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BelindaB1 (Michigan)
Posts: 1
Posted:
What is the process of forcing payment of delinquent dues? I just joined the board a few months ago and we have a homeowner that is about 3 years behind in his dues. Do we need to file suit in small claims court first or can we just file an Association Lien against his property in our county office?

TimB4 (Tennessee)
Posts: 21,059
Posted:
Laws vary by State.
Filing a lien simply prevents the owner from selling unless they satisfy the lien.
If the owner has no plans to sell, the lien itself may not be a motivator.

However, once a lien is in place, the Association can take steps to foreclose on the lien and sell the property to collect the money. Foreclosure laws also vary by State and it could take a year or more once the foreclosure process is started. Foreclosure should only be considered as a "lets stop the bleeding" approach, rather then expect to collect all past assessments along with the costs incurred for collecting those assessments.

Your State may require a judicial order prior to foreclosing on the lien.

My suggestion would be the following:

1) Send a certified letter to the owner informing them of the Association records that they are behind in assessments (providing a ledger accounting helps, plus you will need that for future steps). Give them 30 days to pay or enter into a payment plan.

2) After 30 days, send them a certified letter (also send a copy via first class mail in case they don't pick up certified letters) to inform them that the Board will decide escalating collection efforts at a meeting to be held on mm/dd/yyyy.

3) Once you have Board approval, since it's been three years and the Board isn't sure of the process, turn the issue over to an attorney. The Attorney will insure that required procedures are followed and add their fees (which they will expect the Association to pay when due - typically via monthly billing) to the amount the individual owes.

Often, once someone understands the Association is as serious as the mortgage company or credit card company to collect what is owed, they tend to start paying on time.

Also, your Association should have a collection policy.
If not, you may want to draft one.

Ours is:

30 days late - Informal written warning (first class mail)
60 days late - Formal written warning (first class mail)
90 days late - Certified notification (sent certified and first class mail)
120 days - Notice of Agenda item, 4th notice of arrears (sent certified and first class)
After meeting - issue turned over to attorney for collections and the Association has no further communication to the member on this issue (it all goes through the attorney).

KerryL1 (California)
Posts: 14,550
Posted:
Welcome, Belinda. Everything Tim wrote makes sense.

But is there a policy in your own documents about collecting on delinquent payments? There might be written steps to take like calling this owner to a hearing with the Board to discuss the matter. Your state, too, make rehire that certain steps be taken by the Board, due process so to speak.

If your CC&Rs permit it and if you have common area privileges worth withholding, pool or gym admission, for instance, take the steps necessary to withhold those privileges. Works well in my HOA!

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