§ 24-10.1. Late fees. - North Carolina Statutes

§24‑10.1.  Late fees.

(a)        Subject to thelimitations contained in subsection (b) of this section, any lender may chargea party to a loan or extension of credit governed by the provisions of G.S. 24‑1.1,24‑1.2, or 24‑1.1A a late payment charge as agreed upon by theparties in the loan contract.

(b)        No lender maycharge a late payment charge:

(1)        In excess of fourpercent (4%) of the amount of the payment past due; or

(2)        In excess of theamount disclosed with particularity to the borrower pursuant to the provisionsof the Federal Consumer Credit Protection Act if the transaction is one towhich the provisions of that act apply, which in no event shall exceed fourpercent (4%); or

(3)        For any paymentunless past due for 15 days or more; provided, however, if the loan is one onwhich interest on each installment is paid in advance, no late payment chargemay be charged until the payment is 30 days past due or more; or

(4)        More than once withrespect to a single late payment.  If a late payment charge is deducted from apayment made on the contract and such deduction results in a subsequent defaulton a subsequent payment, no late payment charge may be imposed for suchdefault.  If a late payment charge has been once imposed with respect to aparticular late payment, no such charge shall be imposed with respect to anyfuture payment which would have been timely and sufficient but for the previousdefault; provided that when a borrower fails to make an installment payment,and the terms of the loan agreement provide that subsequent payments shallfirst be applied to the past due balance, and the borrower resumes makinginstallment payments but has not paid all past due installments, then thelender may enforce the contract according to its terms, imposing a separatelate payment charge for each installment that becomes due until the default iscured; or

(5)        On any loan which byits terms calls for repayment of the entire balance in a single payment and notfor installments of interest or principal and interest; or

(6)        Unless the lendernotifies the borrower within 45 days following the date the payment was duethat a late payment charge has been imposed for a particular late payment whichlate payment must be paid unless the borrower can show that the installment waspaid in full and on time.  No late payment charge may be collected from anyborrower if the borrower informs the lender that non‑payment of aninstallment is in dispute and presents proof of payment within 45 days ofreceipt of the lender's notice of the late charge.

(c)        The provisions ofthis subsection apply only to home loans made by lenders described in G.S. 24‑1.1A(a)(2). Notwithstanding that the note or other loan document sets forth a late paymentcharge in excess of that permitted in this section, the loan shall not bedeemed to be unlawful if:

(1)        No late fee inexcess of those permitted in this section has been assessed or collected by thelender; and

(2)        a.         Ifthe loan is executed on or after July 14, 1993, the lender provides writtennotice to the borrower within 90 days of the date of execution of the loandocuments that the late payment charge with respect to the loan shall be fourpercent (4%) or less; or

b.         If the loan wasexecuted prior to July 14, 1993, the lender provides written notice to theborrower within six months of that date that the late payment charge withrespect to the loan shall be four percent (4%) or less. (1985,c. 755, s. 1; 1987, c. 447; 1993, c. 339, s. 1.)