Collecting Unpaid HOA Fees

Hello Everyone! I happy to find this forum because I need advice.

Here is the story:

I am the President of a very small condominium complex, we have two buildings with 4 units in each. The buildings were originally apartments so the units are not metered separately. We receive one utility bill for each building. We have two residents, mother and daughter oddly enough, who are not paying their HOA fees at all. They stopped paying in January 2012. We already have a lien against one of the units and are going to be placing a lien against the other.

My question is: Can the 3 other units in each building who are footing the bill for the delinquents utilities take them to small claims court and recoup their money?

Aside from placing a lien against each what can we do to collect? Our HOA is in very dangerous financial shape. We are going to be forced to raise the HOA fees on good residents to cover the cost of the delinquents. We have written letters, notices til we are blue in the face encouraging them to pay. They simply won't.

Can we take them to small claims court and start garnering their wages? This is something I am looking into now.

Sorry for the rambling of this first post. I am sure you sense my frustration.

Thank you so much for any advice you can give!

Bridgett

Thank you for your prompt reply. This is what I was afraid of. Thank you!

Tim, it isn't just water meters, it is gas and electric too.

Do you have parking lots or driveways that are common areas? Check your Docs - Some COA docs have a clause that says that their voting, parking and other privileges may be suspended if they are over 60 days in arrears. It's not uncommon to see this in the docs. You're not restricting access to the property(They can load/unload etc.),but not park there in the common area spaces. If the provision is in their docs, send them a letter that advises them that their parking privileges have been suspended. Then if they still don't comply, have an impound tow company remove the vehicle from the common areas. Sounds cold, but it's a business and you're about to go out of business.

Wow, I will look for that. Thanks!

Can only stop services if that is in the rules to do so. So tread lighly there. I would make sure to send them notices a lien is on the property every month or when dues are due. Let them know the amount it is accumulating plus legal fees/mailing costs.

If they threaten to sue then let them. Cheaper to counter sue than sue. Plus countersue for amount owed. Sending notices to colect money professionally is NOT harrassment.

Bridgett

You have 8 units with 2 not paying dues. This is 25% default rate when most associations will have start to have financial trouble at about a 10-15% default rate.

Where I you, I would write a letter to each unit owner with a financial outline of what is happening and show how the association is being hurt. I would not mention the two by name but I would show how our association is being financially hurt by non-payers.

I would then call a general meeting to discuss the revenue short coming issue. With only 8 units you might get all to attend, except the two non-payers. Open it up for discussion. If nothing else prepare the others that in the short term they may have to cover the losses.

There might be ways for folks to bring pressure on the non-payers. Now while you did not mention the two non-payers by name, it might well be possible for those at the meeting to "figure out" who they are. Peer pressure, public shaming can be quite persuasive. Let those chips fall where they will.

Also consider turning it over to a debt collection/law firm. Though you may pay a price for their service, they can be quite effective. We reduced are non-payers by about 50% once we turned the law firm loose on them.

Hope this helps.

I like Paul's idea about blocking services but this could get technically tricky as to how and very, very tricky about your legal right to stop utilities. Stop amenities, cable, etc. usually not an issue. Utilities could be a much different issue. I would first ask the utilty company about your rights to and how to do so.

Hope this helps.

Paul:
Just retain a good debt collection firm/attorney. If your governing documents say that the homeowner will pay all costs of collection, then there are firms/attorneys that will work for nothing until they collect and then they get their fees from the debtor. This should work very well for a small association.
Jeanne

Shutting off the utilities would be prohibited in landlord-tenant situations. This case, however, is not a landlord-tenant dispute but a case of an owner consuming services that he has not paid for. Even in a landlord-tenant dispute, if the tenant is responsible for paying his own electricity and fails to pay, the utility company can shut his services off.

Ideally, you should get a lawyer's opinion. But if it were me, I'd turn off their utilities in a heartbeat and leave them off until they pay up or get a court order. They will quickly find that paying up costs far less than hiring an attorney.

Might not be technically possible.

Circuit breaker panels are generally labled. "One", seeming to have problems in their own unit, could "accidentially" throw the "wrong" breakers. "Shazam", the non-payers have no power, might get their attention? Of course, the "accident" could be easily restored, maybe in two or three hours, not long enough for the food in their freezer to thaw. "Accidents" can happen, sorry about that.

Paul T

Not that it matters a whole lot but in our area once the electricity leaves the meter it is the property owner's responsibility to distribute it throught the building. I think the only "property" is the meter, not the electricity, kind of likr buying gas for your car.

Paul T

Lynne has the best idea. Investigate going with seperate, direct billing to individual units.