One of the advantages that the Pennsylvania Condominium Act and Planned Community Act (collectively, the "PA Acts") have over the New Jersey Condominium Act, is that the PA Acts specifically direct the application of common expense assessments that have not been paid in a timely fashion.
The PA Acts provide that "unless the declaration provides otherwise, any payment received by an association in connection with the lien under this section shall be applied first to any interest accrued by the association, then to any late fee, then to any costs and reasonable attorney fees incurred by the association in collection or enforcement and then to the delinquent assessment. The foregoing shall be applicable notwithstanding any restrictive endorsement, designation or instructions placed on or accompanying a payment."
This section of the PA Acts provide an excellent framework for how funds should be applied to a delinquent account. Very few condominiums or homeowners associations in New Jersey have similar provisions in their respective governing documents. Therefore, the board of trustees are encouraged to adopt resolutions that set forth how recovered funds will be applied to a delinquent account.
Using the PA Acts as a model, the Resolution could provide that:
....each payment received by the Association from each owner will be applied in the following order:
- Late charges
- Attorneys' fees and legal costs
- Reimbursement of other costs incurred by the Association with respect to the subject Unit, not otherwise covered by the common expense assessments
- Fines
- Past due common expense assessments
- Current common expense assessments due
- Future common expense assessments
Boards should speak with their attorney regarding drafting such resolutions to make sure that there are no conflicting provisions in the Association's governing documents.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
