An owner on active duty sent us orders. How do we apply the 6 percent SCRA cap to their HOA account?

By OurHOA · General information · Revised November 8, 2026

What an HOA treasurer does when an owner sends military orders: check eligibility, recalculate interest and late fees at 6 percent, credit the ledger and reply.

Part of the HOA board handbook: treasurer and money.

Recalculate back to the call-up date

Do not just lower the rate going forward. Under the Servicemembers Civil Relief Act, 50 U.S.C. section 3937, a covered debt cannot carry more than 6 percent a year during military service. Once the owner gives you written notice and a copy of orders, section 3937(b)(2) makes the cap effective back to the date the owner was called to service. Anything above 6 percent is forgiven, not postponed, so you cannot add it back when the owner comes home. The definition of interest is the part treasurers miss. Section 3937(d)(1) includes service charges, fees and any other charges on the debt, so your late fees count toward the 6 percent along with your interest. The dues themselves are still owed. This guide covers the ledger work. Our guide on whether an HOA can foreclose on an active-duty servicemember covers the wider law. Rules vary by state and by your governing documents, and this is education, not legal advice.

Check whether the cap reaches this account

Answer four questions. - Was the obligation incurred before service? Compare the deed date with the call-up date. An owner who bought while on active duty generally falls outside the cap. - Whose debt is it? The section covers a debt of the servicemember, or of the servicemember and spouse jointly. If the deed shows only a spouse, a trust or an LLC, ask the attorney. - Is this military service? Section 3911(2) covers active duty in the Army, Navy, Air Force, Marine Corps, Space Force and Coast Guard, and certain National Guard calls of more than 30 consecutive days. A weekend drill does not count. - Is the request on time? The owner has until 180 days after release from service to send it. A power of attorney holder or the owner's attorney can make the request for the owner under section 3920. One gray area: the statute never mentions HOA dues, and installments that come due during service could be argued to be new obligations. Treat them as covered, because the duty to pay comes from covenants the owner took on at purchase and the amount at stake is usually small. The board cannot deny the cap because the owner seems able to pay. Section 3937(c) gives that decision to a court, and the legal bill would likely exceed the money in dispute.

Confirm service without collecting more than you need

Orders are the standard proof, along with any orders extending the service. The statute also accepts other appropriate evidence, including a certified letter from a commanding officer. You only need the name and the service dates, so tell the owner they may black out the rest. The Defense Manpower Data Center runs a free status site at scra.dmdc.osd.mil, and section 3937(b)(1)(B) lets a creditor use its data in place of the owner's paperwork. Create an account, then request a certificate for a specific date. It shows whether the person was on active duty that day, had left active duty within the prior 367 days, or had been notified of a call-up. Search with a last name and date of birth. Its user guide says a Social Security number is not required. Keep orders and certificates in a restricted file, out of the shared board drive and meeting packets.

Recalculate the ledger, with a worked example

Pull the ledger from the call-up date forward. Leave charges from before that date alone. For each month in service, add up every interest charge and late fee, then compare the total with 6 percent a year on the unpaid dues balance. Credit the difference. A Florida example: an owner who bought in 2022 is called up March 1 and owes $1,800 in past-due dues that day. Dues of $150 a month go unpaid. The association charges 18 percent simple interest and a $25 late fee on each installment. Orders arrive November 1. - Month-end dues balances for March through October run from $1,950 to $3,000 and total $20,400. - Interest charged at 18 percent: $20,400 x 1.5 percent = $306. - Late fees charged: 8 x $25 = $200. - Total charged during service: $506. - Allowed at 6 percent: $20,400 x 0.5 percent = $102. - Credit to the account: $404. From November on, turn off the late fee and post interest at 6 percent. On a $3,150 balance that is $15.75 for the month. If the owner is on a payment plan, section 3937(a)(3) reduces each payment by the forgiven amount tied to that period, so recompute the schedule. Book the credit as a reduction of late fee and interest income, not as bad debt. Ask the attorney whether collection costs billed during service also count as other charges, because the definition is broad. If the credit leaves the account with a positive balance, offer the owner a refund.

