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HabitatReporter here, with a response from Eric Goidel, Esq., of Borah Goldstein Altschuler Nahins, & Goidel, P.C.:
"The question is not whether the late charges being imposed by the apartment corporation is usurious, but whether those late charges can be imposed at all. Where a proprietary lease has a specific formula for a late charge, the only way that an apartment corporation can legally change the formula is by way of an amendment to the proprietary lease. Virtually all proprietary leases require the affirmative vote of some super majority of shareholders-lessees (typically seventy-five (75%) percent) and do not give boards of directors the unilateral power to amend the proprietary lease. A late charge in derogation of a clear proprietary lease provision would be uncollectible."
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HabitatReporter, thanks for the response from attorney Eric Goidel. While Mr. Goidel is certainly correct that the authority for any late charges must be in the Proprietary Lease -- or an amendment to the lease approved by the required percentage of shareholders -- the original poster said from the start that his lease *did* have such a clause: "Our late fee is outlined in the prop lease as being based on a maximum legal rate of interest (16% or 1.5% a month)."
The poster then went on to explain his board's twisted *interpretation* of this clause: namely, that 5% per month was somehow equivalent to (or less than!) 16% per year, and was therefore permitted by the current lease without amending it. That's just crazy, and provably false.
Also, even if that coop managed to get a super-majority to approve a lease amendment stating that interest on overdue balances was 60% per year, I can't imagine that it would be enforceable in any state with laws against usury. As far as I know, laws invariably trump the lease in case of a conflict. For example, the portions of the standard "Use of Premises" clause (Paragraph 14 in many leases) that conflict with the Roommate Law are not enforceable. You *can* have a roommate, regardless of what the lease says.
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