Collecting Interest On Unpaid Condominium Assessments
Many condominium associations do not realize or do not take advantage of their ability to collect interest on unpaid condominium common assessments. The New Jersey Condominium Act (N.J.S.A. 46:8B-21)(the “Condo Act”) permits associations to charge interest on delinquent balances and defers to an association’s governing documents. Many modern association bylaws will include provisions similar to the following:
“the association at its option shall have the right in connection with the collection of any common expense assessment, or other charge, to impose a late charge of any reasonable amount and/or interest at the legal maximum rate permitted by law for the payment of delinquent real estate taxes."
N.J.S.A. 54:4-67 states that delinquency in real estate taxes can accrue interest at up to 8% per annum for the first $1,500 that is delinquent and 18% per annum for any amount in excess of $1,500. Therefore, if an association has language in its bylaws similar to that set forth above, it may assess interest plus late fees (or as an alternative to late fees) at the maximum rates provide for in N.J.S.A. 54:4-67.
The charging of interest for unpaid assessments has been shown to be a good incentive tool to be used by associations to motivate regularly delinquent owners to bring their accounts current. It is recommended that the association’s board of trustees passed a resolution regarding the levying of interest if the board wishes to impose interest fees for unpaid assessments. The resolution should set forth the amount of the interest to be charged and the time period in which the interest will be calculated and applied to the debtor’s account.
