HOA Collections

Our HOA has a very large amount of outstanding HOA Dues and late fees (over $300,000). Obviously, collecting these would make a huge difference to our community (our annual HOA Dues is only $295/yr). Our past board has been very slow in trying to collect, but I would like to explore establishing a Committee to actively pursue this problem. The current board believes that only board-members can access the HOA members property rolls and financial statements. Is this true? I am thinking a campaign to collect, including a 3 month "amnesty" on dues (waiving the late fees), followed by 3 months of "No Action" collections, followed by 3 months with a collection agency, followed by liens, followed by foreclosure.

Can a Committee have access to the HOA Members information to pursue late dues and fines, or can it only be done by board member State? Oh, and we are in rural Texas...

I understand your frustration but your most likely not going to do anything much better than get a ball rolling. Your not as an individual member be able to collect. You may just effect some change. There is this thing called "Reality" that has to be dealt with.

When I became President we implemented a collections policy. We place a lien at 6 months behind. If still did not pay, then we CONSIDERED foreclosure at 1 year. There are many factors that go into that. One can't foreclose/lien on an ACTIVE DUTY Military person. Foreclosure does NOT make the HOA money but STOPS the bleeding. Liens/Foreclosures do cost money to pursue and time consuming.

So you may feel your HOA board isn't doing anything toward collections. Well they may have liens filed already. Those liens add up till the person sells their home. Which may take years. I've found that some HOA members are not comfortable with pursuing more aggressively with foreclosure. They don't believe in taking a house away from someone. So they will just decide to file a lien and wait it out.

You also never ever foreclose on a house that the bank already has in foreclosure. The bank gets paid first and foremost even if the HOA does the foreclosing. (A few states there is a "Super lien" situation that puts HOA on the same level as the bank). The HOA will only get the money leftover if there is any. Most likely there isn't.

I did a foreclosure in our HOA. The house stayed empty for over a year AFTER the foreclosure. No one could touch the home. There is a "Right to redemption" period where the former owner can get the home back. They just have to cough up all the money they owed plus pay for any improvements that may have been done to the home. Which someone isn't going to put that risk when purchasing a foreclosure. All their remodeling work basically goes to the toilet. That house stayed abandoned and empty altogether for nearly 3 years.

So don't go looking to take matters into your own hands. Instead I would highly recommend suggesting to your board a policy on collections. Which may be what you suggest. It also may be another way or waiting period. Collection agencies don't necessarily take on these types of collections. You need a lawyer. All of which costs money your HOA may not have to pursue the debt owed to it. If that is the case, then someone may scream "Selective enforcement" and threaten to sue. A lawsuit is the last thing you all need to collect or be involved in.

Thanks for the feedback, but I don't think I communicated the issue properly. I am not looking to do anything on my own. The board is considering an ad hoc committee to deal with collections, but they don't know if non-board members can have access to property-owner information. The question is whether the ad hoc committee can access the information needed to pursue collections (name, contact info, payment history, etc.), or if only board members can see that information.

Also, we are a gated lake community, so there are a lot of people that buy empty lots so they can have access to the lake (we call them "membership lots"), and those are the majority of our collection issues. I don't think anybody has the desire (or the stomach) to take somebody's home away through foreclosure.

But again, the main question is whether an ad hoc committee can have the access to information needed to initiate and pursue collections.

I agree with Tim, although when I was on my HOA board (and its treasurer for five years), everyone on our Board was aware of who was delinquent (discussing what to do with them took up a considerable part of our meetings! If you had a committee taking this on, it wouldn't be long before someone would yap to the wrong person(s) as to who was delinquent or not (because some people are incapable of keeping their mouths shut about confidential or sensitive matters), and then you could have problems with violations of the Fair Debt Collections Act (which can get VERY expensive as far as fines are concerned).

