Interest

Two numbers, set by your state

Most states that regulate association collections cap two separate things about interest on a delinquent assessment: the rate, and the date it starts accruing. Both numbers vary by state, and by what your declaration says. California's statute is a useful illustration of the pattern, not a national number.

"an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due"

Source: California Civil Code § 5650, California Legislature, via FindLaw

The statute is a ceiling, not a target

A state interest cap sets the most an association may charge, not what it must charge. Many statutes let the declaration set a lower rate instead, and the lower number is the one that controls. It does not work the other way: a board cannot vote to charge more than the statutory cap, and a declaration provision that tries to authorize a higher rate does not override the statute.

Before adopting an interest rate as policy, confirm what your own declaration says and what your state statute allows, then write down a rate the board actually enforces the same way every time. See Building a collection policy and Consistency in collections.

Interest is not a late fee, and it is not the whole balance

Interest and a late fee are different charges: a late fee is typically a one-time amount for being late, while interest accrues over time on the unpaid balance. Where a state also controls how an owner's payment gets applied, to the assessment itself first, or to interest and fees first, that order is often set by statute rather than left to the board. Read Late fees and Applying owner payments for how those pieces fit together with interest.