Articles

“Interest” and “Late Fees” Are Different Things

“Interest” and “Late Fees” Are Different Things

 

“Interest” and “late fees” are different things.  Governing documents may provide for interest and/or late fees.  Judges are sensitive to the difference.  Judges will not allow interest if only late fees are authorized in the governing documents and judges will not allow late fees if only interest is authorized by the governing documents. 

Judges essentially conclude that “late fees” only accrue on late payments while “interest” is charged on a continuing balance.  Many management companies are not set up to accrue interest; nevertheless, posting late fees (if not authorized by the governing documents) is improper. 

Late fee postings are particularly troubling when late fees are compounded because of a single missed or late payment.  These “late fees” should really be interest on the continuing balance.