Letter of past due accounts

Such a letter would be prima facie evidence that your current board is so incompetent that it should relieved of its responsibilities through either recall or court-ordered receivership.

The message is that the board has allowed assessments to be unpaid and taken no serious steps to collect beyond trying to shame delinquent owners into paying up. But it also says that you have no reserve funds and intend to make capital repairs from the current operating budget. The board is responsible to collect assessments and establish reserves for capital repairs, among other duties.

I would agree with Larry. There is no reason to send out a letter to all homeowners. It sounds like the BOD needs to focus on more effective and aggressive collection techniques.

Kelsi

Before slapping liens as suggested, I would check your state statues first. A lot of lawyers on this site.

As I deal with California, I would have to disagree. You are in default or delinquent, because is not automatically created. Last I checked you had to do some paperwork and then have it recorded with the Counties. Some states even make you vote on it, some even have due process, but it's not automatic.

Kelsi,

I would be careful in how you word such a letter. I agree with others that it may come back to bite the Association. Instead, I'd suggest a two prong approach:

1) Follow your Assocaitions written collection policy to the letter. If you do not have such a policy, then create one. Send a general letter stating that the Board has a fiduciary duty to collect assessments and that the Board, on mm/dd/yyyy, will escalate collection efforts on all accounts that are 90 days or more behind.

2) If desired, explain that some projects (do not mention them) have had to be deferred due to budgetary concerns. Escalating collection efforts will assist in addressing those budgetary concerns.

Typically, once members realize you are serious about following your Association collection policy (which includes liens and, if needed, foreclosure) most members will start paying on time.

All the wording of my covenants? I have.
All the wording of CA statutes? I have not but do understand that in CA the Board must vote before the continuing lien may be recorded with the County.

Richard, I think we are once again in agreement but arguing over semantics.

As I understand it, and expecting that similar language from my earlier citation is in the CC&Rs, since the CC&Rs are considered a contract and per the terms of that contract the member is obligated to pay assessments and agrees to secure the obligation with their property, a contractual agreement is created that specifies a lien continually exists on the property (may also be known as a contract lien). No action may be taken on such a lien without formally recording the lien with the County (how that is done varies from State to State and County to County).

Here are some articles:

Quackit homepage

Misc. Homestead, Liens, Why associations need to follow the rules from the Sun Sentinel (FL)

Lien On Me: A Treatment Of HOA Assessments from Arkansas

HOA ASSESSMENT LIENS: EVERYTHING YOU NEED TO KNOW TO FIGURE OUT YOUR
HEAD FROM YOUR ASSESSMENT LIEN based on TX statutes

Richard, you are correct that the lien must be filed (recorded, perfected) in order to actually collect on the continuing lien. See the following bankruptcy cases: KINGSTON AT WAKEFIELD v CASTELL and Horton Hills v. Hutson

Tim

What is missing from your wording is "the lien to be effective upon recordation of a Notice of Delinquent Assessment". My state in particular, requires that the recordation of a lien be approved in an open session of the Board.

If you didn't realize it, counties throughout the country record liens against all property once property taxes are due and remove it once paid. In California, county recorders are busy four times a year putting liens on and taking liens off.

What I tried to point out originally was before taking actions, check what is right according to individual state statues. Otherwise, as proven, it can bite them in the butt.

Too many of us here are giving what would be considered "legal advise".

I'd start with explaining to everyone why assessments are important - nothing happens without money because no one works for free. When assessments aren't paid in full and on time, the Association has to make tough decisions on what has to get done - the other stuff may have to be reduced or delayed.

Show the numbers - a copy of the income/expense statement is a great start. It should show the budgeted line items vs. actual dollars spent. I'd also include delinquency totals - in our newsletter, we list the number of homeowners delinquent by 30,60, 90 and 120+ days and the total amount owed in each category. Take the total amount owed and compare that to the estimated cost of the projects that need to be done, but have to be delayed because people aren't paying.

To drive this home and make it easier to read, get someone who's really good with graphics that can design some charts that can provide this information at a glance

Now that you have the homeowners' attention (hopefully), the board should state what's being done to collect this $10K. Have you referred these homeowners to the association attorney? Have lawsuits been filed? Have you filed liens against the property? Are you pursuing foreclosure? Again, you don't have to specify what's being done to who, but you should warn homeowners not paying assessments will cost them a lot more in the end.

Everyone else should be told if this $10K continues to increase, they risk considerably higher assessments and/or special assessments to pay for work that must be done. Worst case scenario - the association has to go into bankruptcy or receivership, thus skyrocketing assessments and lowering property values to minus whatever.

End it with referring homeowners to the collection policy (which you should have strengthened)and reminding people of their legal obligation to pay assessments. If they have questions, they can contact the property manager.

You don't have to use cuss words, but you need to be professional and speak plainly about what's going on. Ultimately, people have to understand their quality of life and property values are at stake and if they want both to risk they need to grow the hell up and pay their damn bill (sorry, couldn't resist!)