In addition to late charges and interest, an association is permitted to charge its “[r]easonable costs incurred in collecting [a] delinquent assessment” from a member, “including reasonable attorney’s fees.” (Civ. Code § 5650(b)(1).) Those collection fees and costs, late fees, and interest are then incorporated into the member’s debt, and may be secured through recording an assessment lien against the member’s property. (Civ. Code §§ 5650(a), 5675(a); See also “Duty to Pay Assessments.”)
Fees Imposed by Management & Collection Vendors
Civil Code Section 5600(b) prohibits an association from imposing or collecting a fee “that exceeds the amount necessary to defray the costs for which it is levied.” However, this restriction applies to associations, not their managing agents or collection vendors. An association’s management company or collection vendor is permitted to earn a profit on the collection fees it charges for generating pre-lien letters, assessment liens, etc.:
“…the duty to refrain from the conduct prohibited by [Section 5600(b)] is imposed solely on the ‘association,’ the nonprofit entity designated by statute as having the responsibility to manage the affairs of the common interest development. [Section 5600(b)] has no application to an association’s vendors…the [association’s managing agent] is not prohibited from earning a profit, or from charging any fee the competitive market will bear.” (Brown v. Professional Community Management, Inc. (2005) 127 Cal.App.4th 532, 539-540.)
Related Case Law
- Brown v. Professional Community Management, Inc.
(2005) 127 Cal.App.4th 532
[Assessments & Collection; Collection Fees] An association’s vendors are permitted to earn a profit on the fees it charges in connection with collecting delinquent assessments owed to the association.