Delinquent Accounts & Common Element Parking

Good Evening!

I am the President of a 228 unit condo complex in Georgia. I apoligize now for the long email.

The builder handed the association over in January. We currently have $93k+ in delinquent dues.

Our Covenant states: “If assessments and other charges or any part thereof remain unpaid more than thirty (30) days after the assessment payments first become delinquent, the Association, acting through the Board of Directors, may institute suit to collect all amount due pursuant to the provisions of the Declaration, the Bylaws, the Act and Georgia law, including reasonable attorney’s fees actually incurred, and suspend the Owner’s and Occupant’s right to vote and the right to use the Common Elements; provided, however, the Board may not limit ingress and egress…” (Declaration of Condominiums, 10.c.iv, pg. 9)

From this we gather that they will be parked illegally if they park in our parking lot -- we are private property, as the county will not pave our parking lot or streets.

It further states: “…If any vehicle is parked on any portion of the Condominium in violation of this Paragraph or in violation of the Association’s rules and regulations, the Board or agent of the Association may place a notice on the vehicle specifying the nature of the violation and stating that after twenty-four (24) hours the vehicle may be towed or booted. The notice shall include the name and telephone number of the person or entity that will do the towing or booting and the name and telephone number of a person to contact regarding the alleged violation. If twenty-four (24) hours after such notice is placed on the vehicle the violation continues or thereafter occurs again within six (6) months of such notice, the Board or agent of the Association may have the vehicle towed or booted in accordance with the notice, without further notice to the Owner or user of the vehicle...” (Declaration of Condominiums, 14.i, pg. 21)

We have spoken with our attorneys and been given the okay to tow, but I wanted to get some ideas of what to expect from someone who has taken this action. We have residents who have threaten to call the police if we tow their cars. I sent a note to the police department and was told "To post signs in the common areas indicating that these areas are for active association members. Maybe in the parking areas also include that violators cars will be towed. Distribute flyers making all residents aware of the covenants and what actions will be taken if they don't comply."

Any thoughts are appreciated!

Thanks!

Caroline,

You might also want to consider giving the debt over to a collection agency for 60 days. Their collection expenses are in addition to the debt, so we lose nothing and the owner pays penalities. Then after the collections period, consult your HOA attorney about a lien if this is permissible in your state.

Also, your Covenants are very clear. If they go into arrears, then you have the right to suspend their privileges to park in the common area. Are any of the spots deeded or are they all strictly common areas? It this is definately common area, I would recommend that you send each homeowner a final billing notice and restate the relevant section in your bylaws that gives you right to revoke their priviliges. Also give them 'please respond by dates". Since some of them seem to be very deep in arrears, you might want to work them in order to get them current. Then sign the entrance to the property with the proper signage that details that this is an HOA and parking is restricted to residents and guests. Check with your local county and state laws for the exact verbage for the signs. Then find a towing company that does impound towing. Not all towing companies will impound cars. After that, have the impound company tow 1 or 2 cars at around 2-3 am. That's all that it will take. Word will get around.

It's not fair for some of the homeowners to be paying and others not. Good luck.

I agree... towing (IMHO) should be done to enforce parking or safety issues and not as a step in the collection of past dues/assessments.

What do you accomplish by having a tow...? The owner is then responsible to the towing company for the tow fee, the storage fee, and another applicable fees. Personally, I would rather have that money go to a collection attorney, who can then accelerate to garnishment of wages, etc. Meanwhile with this solution the owner is still able to commute to work, and earn the money to pay the dues.

This is not a free pass (as I am sure someone here will say), it is simply using a "grenade" to get the same intended result - as opposed to dropping a nuke.

CarolineS:
In quoting your note above...'suspend the Owner’s and Occupant’s right to vote and the right to use the Common Elements; provided, however, the Board may not limit ingress and egress…” (Declaration of Condominiums, 10.c.iv, pg. 9). I would question whether you are actually reading more into this then is stated because you have concluded that they cannot use the parking areas.

The quote above states that the Board cannot limit ingress and egress--the entering and exiting of residents. Further, if a resident who is in arrears is not barred from entering the community, are they not allowed to park?? They can enter but not park, they can only drive around? and around? I'm not sure I agree with your interpretation of the covenant dictates. It does NOT STATE that one late on dues CANNOT use the parking area.

What is stated is...'If any vehicle is parked on any portion of the Condominium in violation of this Paragraph or in violation of the Association’s rules and regulations, the Board or agent of the Association may place a notice on the vehicle specifying the nature of the violation and stating that after twenty-four (24) hours the vehicle may be towed or booted....'. Further, the police are advising you...'To post signs in the common areas indicating that these areas are for active association members.' Again, this may be expanding on the covenant incorrectly.

Before you post signs, and before you remove a resident's vehicle who may be in arrears on dues payment, I would strongly recommend you seek legal counsel to interpret correctly for you. You may be opening the Board/Assn. up for law suits. Further, if there is a gray area with this, I would opt on the side of the resident being able to park.

Your bigger issue with all of this is the fact that you have $93K in delinquent dues. This is what you should be addressing with your management company, and finding a solution for those residents in arrears to pay up. Denying them to park is not the way to do it.

Paul, you hit the nail on the head! Why worry about parking when there is a much more serious problem? Priorities need to be established here!

Oh...and YES! We are cutting the grass there just aren't any flowers, new pine straw/mulch and the lawn is not as green as it could be if we could afford fertilizer -- unless I can figure a way to bottle the excuses for not paying.

Thanks!

Caroline,
It appears you are doing many things right to encourage owners to pay. My thoughts are:
1) Are homeowners billed monthly and include late charges? If not perhaps this procedure should be instigated.
2) What is the amount of your monthly late charge? Perhaps it needs to be significantly increased.
3) Is there a penalty for defaulting on payment plans? If not why not? If so, it apparently was not enough to discourage defaulting.
4) Is your attorney the same as the Developer used? If so, perhaps you need a change.
5) You apparently did not do a transition audit before homeowner takeover from the Developer's Board. Perhaps doing this could provide additional funds or uncover additional Developer responsibilities.

We use the same law firm and our management company suggested using a different one for the collections portion of the legal stuff. I like this law firm for a lot of other reasons tho.

One of the law seminars I attended, hosted by WNCW, had a segment on collections and one of the things they suggested was shutting off utilities that are paid through the association. If you don't pay your assessment then shut off something, that is what the gas company would do if you didn't pay your gas bill. Look at what is included in the monthly assessment and see what can be turned off.

As for the flowers...there is still time to plant them but we have been under a state wide watering ban that has gotten tighter in the last month.

Our documents allow for a a late fee of 18%, liens on homes at 30 days past due...always willing to work out payment plans. Too bad assessments can't be paid through your mortgage payment like insurance and taxes (I think they do this in FL).

We filed lawsuits last year, won, and still can't collect.

Julie, the Assessments paid through your mortgage are not specifically a Florida thing. I have heard of several large communities that required this at closing from the builder as they used their title company.