Arrears Collection by the Board Members

Hello everyone, i'm brand spanking new at this. The reason i'm on here is that we just signed on with a new management company. We couldn't get the former management company to turn over any clear records (they gave a disk that apparently doesn't open w/quick books). The problem is that we have 41 consistent paying homeowners and 24 totally non paying. the new management company sent out (what seemed to me) a lukewarm warning letter. Very few responses were given. My suggestion was that we contact the homeowners in arrears and arrange a meeting with the Board, offer to cut a percentage of arrears provided they start paying each and every month. Our Board Presidente thinks we can be sued for harrassment by the homeowner(s) in question. Does anyone have thoughts on this? Also, for some reason, our board president (great guy by the way) thinks that the Board is not supposed to know the homeowners that are in arrears, he believes that info is for management only. Can anyone provide their thoughts on this?

We couldn't get the former management company to turn over any clear records (they gave a disk that apparently doesn't open w/quick books). (Paula)

Paula,

let me just address this issue for now which really troubles me.
Your Association may be required by law to keep all association financial records for at least seven years. Plus all contracts, etc. You also must perform some kind of financial audit.
Please write a letter to the management company stating you require these records or, better yet, have your attorney do that. Believe me, it is very, very important.

Paula,

You shouldn't consider offering "deals" to reduce the amount of association dues owed. It might be reasonable to offer a payment plan with regular payments over a prescribed period of time, but the full amount owed should eventually be paid. It might also be reasonable to offer an incentive by forgiving a portion (or all) of the late fees provided that the delinquent homeowner agrees to a payment plan by a certain date and provided that the homeowner sticks to the agreed upon plan. Otherwise, the full amount of the balance owed (including applicable late fees) becomes due and payable immediately.

Paula,

I might add your president's fears about being sued for harassment are unfounded.

First, as an attorney once told me, you can't prevent anyone from suing you. You can be sued by anyone for anything at anytime. What you CAN do, the attorney told me, is make it difficult or nearly impossible for the person suing you to win.

It is not harassment to try to collect a legitimate debt as long as your attempts to collect the debt are reasonable. Sending a letter, even one of more follow-up letters is not unreasonable. Telephone calls are not unreasonable, as long as they are made during reasonable hours and not several times a day. Having an attorney send a letter is not unreasonable.

What would be considered unreasonable and constitute possible harassment might be:

Calling at unreasonable times, say after 9pm.
Calling several times a day.
Threatening action you do not intend to take.
Using abusive or threatening language (ie., threatening physical harm).
Representing that you are an attorney when you're not, or representing you are a collector or collection agency when you are not.

You can threaten to turn the account over to an attorney as long as it is your right to do so and you intend to do it. You can threaten to file a lien as long as you are entitled to do so and you intend to do it.

Also, hopefully you have D&O insurance. That would defend the board and the association if someone did file a lawsuit as long as you exercised due diligence and didn't willfully violate any laws in attempting to collect the debt.

Some people my try to avoid paying association dues simply because it's "a group of homeowners" and they mistakenly believe the association has no way of actually collecting them. Some people have to learn the hard way that the association has the force of law to collect amounts owed to the association, the same as with any other legitimate debt.