Chronic Deliquent Regime Payment

Our HOA is in the state of South Carolina and there are some laws governing what you can't do to recoup fees. Such as, you can't "garnish" wages. Our Hoa has gone to a lein and a personal judgement against the non-payer. So far these things have not worked. Our Management company handles these actions through a lawyer and presently this is in their hands. We as the BOD are frustrated with the lack of payment and the lenght of time this has gone on, without any resolution. We have inquired about a collections agency to become involved and our management company said they don't use them. Our response was, why not?! Who has had such an experience with non payment and has anyone used a collections agency, with what results? Thanks.

Thanks for the reply.Reading another post on this subject, a comment regarding this really hit home: "Chronic delinquency is a form of community gangarene that slowly spreads and is potentially fatal to cash flow". That's is why, I am searching for a method that expedites the process----Hopefully. Very frustrating. How does one find out if a HOA can foreclose on a deliquent account? I believe that there are no provisions in our covenants, covering using foreclosure.

Hi Ed:

These are tough economic times for everyone from owners to HOA’s. It can take time to collect, but the important aspect is with a lien you at least can collect if or when they sell the home. In the meantime the HOA may need to consider slightly raising the fees to cover costs. While maybe not particularly fair due to potentially covering those who do not pay for a period of time (but potentially collected in the long run), the board has a responsibility to take steps to insure solvency of the association and to cover all costs.

Unfortunately there are not alot of options to "expedite" the process. All options including foreclosure take time.

Ed

Our BOD just had a discussion on late payers. You can send all the letters you like, place all the liens you want, get judgements, etc., as we presently do, but unless you are prepared to go the foreclosure route there is little that can done.

Before I go on, I want to make it clear I do not see foreclosure as something our HOA (or any HOA) wants to get into. I am adamantly opposed to us foreclosing for a myriad of reasons, but another subject.

We have been informed of a law firm that does specialize in association collection and foreclosures. One of our BOD members has had a preliminary discussion with them. They have a multi-step process. Their process can be stopped at anytime by either the homeowner paying their past dues (plus a service fee to the company) or the BOD deciding not to go the next step. They have also given us references of other associations they do work for. There would be no contract with them.

Basically we discussed the following procedure:

Day 1, First qtr dues billed and payable within 15 days. Present procedure.

Day 45, First qtr dues now 30 days late, polite letter from HOA including $5.00 late fee. Present procedure.

Day 90, Second qtr dues billed and payable within 15 days plus a notice of past due first qtr and adding another $5.00 late fee. Present procedure.

Day 120, Letter from HOA threatening legal action if past due dues and late fees not paid within 30 days.

Day 150 Letter from the law firm with notice of lien (this letter/action will cost the HOA $65.00) and threat of further action unless paid in 30 days. There will also be fee of $425 payable by the homeowner to the law firm. This fee is in addition to unpaid dues. $65.00 charge to HOA repaid if fee collected from homeowner.

Day 180, Letter from law firm giving notice of intent to foreclose plus additional law firm fee of $150.00 to the homeowner. HOA would also bill for 3rd qtr at this time.

At this time the HOA is out $65.00 we paid the law firm (Day 150) and of course two quarterly dues. It now becomes decision time. Meaning does the HOA proceed down the foreclosure route or do we drop it.

We are still discussing our options but we do agree we do not want to go to foreclosure.

Comments and suggestions welcome.

Thanks

PS
Our HOA is 120 stanDalone patio homes in SC.

I think the fact your board is so hesitant about pursuing foreclosure takes the sting out of many things. I am NOT saying you should all change your policy on this. What I am saying is don't let on to people that this isn't an option that can't be on the table. If the membership knows the board feelings on this, then they are less inclined to take action. Anyone can live with a lien for a loooooong time on their property. They never see the bill unless the HOA sends it to them to remind them what they owe. The owner can even rent out their home indefinetely with the lien on it. The Renter isn't responsible (Excpept maybe in florida) for the HOA dues. If your HOA doesn't send a message that it has the power to foreclose then it diminishes it's options/power.

I've done a foreclosure in our HOA. It was the right thing to do in this situation. NOT all situations are forecloseable ones and I agree they should be avoided if possible. This person had a reputation for threatening to burn our clubhouse down, tried to force their renter to pay their HOA bill, refused to participate in a special assessement situation, overcharged her renter which later got sued for, and many, many other problems. It was over 2 years of non-payment of dues owed before I took the foreclosure action. Which had full 100% support from the membership and board. We never thought they would go through with the foreclosure and pay up. Instead they got themselves into a legal trap that was beyond us. It took well over a year for that house to be liveable again and get new owners. However, we ended the burden of supporting their attitude and empty pockets.

Foreclosure can be a moral thing and I agree to that. However, there does come a point when the threat or even knowledge of that being an option has to be played out. If you don't let people know the HOA has that power, they will never be afraid of it. Just make sure to mention that as a legal option when you send out your letters. Otherwise, no one will understand the HOA's power or that's an option.