Creating\Filing Proerty Liens

We are a new board and our first order of business is to get a handle of our delinquent homeowners. We will go through the normal practices of sending our notices with explanations which is the easy part. Once we run into the defiant homeowner, we want to exercise our CCR's rules. This includes small claims and property liens to recover outstanding dues. My question is, does anyone have experience in filing property liens? Can the board do this on their own by just filing at the court, or do we need to involve the attorney? We are trying to avoid adding the expense of attorney fees. We currently have a couple of properties that very far behind on dues, and would like to start putting on the pressure. Since our community is in Indiana, the deterrent of assessing fines to homeowners that don't abide to the CCR's is prohibited. So our only recourse is the legal system. Since we have to go that route, anything we can do ourselves would save the community money.

Thanks

thanks

Sidney, in order to charge late fees, interest, legal charges, etc. this must be in your Declaration. For example R&Rs on Delinquent accounts go to CypressGreensHOA.com, click on Documents, click on Rules and Regulations and scroll down.

This is an example where there are no serious collection problems. If there are the late fee can be increased (many in our area charge $25/month) and the lien filing fees can be increased ($100 is minimal).

The cost of liens differ in each state. I was told that in California that liens do not cost an association money to file. However, in my state of Alabama it costs about $300 to file. Usually an attorney does it.
Here's what you need to keep in mind about filing liens. They do cost the HOA money to do in most cases. For example: Our HOA voted and at 6 months it is automatic lien. Our monthly dues are $50 and late fees are $20. After 6 months the amount owed would be $350. Well it would cost the HOA $300 to place a lien. A lien does NOT guarantee payment. It just means the owner of the home can NOT sale their home until their debt is paid off. So the lien can accumulate for years. However, the HOA is out $300 plus the unpaid dues money. Once the lien is paid up, the HOA is THEN reimbursed for the filing fee.
Late fees and interest charges may be exempt in some state for filing liens against. Another example: A resident in our HOA pays their dues consistently late and never pays their late charges. Those late charges don't go away. So after 12 months the resident is up to date on their dues but still owes the HOA $240. That $240 can't be liened against since it is based on FINES and NOT dues owed.
Another legal way for a HOA to place a lien on property, is for work the HOA may have done to the property that wasn't paid for. Example: The homeowner paints their home a color that is NOT approved by the ACC. The HOA can come in and repaint the house, and send that bill to the member. If that member does not pay, then the HOA can place a lien for that money owed. This is different than a Fine which is NOT a basis for placing a lien on any property. (Can't place a lien on property for parking violations etc...)
IMO a HOA should NEVER try to collect monies in small claims court. That is because a lawsuit only gives the HOA a JUDGEMENT. A JUDGEMENT is NOT money. It just a record showing that person owes the money. Most of the time the money in the award does NOT accummulate (it's a set amount) and the homeowner can SELL their home without paying any money. A lien is still a JUDGEMENT but it does accumulate to the day it's paid AND the owner can NOT sell their property. Would you rather the owner stayed and paid or could leave and owe?
Liens do work and they work well when applied properly. I've gone as far as foreclosing. Once you start placing liens do be prepared to take the ultimate step of foreclosure. People will call your bluff if you don't.

Glen:

Would you feel bad if that person lost a job, or was in a car accident or any accident and couldn't work, or lost a spouse to death and just couldn't afford the fees anymore? Maybe they are trying to sell, but most times it takes more than a couple months to sell a home. Not all people who don't pay their fees are moochers, some run into bad luck. I hope that if I am in that position (and I think we all would) my association would work with me until I can get on my feet again instead of turning its back on me.

Glen:

I have never said that you need to take out a loan or special assess anyone. I said I like the idea and applauded Lance for doing it, however, our association has never waived a late fee or anyones dues since I have been here. I like the idea and if the unfortunate situation came before me I would ask the homeowners and the board their thoughts. If they approve then I see no problem with it, but I don't go out on a limb and do things by myself. All I am saying is that giving back a little bit to a homeowner in a time of need (like a death) can go a long way in the future. Perhaps this person who stopped paying their assessments after a death two years ago is upset because all she felt like was the association cared about was money. If you have given her a month of grace things she might have been grateful for the gesture and paid again. We don't know, you never know, just food for thought. I see your side and respect your opinions, hope you will do the same with mine.