Canan HOAforgive late fees?

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Canan HOAforgive late fees?

Our homeowners association has a policy of charging a $25 late fee for late assessment payments. We have a situation where we have a homeowner who has been very active in the Association (he has been chairman of the Maintenance Committee for a number of years) who is behind 2 months in payment of assessments and is delinquent for 5 late fees. It has been proposed that we forgive the late fees if he will bring the assessments current. Is this legal? Does it somehow compromise our ability to charge late fees to others?

Asked on August 29, 2011 Minnesota

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) Any creditor may choose to forgive fees or to settle a debt for  less than its face value.

2) The only general impediment to you doing this would be in your own operating and organizing agreements--is there anything governing the HOA or its relationship with the homeowners that prohibits this? You should check your documentation.

3) Forgiving one debt does not prevent you from enforcing other debts later, with one possible issue or exception: if it can later be argued that the foregiveness now (or lack of foregiveness later) was based on a discrimination on account of race, sex, religion, age over 40, disability, etc., there could be a claim that the act of foregiving person A's debt HOA debt but not B's somehow violates housing discrimination laws. For example: say you forgive the debt of white homeowner A now, but in a similar situation in the future choose to not foregive the debt of African American homeowner B...it's possible B might try to claim discrimination, since you are homeowner's association and the debt can affect residency or access to housing.


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