What Texas, Florida and Colorado change

State law changes the arithmetic, not the federal cap. Texas. Your rate comes from the dedicatory instruments. Property Code section 209.0063 applies payments to delinquent assessments first, so a credit usually removes charges still sitting unpaid at the bottom of the ledger. Section 209.006(b)(2)(C) also requires certified enforcement notices to tell the owner about possible rights under the Act. Florida. Section 720.3085(3) allows the documents' interest rate, or 18 percent simple interest if they set none, plus a late fee up to the greater of $25 or 5 percent of the installment. Payments go to interest first, then late fees, then collection costs, then assessments. Money the owner paid toward interest above the cap has to move down that line, so rerun each payment instead of posting one lump credit. Colorado. Section 38-33.3-315(2) already caps interest on past-due assessments at 8 percent, so the interest difference is small and the late fee often drives the credit. Section 38-33.3-209.5(5)(a) requires the collection policy to state how payments are applied, so follow it when you rerun the account.

Reply in writing

The statute sets no deadline for your answer. Aim for 10 days, and stop new charges the day the notice arrives. Sample letter: "We received your notice and a copy of your orders on [date]. Based on those orders, we have applied the 6 percent limit under 50 U.S.C. section 3937 to your account from [call-up date]. Interest and late fees above that limit during your service have been forgiven, for a credit of $[amount]. A corrected statement is enclosed. Your dues remain payable, and your balance today is $[amount]. Please send any orders that extend your service and tell us your release date when you have it. Questions can go to [name, phone, email]." Add a clause to your collection policy so the next treasurer does the same thing: "When an owner provides written notice and orders under the Servicemembers Civil Relief Act, the treasurer will adjust the account as the Act requires, reply in writing and report the account by number at the next board meeting." The minutes only need the account number and the fact of the adjustment.

Pause the collection track and bring in the attorney

If the account has gone to an attorney, send the orders there the same day. Our guide on handling owner payments after an account goes to the attorney covers the handoff. Several other rules may now apply. - Default judgments. Under 50 U.S.C. section 3931, a plaintiff must file an affidavit on the defendant's military status before a default judgment, and the court must appoint an attorney first if the defendant appears to be in service. - Foreclosure. Section 3953 limits sales on pre-service mortgage-type debts without a court order during service and for one year after. Assume it reaches assessment liens. - Texas. Property Code section 51.015 names liens securing assessments. It bars a sale during active duty and for nine months after, unless there is a court order or a compliant waiver. A knowing violation is a Class A misdemeanor. Use whichever federal or state period runs longer. - Waivers. Section 3918 requires a waiver of these foreclosure protections to be a separate signed document, made during or after service. Never bury one in a payment plan. Section 3936 also keeps military service out of the time limit for suing the servicemember, so there is rarely a rush. Confirm with the attorney how it applies to your lien deadlines.

End the cap on a date, then recheck

For an ordinary debt, the cap runs through the period of service. For a mortgage, trust deed or other security in the nature of a mortgage, it runs one year longer. The statute does not say which rule fits a recorded assessment lien, so hold 6 percent for the extra year on those accounts unless the attorney says otherwise. Put the release date on the treasurer's calendar. On that date, run a new status certificate and save it, because orders get extended. Restart normal charges only for periods after the cap ends, and never recharge what you forgave.

Mistakes to avoid

- Capping interest but leaving the late fees in place. - Moving the forgiven amount to the end of the plan. Forgiven means gone. - Reporting the request to a credit bureau. Section 3919 says seeking a stay, postponement or suspension of a civil obligation cannot by itself justify an adverse credit report. - Shrugging off the penalty. A knowing violation of section 3937(a) can bring a fine or up to a year in prison, and section 4042 lets an aggrieved person sue for damages, with possible attorney fees.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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