Legal Question in Real Estate Law in California
I am one of 54 properties on a community well. We are all owners (own a share) of the municipal water co. that oversees the business of the well. My question is, does the board have the right to impose a 40%-50% penalty as a late fee? The monthly rate is $53.00, and if you're late, they charge you a $25.00 late fee. The water co. is run as a non-profit organization.
Thank you.
Bill Mitchell
2 Answers from Attorneys
A $25 late fee does not seem unreasonable on its face; the booking costs and expenses involved might be close to that amount. The penalty is not looked at as being a percentage of the base amount. As a member of the association you can bring the issue up at a meeting but the majority of people who pay on time are not going to support you.
The appropriateness of the fee would be judged not on what percentage it is of the amount due, but in relation to the cost of billing and collection of past-due amounts. Small organizations may not have computers, and certainly won't have a huge volume of billing allowing automation and assignment of specialists to the collection process. For these and similar reasons, I think a court would probably find a $25 late fee reasonable and allow its assessment, assuming it had been adopted by appropriate board or managerial action.
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