If your governing documents are silent concerning the rate of interest to be imposed on delinquent assessments, how do you set the rate?
It may assist you to know that CCIOA sets a cap on the rate of interest that may be charged by post-CCIOA communities. Specifically, Section 315(2) of CCIOA caps interest on delinquent assessments to 21% per year. This is not a “default” provision of CCIOA, and therefore, it binds all post-CCIOA communities regardless of what their governing documents may provide.
So, what about pre-CCIOA communities—can they charge whatever interest rate they want? Assuming there is no cap or other guidelines in the governing documents, pre-CCIOA communities can charge interest on delinquent accounts at a rate above 21% per annum. However, be careful not to charge a “usurious” rate—currently 45% of the total annual assessment. Remember, usury applies not only to the interest charged, but also any and all late fees and other charges assessed to delinquent accounts.
For more information about charging interest on delinquent assessments and/or usury, please contact a Altitude Community Law attorney at: 303.432.9999.