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Maine Alliance for Road Associations

Penalty Limits

  • 02 Jul 2025 4:28 AM
    Quote
    Message # 13516580
    Anonymous member

    In the formation of a Statutory Road Association, is there a limit to the interest penalty on delinquent road maintenance fees (contained in the by-laws)? Our membership has suggested an 8% per month penalty on a currently owed $400. Is that too excessive?
  • 03 Jul 2025 6:15 AM
    Quote
    Reply # 13517029 on 13516580
    Anonymous member (Administrator)

    The interest rate needs to be perceived by the courts to be fair and equitable to be allowed to stand. An interest rate in the by-laws so voted by the owners probably would stand  Our road association uses the interest-rate set at the town for delinquent taxes. Check out our Resources Page for an example. 

    Last modified: 03 Jul 2025 7:07 AM | Anonymous member (Administrator)
  • 03 Jul 2025 9:40 AM
    Quote
    Reply # 13517087 on 13516580
    Anonymous member

    As stated above, must be fair and equitable.

    I might consider tying your interest rate to the Maine state rate rather than the municipal rate. Our bylaws originally stated that we would charge the municipal rate. Towns are authorized to charge interest up to the state rate. However, our town has been slow to catch up with Maine state rates. We recently amended our bylaws so interest aligns with state rate. This way we still satisfy the fair and reasonable requirement, but we also wont miss out on charging interest because our town rate has not caught up to the higher state rate. 
  • 04 Jul 2025 7:49 AM
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    Reply # 13517415 on 13516580
    Anonymous member (Administrator)

    Nice suggestion. We’ll probably adjust our policy to reflect State tax rates. Thank you!

    In our by-laws, a three to five member Board determines the payment penalty policy. This lessens the need for by-law amendment for future change. Our Board may also adjust policy application in case of member hardship. 

    Also, in answer to the initial post above, the Statutes, 23 Title, §§3101 - 3104 do not discuss interest rates on delinquent assessments. I am not an attorney, but the by-laws voted by majority seem to present a suitable location  for the addition of penalties to the Notice of Claim and associated costs already established in the Statutes.

    Last modified: 04 Jul 2025 3:35 PM | Anonymous member (Administrator)
  • 06 Jul 2025 8:42 AM
    Quote
    Reply # 13517835 on 13516580
    Anonymous member (Administrator)

    My road association has a new, revised Late Payment Penalties Policy approved today by our Board.

    I have posted a Word.docx SAMPLE on the Resources Page and have attached the same SAMPLE below for your consideration. It uses Maine Revenue Service's annual interest rate instead of the Town Tax Assessor's rate.

    Our Town Office is now at 8.5%; Maine Revenue Services, 10%. Thank you for the idea, Joy!

    1 file
    Last modified: 06 Jul 2025 3:38 PM | Anonymous member (Administrator)

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