Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › AmaKhaya tip of the week
February 28, 2011 at 10:32 pm #6686
Two days after the due date for a rental it is, technically, late. Five days later one can bill a late fee. If you have say ten in a month, the added juice will be about $350. Hum, goodley money, no?March 1, 2011 at 7:06 pm #33530
My trustee, PAC Mgt., collects and keeps all late fees, they refuse to share any of it.March 1, 2011 at 7:10 pm #33531
I have no idea why they would do that. Maybe you need to talk with Equity Holding Corp – Tom Standon and find out what they do. I do my own collections for my rental properties, but hey, the trust are simply rentals if one looks at the Use and Possession Agreement.March 1, 2011 at 7:59 pm #33532
Thanks Peter… I do have a call in to Tom.March 1, 2011 at 8:44 pm #33533
My trustee, PAC Mgt., collects and keeps all late fees, they refuse to share any of it.
PAC Mgt. is not associated with Equity Holding Corp (Trustee) or Equity Management Corp (Collection Agent). Talking to Tom about PAC won’t do you any good.
With regard to “late fees”. It’s not a matter of “refusing”, they simply can’t do so. Those late fees are not yours and you are not entitled to them. The Collection Agent, and Landlord and Bank are. They are the ones who manage the Trust and have the burden and expense of dealing with the administration of the payments. Plus, if the payment is late to the Collection Agent then it most likely is going to be late to the Bank, who also charges a Late Fee. Where do you think that comes from? Someone has to pay it. Late Fees ARE NOT a Profit Center and should not be treated as such. At least in a NARS PAC or EHTrust.
Sure, there is a contingency fund but if the RB payment comes in late and without the late fee, the contingency fund is charged the late fee and it reduces the amount of the CF by $75, which may not leave enough in the CF for next month’s payment should it also come in late. So, when the RB makes their next month payment, it needs to include that payment plus last month’s Late Fee to bring the CF back up to a full payment.
Here’s where is really gets nasty. If the RB’s next payment is also late and does not include last month’s late fee, the payment to the lender is now late again and the contingency fund is charge another $75. Now the RB has to send in another $150 for the last two month’s late fees and make the following months payment ONTIME or the problem keeps growing until there is nothing left in the CF. Since all beneficiaries receive the Late Notice, including the Settlor, you may have one ticked off Settlor on your hands.
This is why I always have at least two full monthly payments placed in the CF from the inception of the trust and before the RB can occupy the property. Even if there are several months of late fees, there is always enough to make the full monthly mortgage payment. However, if the RB does not make the CF current within say 90 days, I will serve them a 15 day notice to vacate. That usually does the trick.
So… NO, you are not entitled to any portion of the Late Fees.March 2, 2011 at 2:51 am #33534
Yep, I had the same problem, luckily with only one property. Once we got did a substitution of trustee to EHC, everything has worked well.
Thanks for the post. I thought I’d treat your post as a learning experience for the members.March 2, 2011 at 8:11 pm #33535
Thanks Scott for your prompt response and your input is always invaluable… It keeps the mind in motion.
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