Two recurring issues, late fees and violation enforcement, can create problems when the Association’s procedures are not clearly established or consistently followed.

1. Late Fees

Associations must ensure that their Declaration, By-Laws, and applicable Rules and Regulations (the “Governing Documents”) clearly establish the amount and method of calculating late fees.  An Association can only issue one (1) late fee per missed assessment. Each late fee must correspond to a separate monthly assessment that was independently due and unpaid.

Law: The Illinois Condominium Property Act, 765 ILCS 605 (the “Act”), recognizes an Association’s authority to impose charges for late payment of a unit owner’s proportionate share of the common expenses and fines for violation of the Governing Documents, but the Association should be able to point to the Governing Documents and applicable collection policies as the basis for the charge.  Sections 9(g)(1) and 18.4(l) of the Act authorize the Board of Managers (the “Board”) of an Association to impose late charges for delinquent assessments. The Act expressly states that if any unit owner shall fail or refuse to make any payment of the common expenses or the amount of any unpaid fine when due, the amount thereof together with any interest, late charges, reasonable attorney fees…shall constitute a lien on the interest of the unit owner.

An Association may not compound late fees in a way that effectively penalizes the same delinquency multiple times, as doing so would be considered an unreasonable and unenforceable penalty. See Hidden Grove Condo. Ass’n v. Crooks, 318 Ill. App. 3d 945 (3d Dist. 2001). The Court in Hidden Grove found that a total of $225 in late fees for a single delinquent monthly assessment was unreasonable and an unenforceable penalty and held that, “… a one-time late charge of $25 on an $88.23 monthly assessment would be reasonable.”

Example:

If an owner fails to pay their November ‘26 monthly assessment, a late fee may only be added to their ledger for the month of November ‘26.  The Association cannot add an additional late fee for the delinquent November ‘26 assessment in December ‘26, January ‘27, and/or any month thereafter, even if it remains unpaid.  However, if the owner also fails to pay their December ‘26 monthly assessment, a late fee may be added to their ledger that month to account for the new independently due and unpaid obligation.

2. Violations and Hearings

Associations also need to follow appropriate due process procedures when enforcing violations and imposing fines for violations. Associations that outline their enforcement process in their Governing Documents are in a stronger position when/if a dispute arises.

Law: Under the Act, a Board may levy fines for violations of the Association’s Governing Documents after notice and an opportunity to be heard. See Section 18.4(l) of the Illinois Condominium Property Act, 765 ILCS 605.

When an owner violates the Association’s Governing Documents, the Association, through counsel, may provide the owner with written notice of a violation.  The notice should identify the alleged violation, the applicable provision(s) of the Governing Documents, the consequences of failing to correct the violation, and an opportunity to request a hearing.

The violation letter should advise the owner of their right to a hearing and explain the procedure for requesting a hearing, including how and by when the request must be made.  The Association should keep records of the notice, hearing request, evidence presented, Board decision, and any fine imposed.  Compliance with the notice and hearing requirements is essential before an Association can impose a monetary fine for an alleged violation.

Examples:

Scenario 1: Owner Requests a Hearing

If the owner timely requests a hearing in the manner outlined in the notice, the Association and the owner should work together in good faith to schedule a mutually convenient date and time for the hearing.  During the hearing, the owner should be given an opportunity to present evidence, explain their position, and respond to the alleged violation.  After the hearing, the Board must consider the information presented and determine whether a violation occurred and whether a fine should be imposed.  If the Board determines that a fine is warranted, the Board should formally vote to impose the fine and document that decision in its records.

Scenario 2: Owner Does Not Request a Hearing

If the owner does not timely request a hearing, the Association may proceed in accordance with its Governing Documents and applicable enforcement procedures, including imposing the fine where authorized and informing the owner of any such determination.

Failure to follow these procedures can create challenges for an Association when it later seeks to enforce or collect the amounts assessed.

For more information, contact Tressler LLP, HOA Law attorney Katerina Tsoukalas-Heitkemper at kheitkemper@tresslerllp.com. For more information about this article, contact HOA Law attorney Sayra V. Contreras at scontreras@tresslerllp.com.

About the Author

Sayra V. Contreras is an associate attorney working in the HOA Practice Group. Sayra concentrates her practice in litigation with a focus on representing condominium associations and common interest community associations in areas such as rule enforcement, interpretation of governing documents, review and negotiation of contracts, and collection of assessments. Click here to read Sayra’s full attorney bio.