Opinion ID: 894539
Heading Depth: 1
Heading Rank: 5

Heading: Late Fees

Text: We next consider whether section 204.010(a)(10) authorized Northglen to impose a $35 late charge, in addition to the interest charge included in the deed restrictions, for failure to pay the annual assessments, and if so, whether such a construction violates the Contract Clause of the U.S. or Texas Constitution. The trial court held that Northglen could charge a late fee under section 204.010(a)(10), and the court of appeals affirmed. Both courts noted that the deed restrictions did not expressly prohibit late fees nor limit penalties to the interest charge. We hold that Northglen may charge a $35 late fee and that such a charge is constitutional.
The homeowners argue that permitting Northglen to unilaterally assess late charges would defeat the purpose of the deed restrictions, which already impose a six percent interest charge for nonpayment. Additionally, the homeowners argue that by expressly including the interest charge in the restrictions, the homeowners necessarily rejected late charges, under the doctrine of expressio unius est exclusio alterius (to include one thing implies the exclusion of the other). Black's Law Dictionary 602 (7th ed.1999). The court of appeals disagreed with the homeowners' argument and held that Northglen could assess late charges. The court considered the language of section 204.010(a)(10), which provides, in pertinent part: (a) Unless otherwise provided by the restrictions or the association's articles of incorporation or bylaws, the property owners' association, acting through its board of directors or trustees, may: ... (10) impose interest, late charges, and, if applicable, returned check charges for late payments of regular assessments or special assessments. Tex. Prop.Code § 204.010(a)(10). The court held that this statutory language granted Northglen authority to assess the late charge in the absence of specific language to the contrary. Because the deed restrictions do not mention late charges specifically, the court held that silence could not mean otherwise provide. 76 S.W.3d at 174. We agree that nothing in the Northglen deed restrictions could be considered otherwise providing. Each deed restriction contains the same provision for failing to pay assessments: Effect of Non-payment of Assessments: Remedies of the Association. Any assessment not paid within thirty (30) days after the due date shall bear interest from the due date at the rate of six percent (6%) per annum. The Association may bring an action at law against the Owner personally obligated to pay the same, or foreclose the lien against the property. No Owner may waive or otherwise escape liability for the assessments provided for herein by non-use of any Common Area or abandonment of his Lot. Contrary to Brooks's argument, the deed restrictions do not say the penalties are the exclusive remedies for late payments, nor do they say that late charges are not permitted. The deed restrictions only set the rate at which Northglen may charge interest on unpaid assessments. When construing a statute, the Court must presume that every word of the legislation has meaning. Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 173 (Tex.1980). The statute unequivocally says the Board may impose both interest charges and late charges. That the deed restriction mentions interest charges but not late charges is not sufficient to otherwise provide.
Brooks argues that the assessment of a late fee would violate the U.S. [4] and Texas [5] Constitutions' impairment-of-contracts provisions because the deed restrictions do not provide for late fees. The court of appeals examined the constitutionality of the statute and held that Section 204.010 is not directed to any specific kind of contracts, and it does not directly contradict any contractual provision. . . . 76 S.W.3d at 168. The court further noted that the statute is a permissible exercise of the State's police power because it was enacted to promote the public welfare with regard to the property owners associations' ability to better provide services to the homeowners, maintain the common area facilities, and provide for the common security and restriction enforcement. Id. at 168-69. We agree and hold that the same rationale applies to the late fees imposed pursuant to chapter 204. A statute is presumptively constitutional. Barshop v. Medina Cty. Underground Water Conservation Dist., 925 S.W.2d 618, 625 (Tex.1996). As such, we are obligated to avoid constitutional problems if possible. Id. In this case, we must consider two factors: first, whether the statute substantially impairs the contract; and second, if so, whether the Legislature acted within its police powers in enacting the legislation. See Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244-45, 98 S.Ct. 2716, 57 L.Ed.2d 727 (1978). Section 204.010 does not substantially impair Northglen's deed restrictions. The statute operates only where the deed restrictions do not otherwise provide. Tex. Prop.Code § 204.010. It does not serve to withdraw or remove any contractual obligation. If the statute required the assessment of late fees where late fees were expressly prohibited by the deed restrictions, this would likely be a different case. See Travelers' Ins. Co. v. Marshall, 124 Tex. 45, 76 S.W.2d 1007 (1934)(discussing statutes that declare a complete moratorium on particular contracts). We are not faced with that circumstance here. Thus, applying the statute to authorize a late fee is not unconstitutional.