Illegal Late Fees?

If a payment is received on or after the 16th of the month,
a late charge is applied.
Can additional late charges be applied to the same unpaid amount every month thereafter?

No, you cannot levy late charges month after month on the same unpaid assessment. 

The penalties for violating usury laws are severe.  

Office of the Attorney General/usury

Complaint Form

Department of Real Estate Complaints

Fax Number – Enforcement: (213) 620-6442

The lender on a usurious loan is subject to the following civil penalties:

(1) forfeiture to the borrower of all interest on the loan, not just the usurious part; and

(2) payment to the borrower of triple the amount of interest collected in the year [Equitable Tolling  Wikipedia   Christian Attorney]  before the borrower brings suit.

Additionally, a lender who willfully receives interest in violation of the usury laws is guilty of loan sharking, a felony [Civ. Code §1916-3(b) uncodified statute  summary of laws ] punishable by imprisonment for up to five years.


The basic statute, passed by a general election in 1918, set the maximum allowable annual interest rate at 12 percent.4 Article 15, Section 1 of the California Constitution, 4 Civ. Code §1916-1.

Nonprofit corporations or unincorporated associations created for the purpose of managing a common interest development are exempt. The term “common interest development” includes condominiums, community apartment projects, planned developments, and stock cooperatives.   Civ. Code §§1351(a) and (c), 1366 (e)    Los Angeles County Bar

Davis Stirling – Civil Code §1366. New §5650 Duty to Assess, Limitations on Assessments.

(e) Regular and special assessments levied pursuant to the governing documents

Sample CC & R’s Page 24 #9

are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent the association may recover all of the following: [New: Civ. Code §5650(b)]

(1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees.

(2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.

(3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.  Read more: Civil Code §1366

Summary of Usury Laws Law office of Paul Souter 5 pages
Explanation First Tuesday.US

Alternative Second Claim Tolling Rule. The [statute of] limitations period is extended when a person has several legal remedies and, “reasonably and in good faith,” “timely” (within the SOL) pursues one of them but believing the second “similar” claim is unnecessary or can’t be filed until the first remedy is pursued; and the defendant is not prejudiced because the first claim alerts the defendant to begin investigating the facts which form the basis for the second factually similar claim. Collier v. City of Pasadena (1983) 142 Cal. App. 3d 917, 924-926; Myers v. County of Orange (1970) 6 CA3d 626, 634.


CC & R - Assessment

Summary of Open Meeting Act 4900 - 4950
by Curtis #Sproul Esq
This summary appears to have been written in 2014, so you'll want to check the code references... 
Summary of Open Meeting Act 4900 - 4950 by Curtis Sproul Esq

Brown Act – Very similar to Davis Stirling – Learning Video

4 comments on “Illegal Late Fees – Usury

  1. Is a Homeowner’s Association liable for usury when they compound interest charges and the total interest being charged exceeds 12%

    • Sounds to me like that is exactly what my research above indicates. Please double check with competent legal counsel. You might start with those above whom I’ve cited, plus Todd Friedman, Esq. Who might be willing to take your case at no charge, as he would collect his fee from the HOA.

      • Thank you Steve.

        I did the research today myself and came to the same conclusion. CC 5655 (c), formerly CC 1366(f) says that Associations are exempted from the interest-rate limitations imposed by Art XV of the Ca Constitution, SUBJECT TO THE LIMITATIONS OF THIS SECTION. (e.g. 12%).

        I think that one can argue that once you exceed the 12%, you are liable for usury.


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