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P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
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Experience:  12+ yrs. of experience including real estate law.
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Our HOA assesses a $15 penalty if monthly assessment is not

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Our HOA assesses a $15 penalty if monthly assessment is not paid in 15 days of due date. They also assess a $15 penalty each month the past due payment is late 15 days in each subsequent month. Is this legal under Arizona statutes?
Thanks for the chance to help. I am an Arizona attorney with over 12 years experience. Hopefully I can help you with your legal question.

It is...that is, there is no Arizona statute or case what makes a "late fee" illegal for an HO to impose.

Now...there are limits to this. In Arizona, late fees are governed by contract law.

In order to be legal, the HOA must give notice to its members of the fee, in advance. So, for example, fees can not be arbitrary and must be made clear, either in the HOA bylaws, or by some other way to allow HOA members to have notice of the fees.

And they can not be enforced arbitrarily (for example, the HOA enforces against some members but not against other members)

The final rule is that that fee must be "reasonable"

A late fee is a form of "liquidated damages"...it basically allows for the HOA to put the damages for breach of contract (paying late is technically a breach of contract) up front. But it must be reasonable.

A 10% late fee is not unreasonable.

And the fee can carry over (so, if it goes on month over month, it can continue to accumulate or add up...the law allows this).


Sorry to have to bear bad news

Let me know if you have more questions...happy to assist if I can
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