Last update: 2009 Apr 02 which is the initial post. Click History for a list of changes and updates.
__ The continuation of this post is an email on the above subject. References to prior correspondence are included. The Fair Debt Collection Practices Act may apply to collection of delinquent dues and assessments.
__ Some of the internet links in the post are to a password-protected weblog. If you are a MOA member, please refer to the Welcome and Home Page for information on how to access that weblog.
Don Nordeen
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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.
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Continue reading Board Action to Assess a Late Fee of $25 for Nonpayment of Dues. 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.
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- Key Words:__ Financial Information, General; Governing Documents, 2005-6 Amendment Initiative; Governing Documents, General; MOA Board of Directors; MOA Governance; MOA Members & Members' Rights; late fees; delinquent dues; assessment
Board Action to Assess a Late Fee of $25 for Nonpayment of Dues (continued)
____From: Don Nordeen
___ _Date: 2007 June 12 17:20:13 EST
______To: Floyd Burchard, Tad Latuszek, Bill Martella, Bob Olszewski,
_________Vicky Rigney, Carolyn Study, Kirk Yodzevicis
______cc: Jim Pagels, Christine Zarichney (for MOA file)
__ Subject: Board Action to Assess a Late Fee of $25 for Nonpayment of Dues
Re: Board Action to Assess a Late Fee of $25 for Nonpayment of Dues
__ This email is to advise the board that the $25 late assessment fee may in violation of fair debt collection acts which protect debtors against unreasonable debt collection practices. There are recent cases in which owners associations lost cases in which fees were assessed that were not authorized in the governing documents. You can search the internet to find a number of cases of violations of the act by property owners associations.
__ The Federal Trade Commission has a general information page on the Fair Debt Collection Practices Act at [http://www.ftc.gov/bcp/conline/pubs/credit/fdc.shtm]. I strongly suggest that you read this summary. Among other things, it states that debt collectors "collect any amount greater than your debt, unless your state law permits such a charge", and that the complaint can be filed with the state attorney general and the FTC.
__ This also presents a policy issue for the board to consider. How the association treats members who are not in good standing gives an indication of how the board would likely treat other members whom members of the board do not like. Is it the policy of the board to protect the rights of members? I think it is.
__ Reference is made to my prior emails to the board on this subject which indicate that the $25 late fee is not authorized in MOA's governing documents include emails with the following dates
- 2007 April 3 18:59:47 EST with Subject: Recommended Bylaws Provision re Operating Plan and Budget at [http://swagmanmwpoa.blogspot.com/2007/04/recommended-bylaws-provision-re.html]. This email includes an insert which discussed policy considerations regarding the relationship between the board and members including the assessment of the $25 late fee as an example.
- 2007 March 28 18:39:12 EST with Subject: Minority Report on Bylaws by Don Nordeen at [http://swagman.typepad.com/michaywe_poa/2007/03/minority_report_1.html]. This email includes a discussion of the $25 late fee being inconsistent with the DMCCR.
- 2007 March 26 20:23:52 EST with Subject: Bylaws Section 5.04 - Failure to Pay Dues or Assessments URL Needed.
- 2006 September 15 11:42:10 EST with Subject: Interpretation of Restrictive Covenants and Related Issues at [http://swagman.typepad.com/michaywe_poa/2006/09/interpretation_.html]
- 2007 March 14 10:45:25 EST with Subject: $25.00 Late Fee Likely Inconsistent with Master Declaration at [http://swagmanmwpoa.blogspot.com/2007/02/2500-late-fee-likely-inconsistent-with.html].
__ Appendix A is an email exchange with former president Duane Christie on this question. The email exchange is available on the internet at [http://swagman.typepad.com/michaywe_poa/2005/12/assessment_of_l.html]. His reply certainly leaves much doubt about the quality of the research concerning the authority to levy the arbitrary $25 late fee. What Otsego Lake Township does is likely not relevant. Mr. Christie refers to the DMCCR and its Fine article, but does not consider the required four-step procedure before assessing a fine. He states that "Prior to adopting the policy, our attorney was contacted for approval and the ability to defend this policy if challenged." The meaning of this is unclear. Does this mean he is willing to defend the action and collect a fee for doing so? Does it mean that he doesn't expect to prevail but that his arguments would be sufficiently reasonable to avoid a complaint of malpractice? Does it mean he found a way to provide an opinion that the board or Mr. Christie wanted to hear? What is the attorney's analysis? Which provisions of the DMCCR and bylaws did the attorney consider? Did the attorney consider the fair debt collection act protections? Given the quality of legal advice on other matters, these questions seem appropriate. In my view, absent other information the opinion by Makower is useless as stated.
__ The initiative to include the $25 late fee in the bylaws seems to be an acknowledgment that the authorization for such a fee is not clearly stated in the DMCCR, which is my understanding of strict interpretation of covenants. The initial draft for this proposed amendment was made by attorney Makower without providing any legal analysis to support the language. Given Mr. Makower's lack of analysis on the letter ballot proposals, reasonable inquiry for the basis for his inclusion of the late fee proposal at the request of Jeff Bennethum and/or Duane Christie seems appropriate.
__ My caution to the board is the possibility of personal liability in continuing the $25 late fee assessment. Certainly, doubt has been raised about whether or not the $25 fee is authorized. With strict interpretation of covenants, doubt are construed against the party seeking enforcement. The possibility of fair debt collection acts (maybe state and federal) increase the severity of the consequences. That might even be a prosecution in federal
or state court. It is certainly a candidate for a class action lawsuit against MOA by all owners assessed a $25 late fee.__ To protect MOA as well as to accomplish the other objectives described above, I again urge the board to not proceed with continued assessments of $25 late fees.
Don Nordeen
(989) 939-8240
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Appendix — Assessment of Late Fees
at [http://swagman.typepad.com/michaywe_poa/2005/12/assessment_of_l.html]
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- History:
- 2009 Apr 02 — Date of Initial Post, but indexed to date of original document.
- Links:_ Board Action to Assess a Late Fee of $25 for Nonpayment of Dues at [http://swagmanmwpoa.blogspot.com/2007/06/board-action-to-assess-late-fee-of-25.html]
••• End of Post •••
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