Q: Our management company is collecting $250.00 on each delinquent account as a “management collections fee”. We are fine with this if they can collect it, but it is often challenged by banks and title companies when the properties are foreclosed and back up for sale. Some of these challenges result in delays in closings, which delays the collection of our delinquent assessments. Is this fee legal?
A: Florida law is not entirely clear with respect to the collection of “management” or “administrative” fees on delinquent accounts, but many community association attorneys do not believe that these fees are authorized by either Chapter 718 or Chapter 720. Those attorneys generally take the position that the $25.00 late fee authorized by statute is adequate compensation for late payments, but of course that fee is paid to the association and not the management company. There is an effort by legislators to clarify the legality of these fees, so we can expect this issue to appear in a bill in an upcoming session in Tallahassee. Our position is that a smaller administrative fee for collections in the range of $25.00 to $50.00 is more reasonable and can be collected with relative ease. There is also the possibility of a law reducing the “estoppel fee” charged by associations and their management firms to provide information to title agents.