How Is Late-Payment Interest on Dues Legally Applied?

What Is Late-Payment Interest?

Late-payment interest is the additional amount that an owner who fails to pay a common expense or advance payment on time is obligated to pay because of the late payment. Its purpose is to discourage late payment and to prevent unfairness to owners who pay on time. This is not a penalty but the compensation for the burden created by the delay.

What Is the Legal Rate?

The Turkish Condominium Law provides for a late-payment interest of five percent per month in case of delay. That is, for the unpaid amount, five percent is added to the debt for each month that passes. This rate is the legal ceiling; the management plan or a board decision may set a lower rate but cannot exceed the legal rate.

How Is It Calculated?

The calculation is made on the unpaid amount according to the number of months delayed. For example, for an owner who pays 1,000 TL of dues two months late, a two-month late-payment interest is calculated at five percent per month. Whether the calculation will be made on a daily or monthly basis may vary according to the management plan and practice; what matters is following a consistent and transparent method.

Manual tracking of such calculations is prone to errors. In a digital management system, late-payment interest is calculated automatically according to the specified rate and updated daily; thus, both the manager and the owner see the current debt clearly.

From Which Date Does It Accrue?

Whether late-payment interest starts from the accrual date or the due date can be determined in the management plan. The common practice is that interest begins to accrue when the debt is not paid after its due date. For this reason, each building must refer to the regulation in its own management plan.

Can Late-Payment Interest Be Claimed in Enforcement Proceedings?

Yes. When unpaid dues are pursued through enforcement, the accrued late-payment interest may be claimed together with the principal debt. This ensures that the receivable is collected in full. The interest being correctly calculated and documented is important for the enforcement proceeding to proceed on solid ground.

Common Mistakes

• Exceeding the legal rate: Interest exceeding five percent per month cannot be applied.
• Inconsistent calculation: Applying to some and not to others, or using different methods, leads to objections.
• Failing to document: If late-payment interest is not recorded, it becomes difficult to prove at the enforcement stage.

Related Topics

We covered the place of late-payment interest in collections in our late dues and FIFO article, its claim in enforcement in our enforcement proceedings article, and the statute of limitations for dues debt in our statute of limitations article.

This content is for informational purposes. The rate and application of late-payment interest may vary according to your management plan; obtain legal counsel where necessary.