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Yes, it's absolutely legal to do this, up to 18% per annum. Any more would be illegal under usury laws.
But there's no law that says that an association cannot charge interest on unpaid dues amounts, so long as they're otherwise authorized in a membership agreement or other type of contract to do so.
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My concern is that no where in the by-laws or in the application for membership does it state anything reqarding interest or late fees on unpaid dues. When you state"so long as they're otherwise authorized in a membership agreement or other type of contract to do so".
To be able to collect interest on dues or other fees, there still needs to be a legal basis to do so. There's not a "blanket authorization" to do so under the law, and generally is part of a contract / bylaws / etc... Now if they were to go to court to sue for the unpaid dues, they could get legal interest (which is 4.75% per annum)
If there's nothing in writing that states a higher amount that was agreed to or entered into, then they couldn't get a higher amount of interest than that amount.
And it would run from when the dues were due to when they were paid. Interest could compound on interest, but again, only for the legal rate.
So what you are saying is if interest or late fees are stipulated in the by-laws or in the membership application, then they cannot charge interest over the amount of 4.75% per annum
I meant IF NOT stipulated
Pretty much. That is, they could "charge" that amount, but if you didn't pay and it were to go to court, they would have to show authority that would allow them to charge more than that amount, and if they couldn't, then they would not successfully be able to do so.
Thank you, XXXXX XXXXX arguing with one of the board of directors over this, and I'm afraid if we persue the 18 or 24% interest they wanted originally, we could be in a whole lot of trouble.
Understood. Yes, if you go above 18% that would be usury, even if it were allowed in a contract.
But if over 4.75, it needs to be authorized somewhere.
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