Declaration (continued) ____From: Don Nordeen ____Date: 2007 March 14 10:45:25 EST ______To: MOA Bylaws Committee ______Cc: Christine Zarichney __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Date: 2007 February 23 (Revised 2007 Feb 27, 2007 Mar 14) ____From: Don Nordeen ______To: Bylaws Committee: Bob Allaben, Jack Barry, Mike Buckley, Phil Curtiss, _________Bob Felt, Bill Fish, Joe Houston, Gary Hyatt, Bob Kish, Dick Nelson, _________Don Nordeen, Kate Nordeen, Bill & Penny Nowacki, Jim Pagels, _________Vicki Rigney, Diane Shockey, Pam Tavernier, Dick Thams ______cc: Non-official Michaywe weblog (access information below signature block) _________at [http://swagman.typepad.com/michaywe_poa/2007/02/2500_late_fee_l.html] ______cc: Christine Zarichney (for MOA file) __Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration Re: $25.00 Late Fee Likely Inconsistent with Master Declaration __(added 2007 Feb 27) Revision with this update adds an additional provision of the Declaration of Master Covenants, Conditions and Restrictions (DMCCR) which even more clearly defines allowable late fees as limited to actual costs of the additional administrative expense. __(added 2007 Mar 14) My recollection is that, after considerable discussion, the bylaws cmte decided to reference the applicable provisions in the DMCCR and not include the $25.00 late fee proposal. As the bylaws committee has done elsewhere, it is inappropriate to redefine what is already defined in the DMCCR, which is the superior document. The recommended provision in the bylaws then becomes (added language in italics and blue):
Section 5.04 - Failure to Pay Dues or Assessments. Failure to timely pay dues and assessments may result in additional charges, as defined in Article V of the Master Deed Restrictions, including charges for interest, late fees, fines and collection costs. A certificate in writing issued by the Treasurer of the Association shall be given on demand to any member liable for said charges and assessments setting forth the status thereof. Notes and Explanation__I previously distributed this research by email to those who attended the Feb 21 bylaws committee meeting. I believe it should receive broader communication to provide the opportunity for more members to comment. The bylaws committee should exist to serve the members. MOA Members' inputs are important. Please click "Reply All" and send your comments to those on this distribution list. __Conclusion — (revised 2007 Mar 14) A provision for assessment of a $25.00 late fee is likely inconsistent with the DMCCR and should not be included as a proposed amendment to the bylaws. Rather, the bylaws should refer to Article V for required due dates and the allowable late fees. __ One of the considerations discussed by the board several times in updating the bylaws was the need to bring the bylaws into consistency with the Declaration of Master Covenants, Conditions and Restrictions (DMCCR). Unfortunately, such is not stated in any board motion. However, it seems to be part of the charter for the bylaws cmte. __ (revised 2007 Mar 14) This consideration should apply to any new provision in the bylaws as well. I have stated on several occasions that the DMCCR do not authorize a $25.00 late fee for delinquent dues — rather authorize a fee to cover costs. This is directly stated in Article V, Section 5(b) and 5(e) of the DMCCR:
- Since the due dates and all the charges are defined in the DMCCR which is the superior document, no additional charges can be defined in the bylaws.
- As the committee has decided on other issues, the requirements should not be restated in the bylaws which might create conflicting language.
- Since the various requirements are dispersed through Article V of the DMCCR, it is best to reference Article V to avoid missing a required reference.
- The board's policy to charge a late fee of $25.00 per quarter is likely inconsistent with the DMCCR. The board's obligation is to be obedient to the governing documents. Action is required by the board.
__Excerpt from (c) "The Association may also assess fines for late payment or nonpayment of Association Dues, assessments and other charges in accordance with the provisions of Article VII hereof, and/or through duly promulgated rules and regulations, establish late fees for late payment of Association Dues, assessments and other charges, to compensate the Association for the administrative expense associated with handling delinquent accounts."__The assessment of any fine must meet the requirements for fines as defined in Article VII. Separate board action would appear to be required for each fine assessed. The procedures required are clearly defined in Article VII. Any action to assess a fine that does not conform to Article VII is invalid. __The excerpt of (c) is
"The Association may ... establish late fees for late payment of Association Dues, assessments and other charges, to compensate the Association for the administrative expense associated with handling delinquent accounts."__(added 2007 Feb 27) The DMCCR repeat much of the above in Article V, Section 5(e) which states in its entirety:
"(e) Expenses of Collection. All expenses incurred in collecting unpaid assessments, including interests, fines, costs, actual attorneys' fees (not limited to statutory fees) and other costs paid by the Association for taxes, other liens and other such expenses paid to protect its lien, shall be chargeable to the Owner in default and shall be secured by the lien on his Property Unit. Such collection fees shall also include, but are not limited to, the costs for additional billings and invoices, special correspondence, preparing and recording liens and releases, collection agencies, and court costs. The Association shall prepare a schedule of costs for routine transactions for such billing of costs. Non-routine costs shall be billed at the actual cost to the Association plus the appropriate transaction and administrative costs."This is a very specific provision and as such should take precedence over a general or more general provision. It makes very specific that the Association shall prepare a schedule of costs for the allowable late fees. __Redrafting of the DMCCR is needed to define the additional charges in one section rather than two. The last two sentences of (e) are clear as to what charges are authorized. __The Michigan court of appeals cases has established clear standards for interpretation of restrictive covenants:
“Restrictive covenants are to be read as a whole to give effect to the ascertainable intent of the drafter, and strictly construed against grantors and the parties seeking to enforce the covenants. All doubts are to be resolved in favor of the free use of property. Courts should not infer restrictions that are not expressly provided for in the controlling documents."The excerpt of the remaining part described above is clear about what is allowed, namely fees for administrative expenses. __ When this issue was discussed previously in the bylaws cmte, the action was to refer to Article V, Section 5(b). That clearly makes the bylaws consistent with the DMCCR. __ The current assessment of $25.00 appears to be in violation of the DMCCR, which only allows a late fee "for the administrative expense associated with handling delinquent accounts." The requires a cost analysis to determine the costs for the fee for administrative expense. Don Nordeen (989) 939-8240
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