The Board is responsible for managing the Association's affairs, so it's more appropriate for it to make decisions on collection actions like who should be referred to the association attorney for collection, if a lien should be filed on a home, evaluating the effectiveness of the collection policy, etc. I realize it's not at all pleasant to sue one's neighbor or foreclose on a home, but this is one of the more difficult parts of Board membership they signed up for, so they'll just have to take some Alka-Seltzer and deal with it. It's very unfair for other homeowners to indirectly subsidize their neighbors in paying the association's bills while the deadbeats continue to reap the benefits.

I think the board is correct that only board members are entitled to the records relating to association dues and delinquencies. My reason is as follows:

Section 209 of the Texas Property Code speaks of board meetings and Executive Sessions as follows: " Regular and special board meetings must be open to owners, subject to the right of the board to adjourn a board meeting and reconvene in closed executive session to consider actions involving personnel, pending or threatened litigation, contract negotiations, enforcement actions, confidential communications with the property owners' association's attorney, matters involving the invasion of privacy of individual owners, or matters that are to remain confidential by request of the affected parties and agreement of the board."

It would seem to me that if a board convenes in Executive Session to discuss delinquencies and identify those delinquent accounts - then only board members are privy to that information. Any disclosure to a non-board member could be considered an invasion of privacy.

Your board should develop a collection policy and stick with it, the way we do it is as follows:

1. 30 days delinquent a certified letter advising of possible consequences of non payment
2. 60 days report to credit bureau and another letter advising of action
3. 90 days lien filed at County and another letter
4. 120 days file is sent to attorney for further collection efforts
5. 6 months - possibility of filing foreclosure action
All charges associated with collection are charged to delinquent account

Section 209 of the Property Code also requires that delinquents be offered a payment plan

Thank you, everybody. Great info, but I guess we need to speak with the lawyer and see what our best recourse is. I just know that the current Treasurer, as well as past Treasurer's, have been lacking in their collection duties (if we have over $300K in late dues!). I appreciate the wise words...

NO you do not need to talk to the HOA lawyer. The board needs to talk to the HOA's lawyer. The HOA lawyer is NOT your lawyer. If your a board member, then it should be approved to go talk to the lawyer. In addition, it's usually recommended to have 1 POC who represent the board/HOA to communicate after approval.

It costs the HOA money for each conversation, email, or other communications to a lawyer. If your upset they aren't paying up for collections, then an expensive talk to a lawyer is taking up more funds. It can cost up to $400 or more to file a lien. Money your HOA has to have. So collections may be an expense it can't afford considering it may appear as "selective enforcement" if not all behind are served at same time. Can your HOA afford to pay out 4K for 10 people behind in dues?

Work first on a policy that best fits your collection needs. Once established, then work on following up. Your HOA may be able to collect with the policy and a period of amenesty.

Not every HOA has an attorney on retainer. We did not. Don't recommend it unless your lawyer dependent. Yes, lawyers will charge you for expenses such as phone calls, emails, or other communications if that is how they do business. I can send a copy of our bill for such services. It's something you need to discuss with your attorney on how they charge.

My advice is before going to a lawyer, it's best to set up a collections plan. It's a waste of time/breath if you don't have a plan. Lawyers are just there to do what you tell them to do. Just ask them, they will tell you that. Hence why I don't hire one who gives me that response.

Based on the totality of your postings, I wouldn't consider your HOA as the gold standard to which all others should aspire.

Alex

Our HOA Attorney's firm has a Collection Department. Once we turn a delinquent owner over to them one of their "weapons" is credit company reporting. I say a BOD or MC election effort/letter is not always considered "serious" enough for some to pay attention to. Once the attorney gets involved liens, forelosure, credit bureau reporting, etc. is mentioned, most pay attention.

The attorney charges the HOA $65.00 for kicking the process off which is writing a letter to the owner and filing a lien. The attorney adds a $350.00 charge to what is owed for their time and effort. We pay $150.00 quarterly. Miss the 2nd quarter by 30 days (now one is 190 days late) it goes to the attorney. You will then owe the HOA $300.00 (two quarters) and the attorney $350.00 for a total of $650.00 and a lien has been filed.

Leave it to me and I would have Storm Troopers assaulting you to pay........LOL